Baby steps towards free trade

The Nawaz Administration should build a political coalition that would push economic liberalisation forward.

When it comes to progress in liberalising trade between India and Pakistan, it is perhaps best to hope for slow but steady progress rather than giant leaps, given the powerful nature of the lobbies opposed to the free flow of commerce between the two neighbours. The latest of these baby steps is the decision to keep the Wagah-Attari border crossing open 24 hours a day, seven days a week. Given the frenetic pace of global commerce these days, this is a welcome move that should have, at least, some positive impact in improving trade flows between the two countries. But it is nonetheless a small step and should be recognised as such.

On the major issues of trade — granting most-favoured nation (MFN) status on the Pakistani side and reducing non-tariff barriers on the Indian side — progress has been painstakingly slow. Pakistani financial institutions have been knocking on the Reserve Bank of India’s door for three years now to get licences to open up branches in India and have yet to be granted permission, though Commerce Minister Khurram Dastagir Khan indicated that matters may be speeding up on that front. And Pakistan has yet to fulfil its promise to truly grant India MFN status, a legal obligation for Islamabad under its accession agreement to the World Trade Organisation.

We find ourselves perplexed at the reticence in Islamabad, especially given the PML-N history of trying to improve ties with India through commerce and the party’s campaign promises on liberalising trade with our eastern neighbour. The Nawaz Administration should live up to its campaign promises and build a political coalition that would push economic liberalisation forward. And while we understand the lethargic pace in New Delhi when it comes to reform given that it is election year, we regret the giving in to anti-trade lobbies in detaining around 49 trucks and drivers on unproven allegations of drug smuggling. This has, predictably, led to the suspension of the Srinagar-Muzaffarabad Bus and Truck Service, and we hope the matter will soon be resolved so that the gains from the 24-hour opening of the Wagah-Attari border are fully realised and relations between the two countries are not marred by further hostility.

Published in The Express Tribune, January 21^st, 2014.

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