Regional trade agreements

Tense relations between Pakistan and India continue to upset potential regional trade agreements

Pakistan’s relationship with regional countries has been characterised more by political and military tensions rather than business linkages. The trade that actually does transpire contributes more to the informal economy than it does to the formal sector, indicating that dialogue on trade-related matters is negligible and dependent more on the kind of relations we have with other countries rather than on the realisation that trade can help meet needs of citizens. Hence, it hardly comes as a surprise that trade relations between Afghanistan and Pakistan have taken a back seat as Iran’s role comes to the fore. According to a recent report, Afghanistan, India and Iran have finished negotiating the details of a trilateral transport and a transit pact, leaving Pakistan out of the equation. Afghanistan’s growing disinterest in trading with Pakistan stems from its insistence on including India in any transit trade agreement, and given Pakistan’s refusal to accommodate this, it appears to have decided to move onto Iran.

India’s is a huge economy and Afghanistan rightly wants it to be included in any transit trade agreement with Pakistan. Tense relations between Pakistan and India, however, continue to upset potential regional trade agreements. While Pakistan may have genuine concerns regarding India’s role in the region, ignoring a massive economy that sits next door is not the solution either. In any multi-nation regional agreement, countries would want India’s inclusion. The time for outright stubbornness on trade-related matters has passed. Economies are increasingly converging the world over. There is no reason why Pakistan cannot do the same. In fact, a regional agreement that ensures such convergence could lead to genuine peace, with countries having reduced incentive to destabilise the other. There has to be a better way than a blanket ban on conducting business with one another. Pakistan will be the loser if it is isolated — not India. 

Published in The Express Tribune, April 24^th, 2016.

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