Why trade with India is in our interest

There is need to mitigate impression that India is interested in bilateral trade or it will negatively impact ties.

Shakeel Ahmad Ramay April 14, 2014
The writer is a senior research associate at the Sustainable Development Policy Institute in Islamabad

Regional trade is a key to the interconnectivity and prosperity of South Asia. It can help defuse tension between the two arch-rivals –– Pakistan and India. Kashmir, water and other outstanding issues can be dealt with later and let the trade flourish and the region benefit from it. Interaction between the business communities and the people could help to normalise relations, which would be beneficial for Pakistan and India and for the region at large. These are some of the statements that we read and hear from both sides of the border. Especially, the other side of border shows much more enthusiasm on the subject and shows its intent to help Pakistan boost its trade and economy. This argument is commonly accepted among the economists and business community, somehow.

However, when we analyse this argument against the events happening at the global level, a different picture emerges.

Let’s start with the GSP Plus status. Pakistan was actively pursuing GSP Plus status with the European Union to boost its trade and economy. Pakistan was lobbying to get hold of relevant countries and stakeholders to get consensus on the GSP Plus status.

Pakistan needs this badly, especially in the current difficult circumstances. It is facing a lot of problem ranging from economic to security issues. Despite knowing all this, India had been lobbying against Pakistan. India’s envoy to the EU actively persuaded the European parliamentarians to block the process. There are different narratives to this; the most convincing one was that since India does not enjoy a GSP Plus status, it opposed it for Pakistan. However, this does not justify the act, especially when India itself is trying to build trade relations with Pakistan.

Moreover, India has not been given the status due to the volume of its exports to the EU, not because of Pakistan. India is already a big trading partner of the EU and can further expand on that. There is no need to lobby against Pakistan or even to debate against it.

The second uncalled-for episode was throwing a spanner in Pakistan-Russian relations. During former president Asif Ali Zardari’s regime, Pakistan started to build relations with Russia. Meetings of the Inter-Governmental Commission on trade, economic and scientific cooperation suggest that both countries were interested in developing good relations. Moreover, the Russian foreign minister visited Pakistan and talked about possibilities of further strengthening relations. The Russian government also extended help to Pakistan for the expansion and modernisation of the only steel mill in Pakistan that had earlier been built with Russian assistance.

However, Russian President Vladimir Putin postponed his visit without mentioning the new dates of visit. The mainstream press claims India played a behind-the-scenes role for the postponement of President Putin’s visit.

Third, the evidence comes from the Iran-Pakistan gas pipeline project. Initially, India was part of that initiative, but later walked away. This initiative could boost regional integration and economic wellbeing of the people in the region and could also pave the way for transit trade with Afghanistan via Pakistan. It is a missed opportunity for regional integration and for building trust.

Fourth, evidence comes from the politics surrounding the Indian Premier League (IPL). While there is no conflict of interest one fails to understand why Pakistani cricketers are not allowed to play in IPL. This can provide a good avenue for establishing people-to-people contact.

The other dimension of this decision is that it also weakens the argument that the people from both the sides want cordial relations. It hampers the relations at two stages; first it hinders the confidence building measures and also slows down normalisation of the trade process. These incidents also give the impression that India is only interested in bilateral trade, which is beneficial for India and that beyond bilateral trade, it does not have any interest in normalising relations. There is a strong need to mitigate this impression or it will negatively impact relations between Pakistan and India. It will make it difficult for the government of Pakistan to grant India the status of Most-Favoured Nation (MFN).

Published in The Express Tribune, April 15th, 2014.

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gp65 | 6 years ago | Reply @Naresh: Free Trade between India and Pakistan is not on the cards at all. What is being discussed is MFN stats to India which is actually a requirement for all WTO members (which Pakistan is) to grant to all other WTO members (which India is). MFN status for India simply means that trade with India will not be on terms worse than trade with other WTO nations. In effect it refers to non-discriminatory market access. This is quite different from free trade which implies trade at 0 or minimal duties for most items.
Shan | 6 years ago | Reply

@Aslam: Even after 100000000000000 years kashmir will be the integral part of india..

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