Why trade with India is in our interest

Published: April 14, 2014
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The writer is a senior research associate at the Sustainable Development Policy Institute in Islamabad

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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Reader Comments (32)

  • Funny
    Apr 15, 2014 - 12:31AM

    Paks are really funny people with tremendous sense of entitlement. Paks think the entire world owes to the Paks big time.
    Every day you Paks say India is full of poor people. Yet when we want to protect our textile industry, Paks whine and ascribe evil intentions to India.
    No one owes you anything.
    Don’t be silly and delude yourself thinking India is desperate to get more trade w Paks. You are a small fry and getting smaller by the minute.

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  • G. Din
    Apr 15, 2014 - 12:37AM

    “… it will negatively impact relations between Pakistan and India. “
    I don’t think there is any scope of negatives left to impact any non-existent relations.
    It will make it difficult for the government of Pakistan to grant India the status of Most-Favoured Nation (MFN).
    Please give us a break. Save your MFN status for someone else. We are overcome with boredom whenever Pakistan and MFN are stated together.

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  • 3rdRockFromTheSun
    Apr 15, 2014 - 12:49AM

    @Author – if you are trying to persuade your countrymen to trade with India, how about NOT listing a list of ‘Negative’ perceptions about India then?

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  • gp65
    Apr 15, 2014 - 1:07AM

    The OpEd title does not match the content.

    Some of the points mentioned herein are not factual at all.

    There is no evidence whatsoever that it is India that had anything to do with Putin cancelling his visit to Pakistan.

    India did nothing to stop GSP plus for Pakistan. If you can find evidence of the same, I would appreciate it. IT is earlier on when europe promised tax waivers due to the floods in Pakistan – not just India but Bangladesh and Vietnam also objected since such concessions were not in line with WTO norms. Eventually Pakistan offered to give India the MFN status if India withdrew its objections. India did so but Pakistan failed to keep its word.

    India withdrew from IP pipeline because the project did not make commercial sense due to the following reasons:

    a. The rate charged for gas by Iran was too high
    b. The rate charged by PAkistan for transporting gas was too high.
    c. Pakistan refused to any penalties in case the pipeline which India would invest billions to construct was destroyed through terrorism in Pakistan.
    In any case if IP pipeline was so good, why did Pakistan not honor its agreement with Iran and consolidate neighborly relations with at least one country?

    Having explained why all your grievances against India are not based on facts – let me assure you that dangling of MFN status in front of India to gain unending unilateral concessions from India – while refusing to honor your commitments – is a strategy which is past the sell-by date.

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  • Strategic Asset
    Apr 15, 2014 - 1:20AM

    Firstly bear in mind that at this moment in time, while India is enthusiastic about trade with Pakistan, it does not need it. India has been able to do well despite Pakistan and nowhere does Pakistan fit into its economic agenda.

    Now let’s delve into the points you raised. Most of the explanations provided are childish and are not grounded in facts or reality.

    GSP+: India has every right to campaign against Pakistan in the EU as this was a special benefit provided by the EU to Pakistan in the aftermath of the earthquake which would have affected India’s own exports to the EU. However India withdrew its objections when Pakistan promised MFN in return and this promise was subsequently reneged by Pakistan. This is despite India providing MFN to Pakistan some 18 odd years ago.

    Putin’s visit: You should ask Putin about this. But make no mistake that India has deep-rooted ties with Russia and Russia has massive investments in India.

    IPI: India walking away from IPI had everything to do with Iran and Pakistan locking down on a rate at the first entry point into India. As it is, Iran’s rate was high and Pakistan’s transit fees were unknown, hence it made little sense for India to invest. On the other hand, India has shown interest in an undersea pipeline with Qatar with which it has a long-term contract.

    IPL: It was only to be expected that an IPL with Pakistani cricketers in the aftermath of the Mumbai attacks in 2009 would meet with anger and resentment from the public. However it was PCB which decided to not allow any Pakistani cricketers to play in IPL and revoked all their NOCs. Franchise owners had to scramble at the last minute to buy other overseas players. As a result, it is the franchise owners and not BCCI which is not interested in taking any cricketers from Pakistan.

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  • dev maiti
    Apr 15, 2014 - 1:55AM

    wow…. you finally seem to be getting it. Indians don’t want any relations with Pakistan. We are at best indifferent towards Pakistan and get all riled up (with no apparent solution) when terror attacks happen! A recent PEW survey on perceptions showed that 80% of Indians have a negative view of Pakistan!

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  • Arindom
    Apr 15, 2014 - 2:04AM

    A few points:

    1) Author needs to understand the difference between “International” and “Bilateral.” International markets are free and highly competitive. To export to EU (example garments and leather) , India faces competition from Bangladesh, Sri Lanka, Thailand, Phillippines, Egypt, etc… besides Pakistan. It is a free-for all. Why should India not protect it’s interests in the International markets? Why should it not debate/lobby against a selected individual country. It owes nothing to any of the competitors. Welcome to free market, Sir.

    2) Now for Bilaterat trade India and Pakistan are free to agee to do anything. They can even set up a free trade area – nothing prevents any two countries. India already has free-trade agreements with several countries

    3) Donot mix up MFN status to India. It is not a gift! Every day, it delays giving this status to India, Pakistan is in violation if Trade Laws as India has long back given Pakistan such a status. Be thankful, India has not complained to Internal Courts / Forums!

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  • It Is (still) Economy Stupid
    Apr 15, 2014 - 2:13AM

    After reading all the op-ed for number of years I have come to conclusion that Pakistani schools do not teach critical thinking and self analysis. This authors is doing exactly same it is everybody else’s fault but Pakistan. This approach will not get anywhere. A correct diagnosis is required to get right treatment. Example” 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. ” The reality is trade with Pakistan will not make any difference in India’s GDP number. Pakistan has been factored out. Most of the regional trade partners are doing business except with Pakistan. Liberal Visa, inclusion of Pakistani player in IPL, visit of Indian Politicians to Pakistan is all on hold for 26/11 trial. The bitter truth is that support for non state actors and trade with India are mutually exclusive. Author conveniently forgot that pipe line between Iran and Pakistan is torpedo by KSA and not by India. Moreover, Pakistan does not have money to build pipeline within its own border and expects Iran or some other country to finance it. Free 1.5 billion and free oil from KSA is more attractive than self reliance, history repeats itself.

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  • a_writer
    Apr 15, 2014 - 3:11AM

    Wow ! India can only dream of having the kind of clout the writer implies. Putin, EU all towing the lines on India’s demand? Give us all a break, please. If Putin didn’t visit Pakistan or if EU is not willing to give Pakistan GSP Plus status, it just means that these countries decided that it is not in their national interest either short term or long term. Most probably India’s likes and dislikes had absolutely no impact on these decisions.
    There has to be a way out of this ‘Paranoia’ rut Pakistan finds itself in for some 60+ years.

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  • F
    Apr 15, 2014 - 6:19AM

    Why do you need to play in the IPL to be “accepted” by India? What does India have to do with improving the internal security situation and becoming a haven for trade and growth? Why can’t you become partners with Iran on gas on your own? Why blame India?

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  • MOhinder sandhu
    Apr 15, 2014 - 6:44AM

    European union or russia do not take dictation from india to make or break friends.If giving pakistan a favourable status is gonna benefit EU then no matter how much india oppose it, EU will grant it and so is russia.The author writes this article with same mentallity that existed in pakistan since its birth.INDIA is evil every where and pakistan a poor victim.No body in the world accept this argument other than pakistanis.Pakistan is gonna benefit more because of bigger market its gonna get.India’s economy is doing well.it is pakistan that is sinking into WELL.

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  • Strategic Asset
    Apr 15, 2014 - 9:39AM

    Excerpts from 2010:

    Lalit Modi, the IPL commissioner, said the apprehension over the availability of Pakistan players was the main reason for them being unsold. “Franchises are no more ready to spend $7-8 million on someone who won’t be available for the tournament,” he said. “It not only exhausted their purse but also wasted slots. They want only those players who would be available for the tournament. They are spending money and they want to get the results.”

    Shilpa Shetty, the co-owner of Rajasthan, echoed Modi’s words. “We were not convinced about their availability and that’s why we did not want to take any risk,” she said. “If someone is not going to be available, why bid for him.” She also said that though they had watched Tanvir over the past year, they were looking for a batsman.

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  • Saqib
    Apr 15, 2014 - 9:58AM

    Correction! There are several steel mills in the private sector eg. Tuwairqi steel.

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  • Apr 15, 2014 - 11:42AM

    Timeline :

    November 2008 – Mumbai Attacks.

    January 2009 – India refuse to tour Pakistan citing security.

    April 2009 – Pakistan refuses to send its players to India saying they are not safe in India.

    The saga starts..

    Till date the situation has remained the same. Nothing has changed. How come suddenly the Pakistanis have deemed India safe for Pakistani Cricketers?

    Or, were they lying earlier?

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  • Aam Admi Bechara
    Apr 15, 2014 - 1:06PM

    Depends on who this “our” is? For nawaz government rulers, traders, wholesalers, retailers, importers it sure is in “our” interest but for the indigenous industry, production, agriculture where the majority of Pakistani employed population is employed it’s not in “our” interest

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  • Apr 15, 2014 - 1:39PM

    And none of the respondents above mentioned Kashmir and pakistani establishment’s continued support for militants there. Trade with India will mean pakistan will have to revisit all these pet projects – Hafiz saeed and his difa e pakistan understands this and therefore their very logical opposition to the MFN status. I would advise the author to listen to Hafiz saeed – it would be less painful for Pakistan.

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  • Saad
    Apr 15, 2014 - 1:44PM

    Getting pretty sick and tired of all this “it’s everybody’s fault except our own” narrative. We need to grow out of this, it’s about time. And the title of this article is misleading.

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  • Feroz
    Apr 15, 2014 - 2:41PM

    How can an reciprocal arrangement like granting MFN status be delayed for decades not years. For a months delay some excuse is possible, for a years delay you need a lot of spin, delay for over ten years only sends a single message — we will eat our cake and have it too. All of India know that Parliament and PM are not the Institution or office holding real Power, which is exercised from elsewhere. There is little left to wonder why India is not coming to the negotiating table for composite talks, knowing well enough that PM Sharif can promise everything, deliver nothing.

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  • mrpr
    Apr 15, 2014 - 3:42PM

    Seems the author has grownup hearing and seeing people assuming and blaming India for everything bad that happens in Pakistan, its obvious from his article…….there is no intellectual input in it however…Recommend

  • Indian Observer
    Apr 15, 2014 - 5:02PM

    The confused author of this op-ed piece gets even more confused when he talks about trade, and tries to bring in Russian President Putin, the European Union, etc. First of all, India has tried zillion times to persuade Pakistan to engage more in trade and business. By some perverted political logic, Pakistani regimes have been arguing both ways — that they want to trade with India but cannot grant it a MFN status without irking public ire. India has already given this status to Pakistan over a decade ago and, likewise, it is for Pakistan to reciprocate this gesture. The MFN, for most ignorant Pakistanis, is “selling” Pakistan’s economy to India. Nothing is farther from the truth. The MFN, as negotiated between the two sides, merely precludes overburdening trade with all kinds of tariffs and levies. Competition, and not protectionism, should govern trade. The idea is to create a level-playing field. How long will Pakistan continue to hide behind these baseless arguments. Me thinks, the author of this piece needs some elementary education in basic economics. . But let’s also be frank why India — and the rest of the world – ignores Pakistan as a reliable and stable trading partner. The problem lies within Pakistan: its culture of terrorism and religious extremism have scared away foreign investors and business people who shun Pakistan for these reasons. Indeed, Pakistani textile companies at international trade fairs are even told to come to Dubai or, ironically, also to India if they want to meet foreign buyers, many of whom do not feel safe on Pakistani soil. And, please, dear Pakistanis, stop telling us how much “sacrifice” you have made for the world in the war on terror. For those intelligent folks, I suggest you read Pulitzer Prize-winning journalist Carlotta Gall’s latest very enlightening book “The Wrong Enemy” to find out what Pakistan has been doing to itself and the world with its denial and deception policies. I truly feel sorry for the next generation of Pakistanis who will also be brought up with such horrendous lies, prejudices and hatred. You will probably lose the next generation, as you have done so in the past, because this generation will not produce any nation builders. They will start believing their own lies as the gospel truth. Nothing can be worse and more damaging to the already crumbling piece of culture and real estate called Pakistan.Recommend

  • Singh
    Apr 15, 2014 - 7:31PM

    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.
    Author please can you check archive of ET that India did object to GSP after it negotiate with Pakistan Govt. And also you will find news that EU did grant GSP status to Pakistan which Mr Dar claim so in Parliament.
    Check your facts first before writing op-ed. or may be you are living in some cave of Tora Bora.
    ET Pls publish this. Recommend

  • gp65
    Apr 15, 2014 - 7:41PM

    @BruteForce:
    Pakistani cricketers did play in India in Word Cup 2011. They further played a bilateral series in 2012 December. So you are factually incorrect that Pakistani cricketers have refused to play in India since 2009. Recommend

  • IndianDude
    Apr 15, 2014 - 8:23PM

    ..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. ….

    You still don’t get it, do you? the murderer and planners of 26/11 mumbai massacre are openly walking around in lahore . IPL is a private business venture. The indian public will boycott/reject the teams that has large numbers of pakisatani players. The franchisee will lose money. Besides, not a single game in pune or mumbai will be played by team that had pakisatani players in their teams.

    Arrest and prosecute the mastermind and foot soldiers of 26/11 and will have afridi biting ball in mumbai in no time! Recommend

  • vimal krishna
    Apr 15, 2014 - 9:13PM

    Author is seeing issue in wrong perspective:

    1>Trade with Pakistan is more benificial for Pakistan then India.
    70 billion dollar comes anually from indian expats. What will be volume of trade with Pak? 4-5 billion dollar.
    Pakistan needs trade with India to improve its own internal strengthening of institutions like democracy, economy, limiting the role of military gradually but surely.

    2>Does trade with India ends hostility with India? We are declared enemy nations, so long issues are not resolved both side will continue to do a friendly nation will not do.

    3>IPI gas line. India and US are strategic partners. If USA hints india not to do, india is well advised to walk out. Pakistan is enemy of both India and USA, they both will gradually become friend with Pakistan once it becomes a normal nation. Pakistan has global ambition, to bring it down to ground is the challenge.

    4> Once Pakistan shows progress in Mumbai attack, they will come and Join IPL.

    5> Pakistan has CHINA as a great friend. Why they dont rescue Pakistan?Recommend

  • Baffled
    Apr 15, 2014 - 10:17PM

    Wow, Shakeel, You seem to have very accurately touched extremely raw (not RAW!) nerves in India. Tremendous response from across the border. I suggest you reserve your next column on analysing these responses.Recommend

  • someone
    Apr 16, 2014 - 7:37AM

    @Baffled:
    Were you able to find a single non factual rebuttal? All responses are so very valid, to the point and based on fact unlike this article which is based on same old rhetoric. Seems like ordinary people in India have better understanding and analytic sense then the writer of this article.

    Recommend

  • Anil Nair
    Apr 16, 2014 - 11:02AM

    Indians can be vindictive at times.

    Sorry guys :/

    Recommend

  • Aslam
    Apr 16, 2014 - 12:37PM

    **Dear Shakeel Ahmad Ramay,

    The arguments which you have mentioned are all very strong but most significant factor between Pakistan and India is Kashmir?The Kashmir is the core issue, If the Kashmir issue is not solved ,How bilateral relations can be built?**

    Recommend

  • Naresh
    Apr 16, 2014 - 5:21PM

    Shakeel Ahmad Ramay Esq. : I have said this before and I will say it again – More than Thirty Pakistan Industries have been DESTROYED AND CLOSED due to their inability to compete with Chinese Imports by way of Free Trade with China. The People of Pakistan have Great Love for the Chinese. Free Trade with India will decimate-destroy at least Thirty if not more Pakistani Industries. The People of Pakistan truly hate the Indians in General and the Hindus, Jains, Sikhs and Buddhist in Particular who do not have PURE AND LARGE HEARTS like the Pakistanis. On experiencing the Ill Effect of Free Trade with India on Pakistani Industries due to Free Trade with India the People of Pakistan – I can understand the wrath of the Pakistanis – there may be even a Mutually Destructive War as Pakistanis will most definitely, State Actors as well as Non-State Actors, go to War with India.
    .
    So please do not Advocate Free Trade to Pakistan with India. At least if we cannot be Friends WE WILL AT LEAST NOT BECOME TOTAL ENEMIES.
    .
    CheersRecommend

  • Vivek
    Apr 16, 2014 - 5:22PM

    I’m surprised this made it to print at all. I’m even more surprised and disappointed at the quality of scholarship in Pakistan, even in one targeting “sustainable development”. A lack of depth and ability to see 360 degrees asides, I don’t see any veracity of the facts. HOW could the editors pass this without any vetting? Truly disappointing.Recommend

  • Shan
    Apr 16, 2014 - 7:17PM

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

    Recommend

  • gp65
    Apr 17, 2014 - 1:33AM

    @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.Recommend

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