Tense India ties cost Pakistan huge losses in trade

Published: June 16, 2010
Think tank suggests ‘trade now peace later’ policy

Think tank suggests ‘trade now peace later’ policy

Tense relations with India are costing Pakistan $1.8 billion in annual trade and that can be saved by changing the policy to one based on the concept of ‘trade now peace later’, suggests a regional think tank in its latest report.

On top of that, intra-regional trade between Islamabad and New Delhi may bring prosperity for millions of people, as it will help create opportunities for jobs and enhance incomes which will surely reduce poverty, said the 13th flagship publication of the Mahbub-ul-Haq Human Development Centre titled “Trade and Human Development in South Asia”.

“As high as 55 per cent potential of intra-regional trade in South Asia has remained untapped and more than $1.8 billion worth of trade potential between the arch-rivals has remained unutilised, which is over 80 per cent of the existing bilateral trade,” said the report.

It further said the regional trade could directly affect South Asia’s human development through generating employment, enhancing income and contributing to poverty reduction.

“It is a timely report and the suggestion to focus on intra-regional trade will help the government formulate a policy to promote trade,” said Senate Chairman Farooq H Naek at the launch of the report.

“The report has tried to sell an idea, which is opposite to what is the policy of Islamabad towards New Delhi,” said former secretary foreign affairs Akram Zaki.

US Secretary of State Hillary Clinton has also advocated ‘trade first then peace’ between both the countries, he added.

The report suggested that the South Asian region lost trade opportunities because of India-Pakistan hostility, a similar export basket, presence of non-tariff trade barriers particularly from the Indian side and infrastructure bottlenecks.

Former finance minister Dr Hafeez Pasha said the negative trade list of regional countries was excluding 53 per cent of the total regional exports from trade between them.

“The government must seriously consider declaring India the most favoured nation for trade,” he argued.

The report said total intra-regional trade is just five per cent or $30 billion of the total regional trade. In comparison, the Association of South East Asian Nations’ (Asean) regional trade is 25 per cent of its total volume.

“Countries need to trade to upgrade worker knowledge, reduce poverty and improve well-being of people,” said Khadija Haq, the Chairperson of the Mahbub-ul-Haq Human Development Centre.

She said the gains from trade in services were very limited due to restrictions on cross-border movement.

The report said one-third  of Pakistan’s population lives below the poverty line, which is only second to Bangladesh in the region. A large section of the population lives on $1.25 a day, the report concluded.

Published in the Express Tribune, June 16th, 2010.

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Reader Comments (18)

  • manish mall
    Oct 21, 2010 - 10:48AM

    I only wish that more people of Pakistan read this article and understand that rather than exporting terror the export of Peshawari chappals and your wonderful basmati rice can bring greater benefits and rewards.Recommend

  • Ali Raza
    Oct 22, 2010 - 11:42AM

    Conspiracy by baniasRecommend

  • Saif
    Oct 22, 2010 - 12:51PM

    Only if Peshawaris will be allowed to export products of their own and not the terror exported in their name by the dominant folks. Why do we have to be enemy with our neighbors always, not just India, but look around which neighbor do we have good relations with. Why are we held hostage by some fanatics who have this terrible ideas of colonizing the whole region, while the house is burning itself !!! let’s say it to all those conservatives and fanatics and the likes of Hameed gul, JI and the leagures that we want to focus on the development of our people, empire building – another time.Recommend

  • R. Querieshi
    Oct 22, 2010 - 5:08PM

    While trade between India and Pakistan is a wonderful idea, lets not get fooled by the figures given by Mehboob ul Haq foundation report. This report is trying to sell Utopia while in reality India and Pakistan try to undermine when trade starts. The agreements signed in 1988 with India are resulting in loss to Pakistani trade due to excuses being used by India when it comes to implementing their part of it.

    Instead of giving lectures to Pakistan only, lets also ask India to scrap its $100 Billion deal with Britain to buy Jauguar fighters while half of India’s population lives on less than dollar a day! Recommend

  • Farhan
    Oct 22, 2010 - 5:18PM

    Dr Hafeez Pasha is very right in saying that Pakistan should reciprocate and give most favourite nation status to India.

    One day or another both India and Pakistan would bow down and start trading with each other.

    Pakistanis and Indians and who hesitates in talking rationally about each other need to assert more strongly on their governments to reduce trading problems betweent the both countries. Otherwise, be ready for a internal and external threats of poverty and illiteracy. Good luck!Recommend

  • Oct 22, 2010 - 5:38PM

    Ali Raza – what would you have? A conspiracy by banias to increase their earnings through trade and generate some income for the non-banias on both sides of the border (believe me there is no stopping them) or would you have jem and let spreading their version of love on both sides of the border? Recommend

  • Jerry Olson
    Oct 22, 2010 - 6:47PM

    Trade with Pakistan is not possible ,as long as pakistan support terror against INDIA.Recommend

  • lalit
    Oct 22, 2010 - 10:03PM

    @R. Querieshi you cant be more imaginative…100 billion dollars?that too for Jaguars which are on the verge of being phased out of all the Air forces including IAF.just dont jump to any conclusion without doing your homework.
    and can you please be more specific about Indian wrong doings in implementing its own part of understanding. Recommend

  • A Suhail
    Oct 23, 2010 - 10:51AM

    Great article and great comment by Saif. The opening up of trade with India will have a very positive impact on the economies of Punjab and KP. India is manufacturing machinery and parts used in textle industry and they are way inexpensive when compared with European and Chinese machinery. The freight rates will also be a factor, its cheaper to import from India. Pakistan will get a huge indian middle class buyers for its textile products. Also keep in mind India is a huge country and for people in Indian punjab and surrounding area’s it is cost effective to use Karachi as a port for shipping its product outside the country. One can write so much on this topic but I feel the pros for the trade offset the cons. Lets ignore Jerry Olson and Ali Raza and for a change do something which will benefit the poorer on both sides of the border. Remember collectively we both have so many people living in poverty that it should be a matter of shame. Recommend

  • Rajat
    Oct 23, 2010 - 7:40PM

    //Off topic//

    I am an Indian and I want ask my Pak friends one thing-

    Is the numbering system of using lakh, crore, arab, kharab, etc, been stopped in Pakistan? All figures are in million, billion, trillion while denoting Pakistan Rupees (i can understand if it is USD). Apart from news print, what do you guys use in your daily life?

    I know its off topic please bear with me.


  • Anoop
    Oct 23, 2010 - 10:48PM

    Pakistan has given MFN status to China but argues that giving the same to India will flood its market with Indian goods. So, in effect is it suggesting that Indian goods are much more cheaper and competitive than the export oriented Chinese?

    India and Pakistan are not equals. One fear in Pakistan is it wont be competitive enough to export anything to India whereas India will export a whole lot more to Pakistan thus resulting in trade imbalance. But, what did you expect? The aid-dependent export industry in Pakistan can compete with the Indian might?

    The best part of free trade is it creates jobs on both the sides. Look at India-China trade for example.Recommend

  • Oct 24, 2010 - 1:23AM

    @Rajat——– an intersting question my friend. Well, when it comes to banks the payments are made in millions and records are also kept in the same numbering system. If you talk of language and the way an ordinary person on street deals with money- he counts it in thousands, Lakhs, crores and so on. In sort both numbering systems are still practiced in Pakistan.Recommend

    Oct 24, 2010 - 7:42AM

    regional trades r the need of the hour. by signing of mfn pakistan will have an extendent mkt.Recommend

  • Tanzeel Huda
    Oct 24, 2010 - 11:57AM

    Seriously, I think that after 60 years of hatred; both the governments of Pakistan and India should realise the apparent-losses and potential-gains that could be achieved if both countries open their economies to one another. Futhermore, if we have a classic example of the EU where the European countries shunted away their differences and technically baceme one then why can’t we Indians and Pakistanis do the same ? Recommend

  • Bangash
    Oct 24, 2010 - 8:31PM

    The report overlooks the fact that Indians are full of malice and grievances against Pakistan and refuse to acknowledge any wrongdoing on their part. Indians are not going to buy anything from Pakistan, they are only interested in selling to Pakistan.Recommend

  • Oct 25, 2010 - 6:14AM

    Yes, really alarming and time to ponder.

    BTW… do you have any idea about our much loved neighbor is sitting on the border 24/7, waiting for Uncle Sam to get angry on us, so that they can avail this golden opportunity for themselves?

    So much for peace.Recommend

  • sandy
    Oct 25, 2010 - 10:31AM

    @Bangash / Normal

    India doesnt need to buy from Pak as pak has nothing to offer. The middle and small business in Pak is completely ruined by cheap chinese imports, the big brother enjoys huge surplus against a meager export from pak to china. The political class are busy servants saying yes to the chinese bosses. The bigger public sector businesses run on loan money from West and donors. The day US and west leaves Pak, they will go bankrupt as it was in 2000-2001 before money started flowing in.

    Even after 62 yrs, Pak is a pawn in China’s hand with no self identity, economic, militarily or otherwise.Recommend

  • Giri
    Oct 25, 2010 - 10:46AM

    I saw an article few days back that Tamilnadu (a southern indian state) is importing cement from Pakistan @ Rs 190 per unit while the same is around Rs 400 in the country. This only shows you are completely wrong. Recommend

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