Pak-India trade: more clarity sought

The month of February brings promise of a new era of trade relations between Pakistan and India. Relations between the two countries have already thawed considerably in recent weeks, after being on the rocks since the gruesome 7/11 Mumbai attacks. Delegations of journalists, athletes, traders, prospective investors and regulators have been scurrying across Wagah border, of late. Infrastructure on both sides of that border crossing is being revamped and its capacity is expected to be increased over the next two months. By the time Valentines Day arrives, trade ministers from both countries are expected to have inked a comprehensive agreement to liberalise bilateral trade. During his visit, Indian trade minister Anand Sharma is expected to announce easing of visa restrictions for business travellers. The two sides will also complete formalities for setting up joint-border liaison committees and steps for expediting cargo clearance. But, while both governments are busy ratcheting up the infrastructure and policy framework their most formidable task entails restoring the trust of the private sectors on both sides of the border. At a recent meeting with representatives of Indian regulators, local businessmen recalled snags in exports of cement and onions to India, which they assert was caused by deliberately slow response from Indian authorities. The fiasco over cotton imports from India is also a fresh wound for local textile players who were left stranded by Indian sellers last year as cotton prices went through the roof. Indian officials have categorically maintained that "there are no Pakistan-specific non-tariff barriers". Businessmen appear unmoved by this response at least for now. "If the end effect of any regulation is that Pakistani businesses do not receive the necessary approvals in time and lose their clients in India as a consequence, then it doesn really matter whether the NTB was specific to us or not" exclaimed the owner of a leading textile firm. While some of the concerns voiced by local businesses are genuine; many others emanate from a lack of adequate knowledge of Indian trade laws and regulations: and there are many. Unlike Pakistan, tax rates on trade of goods and services vary significantly between Indian states. These differentials will undoubtedly affect local exporters as their buyers would be mindful of the final cost borne by them, inclusive of all taxes and duties. Clarity is also wanting on quality standards and other legal formalities. In order to comprehensively address such issues, it is imperative that representatives of the private sector must be included in all joint committees and task forces. The fact that at least one hundred private-sector representatives from India are expected to accompany Sharma to Pakistan is a good omen. Hopefully, businessmen and independent experts from both sides will also be included in subsequent encounters and initiatives to identify and rectify all constraints to bilateral trade between the neighbouring countries.