Trade with CARs

Earlier this month, Prime Minister Nawaz Sharif left on a two-day visit to Tajikistan to discuss trade cooperation among other issues. In CPEC’s backdrop, his visit to Tajikistan understandably laid stress on promoting and expanding connectivity to spur socio-economic growth and trade.

The Central Asian Republics consist of 5 countries: Kazakhstan, Krygstan, Turkmenistan, Tajikistan, and Uzbekistan. Together, they provide a market of $251 billion with a population of $70 million. On average, their per capita income is $3,577 with Kazakhstan and Turkmenistan providing the biggest markets.

Pakistan’s $37.4 million exports to CAR in 2016 were less than 1 percent of CAR’s total imports which amounted to $46 billion. India’s exports to CAR were nearly 9 times more than Pakistan’s exports.

Among India’s top exports to Central Asian states in 2016 were medicaments (HS Code 300490) worth $9.8 billion, rice (HS Code 100630) worth $ 5.2 billion, and cotton (520100) worth $1.34 billion.

Rice, medicaments, cotton, along with wheat, medical instruments, sugar, and cement are some of the top exports of Pakistan, in terms or quality and/or volume, which are in demand by the CARs. Given the scope of trade available with CARs, to see Pakistan’s total export at $37.4 million to CARs is lamentable.

Pakistan can access CAR markets from three sides: Afghanistan, Iran and China. While Pakistan is touting war in Afghanistan the biggest hurdle to trade with CARs, India has made its own routes.

India is a big driver of enhancements to Iran’s Chabahar port which is expected to see its cargo volume increase fivefold to 12.5 million tons per year. India is also backing the Kaladan Multimodal Transit Transport Project that will connect Afghanistan through their neighbouring country Myanmar. Furthermore, India is working towards developing the 7,200km multimodal North-South Transport Corridor (NSTC) that will link India with Iran, Russia, the Caucasus and Central Asia.

India’s bilateral trade with Central Asian states is a small percentage of its trade with the world, but it is investing not only to improve connectivity for trade but also to gain better access to natural resources of energy that the mineral rich region possesses. Projects such as NSTC will allow it to completely bypass Pakistan to tap new markets for trade, energy and investment.

On the other hand, Pakistan’s rhetoric seems to concentrate on stability with Afghanistan for CAR access, which though important, is by no means the only way of accessing those markets. China’s Belt and Road Initiative would in the long term enable it to be better connected for access but so far little of the project has been completed outside of China.

In the short term, trade with CARs would rise if Chinese use Gwadar port to trade with Central Asia states and Pakistan uses road links with China to access CARs markets. Iranian free trade zone of Chabahar can be used to reach Central Asia as well. Playing a pro-active role in regional forums like Shanghai Cooperation Organization and the Central Asia Regional Economic Cooperation could also help expand trade volume with Central Asian states.