KARACHI: Realising the fact that non-tariff barriers are hindering the growth potential, India and Pakistan are going to sign three agreements in few weeks to remove the hurdles and strengthen trade ties, says Arvind Saxena, Economic and Commercial Counsellor, High Commission of India.
Saxena was speaking here on Thursday at the ‘Economic Summit 2012 Beyond Borders – Trade Treaties and Their Implications’, organised by the American Business Council of Pakistan (ABC), which serves as chamber of commerce of US businesses in Pakistan.
“Imagine the volume of trade when Pakistan and India – the region’s two biggest economies – resume trading and come to the level that they had at the time of independence,” he said.
Today, bilateral trade between the two countries is negligible. Indian exports to Pakistan are just 1% of its total exports while Pakistan’s exports to India are only 0.5% of its entire exports.
At the time of independence in 1947, the two countries had 60% to 70% of their total trade with each other. “This shows that instead of going forward, the two countries have rolled back,” he said.
Putting his point simpler, Saxena said, after December Pakistan and India would be dealing in 80% of tradable products, which at present stands at just 15%.
Pakistan has already announced that it will phase out the negative list, which contains very limited items which cannot be traded, by the end of the year.
Speaking on the occasion, US Consul General in Karachi Michael Dodman stressed that the US wanted to help Pakistan in expanding its trade with other countries.
Former minister of state for finance Omar Ayub Khan pointed out that the country lacked competitiveness and innovation, which was why its gross domestic product (GDP) was growing but not exports.
ABC President Saad Amanullah Khan said total global merchandise trade stood at $35.4 trillion and total global services trade was valued at $3.7 trillion. Pakistan’s GDP is 0.3% of global GDP, while Pakistan’s trade is 0.1% of global trade. On fair share basis, Pakistan’s trade should be at least three times bigger.
According to a study shared on the occasion, trade as percentage of GDP for Pakistan in 1990 was 39% and in 2010 it declined to 32%, reflecting a decline of 7%, whereas the same for India and Bangladesh increased by 34% and 24% respectively.
Published in The Express Tribune, September 14th, 2012.
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