Pakistan-India economic cooperation

In a joint statement at the end of the sixth round of talks on commercial and economic cooperation between the Pakistan and Indian commerce secretaries, the two countries agreed to enhance bilateral trade. Several such statements were made in the past subsequent to talks on commercial and economic cooperation. However this time around, there is more optimism with respect to achieving the objective. The reason for this is twofold. First and foremost, Pakistan has granted the Most Favoured Nation (MFN) status to India though there is some concern amongst Pakistani stakeholders that India's legendary Non-Tariff Barriers (NTBs), of much annoyance to its trading partners throughout the world including Western countries, must be vigorously negotiated, especially given that India imposes additional Pakistan-specific NTBs. It is not yet clear whether the government would pursue the matter of NTBs with India. However, recent statements attributed to our officialdom do indicate that the government is fully cognizant of this issue that, it must be acknowledged, would continue to simmer until and unless dealt with. Secondly and equally importantly, Afghanistan and India have been able to put pressure on Pakistan, through the United States, to allow them to trade in goods by road. The veracity of this statement is evident from photographs, which show a smiling Secretary of State Hillary Clinton looking on as Pakistan and Afghanistan signed the treaty over a year ago. True, that a side letter promised under the Afghan Transit Trade Agreement remains pending to date, yet the fact remains that in principle at least, the government has agreed to allow India and Afghanistan to use Pakistan as a transit country. The Indian government had linked the extension of MFN status to the withdrawal of its objection to a time-barred (two years) European Union offer of trade concessions to specific exports including textiles as assistance to Pakistan's 2010 flood victims. India had objected as this would have made our textiles cheaper, which would have negatively impacted on India's total exports to the EU. However, the withdrawal of India's objections led to Bangladesh voicing its own objections as the EU proposal went to the World Trade Organisation forum, as required. It has been reported that the EU has indicated a readiness to incorporate tariff quotas on six items which Bangladesh has indicated would lead to the withdrawal of its objections. However, the Pakistan government must keep in mind that Brazil and Peru voiced their objections to the EU proposal as well and may now decide to launch their own opposition at the WTO. The Business Recorder is fully supportive of taking any measures that would enhance trade as it is invariably accompanied by enhanced economic activity. However the government of Pakistan needs to undertake some further appropriate measures to ensure that trade accords are based on reciprocity thereby ensuring that benefits to its own economy remains its overwhelming priority. The government of Pakistan must proactively negotiate with India to eliminate the Pakistan-specific NTBs to be followed by reducing all other NTBs that are not imposed by Pakistan according to our relatively much more liberal import policy. The government must also negotiate (through either a bilateral treaty with India or within the Saarc context) allowing Pakistan to use the road route for trade with other Saarc member countries with contiguous borders with India. It is unlikely that this trade would be as high as India-Afghanistan trade is expected to be given the much longer route in transit but it would spread the perception in this country that the road route has been allowed on the reciprocal basis. Trading within the region is highly advantageous as it cuts transportation costs and allows for much quicker delivery in case of an emergency. Opening trade with India must be supported by all stakeholders, as it would benefit the two countries and with tariff barriers considerably reduced, the high-level of smuggling across our borders would simply end as it would no longer be profitable. Copyright Business Recorder, 2011