Our booming neighbour

It is undeniably one of the best ideas of the past decade. Opening up trade with India is exactly the sort of boost our economy needs to break out of its lethargic ‘low growth-high inflation equilibrium’.

The last time our economy received such a boost was when the Middle East oil boom got underway. We were able to tap into the lowest rungs of that boom by becoming an exporter of raw manpower. And those exports opened up a stream of remittances that have carried us through some of the most difficult periods in our economic history.

Now a boom is underway to our east, in India. And once again, we need to find a way to tap into this boom. The engagement this time will be a lot more complicated since it involves a two-way trade process in which some parties stand to gain and some to lose.

But a trade engagement with India makes far more sense than going to western countries and practically begging for ‘market access’. Think about the absurdity of it. We line up outside western capitals asking for preferential market access in the name of aid, ‘trade not aid please’, arguing that this is the best way to help the flood affectees or assist Pakistan bear the costs of the war on terror. Meanwhile, these same western countries are lining up for access to India’s growing market, from which we have voluntarily locked ourselves out for silly reasons!

The most logical thing to do is to open up a trade engagement with India and stop asking western countries for preferential market access. Of course, a trade engagement with India will require some homework from our end first and that’s something relatively too new to us.

For instance, when drawing up a ‘negative list’ of prohibited items for trade with India, the commerce ministry complains that industry representatives are slow to cooperate with the ministry in providing their input. The chambers of commerce for their part complain that individual industry players are slow to provide any input to the chamber leadership.

The fact is, our industry players have a hard time thinking about anything beyond very narrow and very short-term vested interests. They prefer to remain obsessed with the latest SRO from the Federal Board of Revenue or the direction of interest rates or latest gas allocations. Of course, all of these day-to-day matters are very important and deserve attention, but far too many industry players remain obsessed only with these sorts of things and are totally incapable of taking a broader view of things when asked to do so.

This is why the commerce ministry finds it so hard to get any input when drawing up the negative list. When they do draw up the list and present it before the cabinet for approval, protests are quick to materialise from industry quarters that they were ‘not consulted’.

Something along these lines is what appears to have happened during February 14’s cabinet meeting, when the commerce ministry was denied cabinet approval for its negative list of 636 items. It is not clear what exactly the objections were, but reports indicate that ministries of textiles and interior raised objections.

The interior ministry probably objected to some items it perceived as ‘sensitive’ or of a security nature that were not present on the list. Leave it up to interior, and chewing gum will be on the list, too, for being a ‘security threat’ for Pakistan. Never mind that suicide bombers are able to ply their trade with impunity within Pakistan without resort to any items imported from India. If only interior had a better track record in suppressing the traffic in bomb-making materials. But then again, suicide bombers don’t really seek cabinet approval before carrying out their acts, which doubtless, makes it difficult for the interior ministry to deny them permission!

The textiles ministry needs to simply be wound up. I don’t know anyone in the textile industry who thinks the ministry is serving any useful purpose at all. Perhaps, it should be demanded from them to produce a report on what their achievements have been thus far. I’d love to read through that report and write about it!

The fact of the matter is that the process of ‘stakeholder consultation’, which the commerce ministry has tried to implement while drawing up the negative list is something our government and industry reps are still unaccustomed to. It is one thing to travel the world in search of our next fix of cheap aid — whether preferential market access or budgetary support — but it’s another altogether to participate in a serious policy process that aims to anticipate and fine-tune a trade policy that will transform the fortunes of many groups. One big positive to come out of engagement with India is that we are learning to do the latter.

Published in The Express Tribune, February 16^th, 2012.