Trade talks: Sharma tries to put positive spin on slow progress

Indian commerce minister praises hospitality of his hosts .

ISLAMABAD: For a man who had essentially been stood up, Anand Sharma appeared remarkably cheerful. If the Indian commerce minister was disappointed at Pakistan’s failure to liberalise its end of trade between the two countries, he certainly did not show it when he sat down for an interview with The Express Tribune.

“We had only one desire: that the thinking of the two nations changes such that trade relations between the two countries improve. And that was achieved on this trip,” said Sharma, delicately evading the question of whether he felt that Pakistan had backtracked on its commitment.

At issue was Pakistan’s failure to move from a  “positive list” – where only the items allowed for trade are defined and the rest banned – to a short “negative list”, which consists only of a few items that are disallowed for trading and legalising the rest. After the meeting between the commerce ministers of the two countries in Mumbai in November, it had been widely expected that Pakistan would do so during Sharma’s visit in February. Pakistan has not yet done so and only “reaffirmed” its commitment to do so by the end of the month.

Sharma appeared to be trying to put a positive spin on the matter: “The joint statement has reaffirmed this and even Prime Minister Yousaf Raza Gilani said this very clearly last night as well.”

The Indian commerce minister made it a point to appreciate the efforts of his host. “Our people are very impressed by the hospitality of the Pakistani people and the government,” said Sharma, referring to the delegation of Indian businessmen who have accompanied him on this trip. He described the delegation as the largest trade group that has travelled abroad from India.

Yet even as he appeared on the surface to have been forgiving of delays on the Pakistani side, the Indian cabinet minister seemed unwilling to talk about the issue that many Pakistanis see as the key to liberalising trade with India: non-tariff barriers to trade such as quotas, quantitative restrictions, and regulations that many businessmen and economists describe as burdensome.

When asked the question about non-tariff barriers, Sharma at first started talking about the reductions India had made in its tariffs and then changed track, referring to India’s growing international trade as evidence that all was well. “If it were true [that non-tariff barriers are a problem], then India’s trade would not have grown to the levels it has,” he said, adding that India’s exports and imports totalled $750 billion in 2011.

Sharma’s opinion, however, seems to be contradicted by the World Bank, which ranks India 109th out of 183 countries in terms of ease of trading across borders in its 2012 Doing Business report. The Indian commerce minister appeared to get mildly flustered at the mention of that ranking, which is a full 34 places below that of Pakistan. “No, I do not agree with that report. I will be speaking to our people who deal with the World Bank to clarify the matter. But we do not have to agree with every IMF and World Bank report.”

The Indian cabinet minister eventually admitted that non-tariff barriers were an issue and said that the three agreements signed between India and Pakistan in Islamabad on Wednesday were meant to address them.

Sharma’s denial seems ironic, considering how he had said earlier in the interview that “governments can only make policies and create the conducive environment for trade.”

The rest of his rhetoric also appeared solidly supportive of free markets. “We are against protectionism globally. India is speaking very strongly for liberal trade regimes... International trade used to be a small part of our GDP but now touches two-thirds of the Indian economy.”

This rhetoric, however, belies the political difficulties that Indian Prime Minister Manmohan Singh’s administration has had in pushing through liberalisation reforms. Sharma admitted that political consensus had been difficult to achieve, but remained largely optimistic. “Consensus must not be confused with unanimity... I have not come without a political mandate. I have the mandate of my prime minister and my government. We have come with an open heart and an open mind.”

“Our 64-year journey is a story of lost opportunities,” he said. “We can either look at the glass as half full or half empty. I’d rather we look at it as half full.”

(Read: Trade ties with India)

Published in The Express Tribune, February 17^th, 2012.