FOREIGN TRADE: Burlap from Pakistan

When India and Pakistan separated in 1947, their profitable burlap industry was also split. Pakistan grows 75% of the world's raw jute, but it did not have a single jute mill to make burlap. India owned all the mills, and when the Korean war sent the price of burlap soaring, India tried to gouge burlap users by slapping a heavy export tax on the cloth. Result: imports into the U.S., the biggest burlap user, dropped 20% as businessmen shifted to substitutes for packaging.

Not to be squeezed out of the burlap market, Pakistan raised $20 million for two jute mills...

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