Skirmishes between India and Pakistan have been escalated to
international borders from the Line of Control (LoC). Rising tension between
the two neighbors is a major threat to peace in South Asia.
Cease fire agreement in 2003 had calmed the disputed border territory and gave
way to Track-I dialogue between these countries. Over the years governments on
both sides had tried to open trade corridors for each other, building
confidence of the investors and worked on the Non-Tariff Barriers (NTBs)
especially on visa issues.
The dream of regional integration
in South Asia is highly dependent on political and economic relations between India and Pakistan. Only trade and investment
could bring prosperity in the entire region. Everyday disputes between two
regional powers could deprive the over one fifth of the world's population from
their right of development.
Notwithstanding, trading
relations between these countries have significantly improved over the years. India is the biggest trading partner of Pakistan in the South Asian region, it is,
therefore, evident that increase in volume of trade will benefit Pakistan.
According to the Federal Bureau of Statistics, data, Pakistan’s
total exports to India
form July, 2012 to November, 2012 was Rs12,360.59million which is 1.31 percent
of the total exports of the country. Imports in the same period from India
amounts to Rs56,016.56million which is 3.23 percent of the total Imports.
Moreover, India has awarded Pakistan with the status of Most
Favored Nation (MFN) in 1996. Pakistan
was supposed to grant MFN status to India last year but the
bureaucratic procedures and pressures from various quarters lingered on the
process. For many of us MFN would certainly means like granting India the more
favored importing country, for clarity: "This only implies that Pakistan will
give the same treatment to Imports from India as it does to imports from any
other WTO member states with which Pakistan doesn’t have Free Trade Agreement
(FTA) or Preferential Agreement (PTA). (Source: Ministry of Commerce, Pakistan)."
According to a recent study conducted by
Sustainable Development Policy Institute (SDPI), informal trade between India and Pakistan is around US $4.2 billion,
which is way above the formal trade. A study by Dr. Hafiz Pasha for Ministry of
Commerce, Pakistan shows
that if Pakistan grants MFN
status to India
and mutual relaxation in NTBs, then the volume of formal trade can rise from US
$2.7 billion to US $7.1 billion. Same study also took into account
macro-economic impacts of trade liberalization with India; here is brief
summary of those: Gross Domestic Product (GDP) of Pakistan could be 1.5 %
higher, net increase in employment in the medium term is about 169,000,
consumer welfare gain estimated to be Rs 70 billion and likely improvement in
the global trade balance for Pakistan. Other important point that is worth
mentioning here is the rising interest of entrepreneurs from both sides of the
border for the investment opportunities. The recent trade liberalization
efforts paved the way for consolidated foreign direct investment (FDI) policy
and many other areas of economic corporation.
Pakistan really needs to think out
of box, where this conflict will lead us to. Hostile environment between both
nations have some serious repercussions for the people living on both sides of
LoC and border. All the efforts made so far for Track-I and Track-II dialogue
are put aside when a single bullet is fired on LoC. There is very important
role that comes in here which rests with civil society, media and business
community on both sides of the border. Media can act as a catalyst for
exaggerating this conflict or they can exert pressure on both the governments
to normalize relationships in favor of the citizens of these countries.
Business community on both sides of the border have huge stake in normalizing
relationships with India, so sitting quietly won’t help them now, same is the
case with all the big chambers of the countries.
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