Pak-Indian trade: back to the future

Whether it is due to the heightened political uncertainty that seemingly lurks over Pakistan endlessly or the politically charged mindsets of the nation, unfortunately, economic issues usually play second fiddle to politicking. In the case of improving economic relations with India, the government had been braving pressure, particularly from right wing political parties. Despite boisterous opposition and street agitation by opponents of better relations between the two neighbours, the current regime managed to re-initiate dialogue with Indian counterparts. Pakistan has already expanded the list of items tradable with India; the capacity of customs and border control authorities has been enhanced to facilitate faster clearance of goods and a new visa regime is under deliberations with a view of facilitating businessmen from both sides of the border. The raging success of the Lifestyle Pakistan expo in New Delhi arranged under the auspices of TDAP proves that enthusiasm about Pakistani goods is just as high across the border. However, recent media reports suggest that the government that had hitherto hastened to liberalise trade with India may now be caving in to the pressure from opponents to improved relations between Pakistan and India. A recent BR news report quoting Commerce Ministry sources revealed: "The pace of the process was slowed, pressing India to take up other issues, including territorial, river water and Kashmir dispute". While the resolution of these outstanding issues is no doubt necessary for enduring peace and mutual trust between the two countries, progress on these fronts must not hold better economic ties hostage. Neither should the opinions of a few be allowed to jeopardise the interests of the majority. A presentation regarding the development of Pakistan as a regional economic hub presented to the PMs Economic Advisory Council on May 25, 2012, notes that "while there are many gainers from Pakistan-India trade liberalisation, they remain largely voiceless while the potential losers are a few but well organised and loud". In a paper entitled Prospects and Challenges for Increasing India-Pakistan Trade, former SBP Governor Ishrat Husain has noted that "trade liberalisation will unambiguously benefit Pakistani consumers", and the "strengthening of bilateral/regional trade would also cushion the economies of both countries from global financial or stock market shocks". Other studies show that an overwhelming proportion of the potential consumer surplus for Pakistani consumers from trade liberalisation within SAFTA would come from easing trade restrictions with India. Prior to the independence of Pakistan and India, the Indian subcontinent had remained an integrated economic unit whose prosperity attracted merchants from world over as well as the colonial powers that sought to capitalise on the regions prosperity. When the two countries became signatories of GATT, article 24, clause 11 was introduced to ensure that prospects of bilateral trade and cooperation between India and Pakistan would not suffer as a consequence, "taking into account the exceptional circumstances arising out of the establishment of India and Pakistan as independent states and recognising the fact that they have long constituted an economic unit". But, more recent chapters in the history of the two states contain tales of mistrust and conflict. The current government, which was already into its last year, now stands at a crossroads that has been frequented by regimes past. Decisive and quick actions to improve economic ties with India can set the stage for regional prosperity in the future. Inaction will lead to maintenance of the status quo, contrary to the well being of citizens on both sides of the border.