India, Pakistan trade talks to take cooperation to new level

NEW DELHI: Formal Trade Minister-level talks between India and Pakistan will formally begin on Wednesday when the two nations seek to take bilateral trade and strategic economic cooperation to a new level, including working on easing visa restrictions for businessmen from both sides.

Pakistan's Commerce Minister Makhdoom Amin Fahim reached Mumbai Monday on six-day visit to India at the invitation of Commerce & Industry Minister Anand Sharma. He had talks Tuesday with business honchos and political leadership in Mumbai and fly to New Delhi on Wednesday. Both Ministers are likely to hold a number of sessions, including business talks.

These talks are a follow-up to the Secretary-level talks held in Islamabad in April this year. Fahim is accompanied by a large delegation comprising the business community of Pakistan, including representatives of various chambers of commerce in Pakistan. This is the first meeting between the Trade and Commerce Ministers of the two countries after a three-year gap.

Pakistan says it will have talks on granting Most Favoured Nation (MFN) status to India and intends to move over from positive list to negative list on trade with India. Currently, Pakistan has given access to 1,940 product lines on its positive list and has 12,000 on negative list. But half of the items on positive list are not exported by India or it imports these items.

A report in The Hindu newspaper says Pakistan is likely to take up issue of end to non-tariff barriers (NTBs) that prevent many of its goods from entering India. With Pakistan blocking Indian imports by positive list, India has so far maintained that NTBs Pakistan claims are not country-specific.

The two sides are also likely to deliberate and work out a way for easing business visa regime and greater volume flow trade by land routes. The problems plaguing cross-Line of Control (LoC in disputed Kashmir) trade will sought to be eased by more trading days, smoother entry permits, adequate facilities and better phone services and banking.

The trade between two countries might have grown fourfold to $2.7 billion during 2010-11 in seven years, but it is still one fourth of informal trade of over $10 billion between two countries.

A Federation of Indian Chamber of Commerce & Industry FICCI study says, informal trade through third countries or circular trade, as it is called, is mainly conducted via agents operating in free ports like Dubai or Singapore and Central Asian Republic states.

Size of circular trade underlines potentialof flourishing bilateral trade between two countries. Converting this into direct trade would help Pakistan as it would enable it to get Indian goods at cheaper price due to reduced transportation cost.

Pakistan's share in India's total exports increased from 0.45 per cent in 2003-2004 to 0.78 per cent in 2008-09 and imports from Pakistan as percentage of total imports of India, marginally increased from 0.07 per cent in 2003-04 to 0.12 per cent in 2008-09.

While Pakistan exports a host of items to India, it has maintained a positive list of 1938 items vis-à-vis imports from India. India does not impose equivalent formal restrictions on exports to or imports from Pakistan as it had granted MFN status to Pakistan many years back.

Copyright PPI (Pakistan Press International), 2011