Pakistan-India trade

Heartening though the trade talks may be, they merely scratch the surface of economic potential in improved relations.

Rare is the Pakistan-India summit where the chances of success are higher than those of failure. Yet that is precisely the case with the two-day trade summit held in New Delhi between the commerce secretaries of the two countries. The scope of the trade meeting is not too ambitious — India will use to it to clarify Pakistan’s decision to grant it Most Favoured Nation trading status while Pakistan is trying to get a more liberal visa regime for its businessmen. If progress is made on these issues, we can expect India to lift trade barriers on the import of Pakistani goods and for us to reciprocate by adding 2,000 goods to the positive list of items India can export to Pakistan. Needless to say, the improvement in relations between the two countries has been so remarkable that both sides are willing to set aside their main concerns of Kashmir and terrorism for the time being to cooperate on matters of mutual interest. This shows a maturity in the approach by Pakistan and India, both of whom have sometimes given the impression in the past that they are more interested in hurting their neighbour than helping themselves.

Heartening though the trade talks may be, they merely scratch the surface of the economic potential in improved relations. Currently, trade between Pakistan and India is worth only an anaemic $2.6 billion. This number could easily be quadrupled just by the lifting of trade barriers. In principle, this is what Prime Minister Yousaf Raza Gilani and his counterpart Dr Manmohan Singh agreed to on the sidelines of the Saarc summit in the Maldives. Singh offered to sign a Preferential Trade Agreement with Pakistan that would eliminate all trade barriers by 2016. Needless to say, this would be a positive development. Nonetheless, we would be wise to remember that economic cooperation, while making political cooperation more likely, doesn’t guarantee peace between the two countries. Although Gilani and Singh are wisely ignoring the elephant in the room, relations could easily be derailed, perhaps permanently, if there is another terrorist attack in India that can be traced back to Pakistan. Friendship between the two countries has been initiated but the foundations on which it is built are still extremely weak and prone to collapse.

Published in The Express Tribune, November 16^th,  2011.