Pakistan and India are close neighbours as well as two important members of the South Asian Association for Regional Co-operation (Saarc). There are immense potential of co-operation in the sectors of trade, industry, research, technical co-operation, joint ventures, education and healthcare but have neither been fully availed nor explored.
Instead of getting the benefit of geographical proximity, time was wasted on efforts for airing differences. It did not help in co-sharing prosperity rather precious resources were wasted on wars. Pakistan was disintegrated into two parts in 1972.
Saarc Chamber of Commerce and Industry from its inception, realised that the differences created on political basis were damaging the potential of regional co-operation. Saarc Chamber accepted the challenge and after hectic efforts of bridging the differences of private sector on both sides succeeded in persuading the respective governments to sit on the table and discuss how economic co-operation can be given a practical shape. Subsequently meetings among the commerce sectaries of both the countries were held where a framework was agreed to normalise trade relations and sort out procedural bottlenecks.
A brief of the framework finalised at the 5th round of India-Pakistan talks on commercial and economic co-operation held on 27th-28th April 2011, in Islamabad is given below for information:
1. Both sides agreed that increase in trade and economic engagement would help not only in the mutual quest for national development but also contribute to building trust between the two countries.
2. To build confidence, dispel misunderstandings and allay any misapprehensions, it is essential that governments in both countries support the business communities in promotion of bilateral trade.
3. To promote trade, both tariff and non-tariff barriers (NTBs) need to be reduced/removed.
4. Both sides agreed to expand trade through Wagah-Attari by inter-alia (a) increasing trading hours taking advantage of the new infrastructure (b) expeditious clearance of cargo and (c) facilitating movement of large vehicles and containerised traffic.
It was noted that an informal and effective Customs Liaison arrangement is already operating at Wagah-Attari.
5. It was decided to undertake a new initiative to enable trade of electricity between both countries.
6. Both sides also agreed to work out how to initiate and substantially expand trade in all types of petroleum products.
7. A new initiative to promote bilateral trade in Bt cottonseeds was identified.
8. Co-operation in the Information Technology (IT) Sector would be encouraged through the private sector route.
9. Pakistan recognised that grant of MFN status to India would help in expanding bilateral trade relations. Both sides agreed to remove the NTBs and all other restrictive practices that hamper bilateral trade.
10. Both sides agreed that facilitating grant of business visas was essential to expansion of trade.
11. While appreciating the need for business-to-business contact, both sides desired to create an enabling environment and encourage the Chamber of Commerce and Industry on both sides to form officially recognised joint chambers at the apex and regional levels.
12. On the opening of bank branches in each other's countries, both sides agreed that banking channels are important and the process needs to be fast tracked.
Similarly a number of conferences were held in various Saarc member countries to come out with the viewpoint of the stakeholders. After 15 years efforts, the ice melted and Pakistan agreed to grant MFN status to India. It may be noted that while signing Safta on 6th June 2004, Pakistan agreed granting MFN status to liberalise trade, being a requirement of the WTO framework of softening trade policies.
The fears being raised by certain circles in the country on the MFN status to India is not based on facts. Prior to granting this status, Government of Pakistan invited suggestions from the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the regional chambers and other trade bodies acknowledging trade and industry as major stakeholders. Later on, various trade sectors like textile and automobile industry, leather manufacturers, garment manufacturers, pharmaceutical manufacturers, etc will be involved while selecting items for concessionary tariff and the negative list to save domestic industry from any damage.
It may be noted that the Commerce Secretary of Pakistan has categorically assured in a press statement that the process of compiling new list will be completed with the consensus of all sectors. For the time being the Government has decided to continue trading on the basis of the existing positive list. He was of the view that granting the MFN status to India would not harm domestic industries or sectors as there will be enough room to protect domestic industry through imposing high tariff and other duties as are permissible under the WTO legal framework.
He further said that as the ministry is in direct contact with various chambers and trade bodies, every step would be taken in the best interests of the country and its industry. The ministry would definitely protect the country's own industry. Another benefit would be that New Delhi would not oppose the European Union unilateral trade concession package to Pakistan in the forthcoming meeting of World Trade Organisation (WTO).
Regionalization of economic interest has become necessary in the present turmoil to protect the domestic industry. Financial crunch in advanced countries and their debts have weakened their economic growth, which has become a headache for the whole world.
Regional co-operation among the Saarc countries is a most welcome step. It has a number of advantages. Short distances ensure savings on transportation and shipping cost besides reducing shipping period. Other advantage being that the importers could visit any country of origin in the region at short notice for pre-shipment inspection to ensure quality of goods being imported. These benefits at the end of the year accumulate in savings of millions of dollars, besides reducing the cost of production.
In industry, India has succeeded in acquiring franchise from a number of world-renowned industries. Thus machinery, semi-finished goods and raw materials could be imported from India at the most competitive prices resulting in savings on account of cost and low inventory level to be maintained by the industry. Pakistan could reciprocate if our youth accentuates export-oriented efforts instead of confining themselves within the country.
India has worked hard in the agricultural sector. Its advancements are in the development of hybrid seeds, improvement in yield per hectare, control of diseases, water management etc. Pakistan could benefit from these achievements. Moreover, in case of shortage of any agriculture products, India helps through immediate exports. Example of tomato, onion and ginger, etc, could be quoted. Because of these imports, the prices of vegetables in Pakistan remain low and within the reach of common man.
Pakistan has a strong network of 50 chambers and 128 associations with the FPCCI as their apex body. During the discussion at the meetings of these trade bodies, various aspects of co-operation with India have been looked into. Their pros and cons have been examined and analysed. Thus fears being expressed by various quarters are not much related with trade and industry but otherwise - the private sector is the major stakeholder and it knows how to protect its interests. Moreover, the Saarc Chamber of Commerce so pleads the case that every Saarc member country is in a win-win position. This policy nurtures co-operation without any complaint on the other side.
Efforts are also being made to sort out non-tariff barriers. It is hoped that when trade starts the NTB will be identified and removed. The Parliamentarians and political leaders are requested to work on improving infrastructure so that economic co-operation could produce results through improving production and employment. If the shortage of gas, electricity and water persists - no investor will come to Pakistan. Our friends are ready to help us provided there are transparent policies. If Pakistan wants to become a respectable member of the world community then we will have to march forward with hope and confidence.
(The writer is Vice President of Saarc Chamber and an expert on economic issues.)