Media Coverage

Regional cooperation among South Asian neighbors in general and regional trade among SAARC countries in particular was always marred by lack of trust. It is often said that historic animosities between Pakistan and India have held hostage SAARC’s agenda and without a miraculous improvement in their bilateral relations implementation of South Asia Free Trade Agreement (SAFTA) would remain a dream.
Finally there is a ray of hope. Despite all political and judicial turmoil that the Gilani government is facing, it kept on working on trade normalisation with neighbouring countries, especially with India.
The Pakistani cabinet deferred switching to negative list approach for trade with India from the current restrictive positive list approach. However, there seems to be a silent endorsement of GHQ for trade normalisation with India.
The good omen is that so far military leadership did not make any negative comments on the proposal of granting MFN status to India. Perhaps the establishment has realised that stability at the Eastern border would help it to concentrate on the state of affairs along the Western borders. Peaceful relations with India would also help to divert resources to combat internal security threats.
The Americans, too, must be supportive of the latest developments on normalisation of working relationship between Pakistan and India. And it seems that they are. If all goes well, the result would be reduced conflict between the two atomic neighbours, cooling down of a hotspot, which in turn would have a positive impact on US security interests in the region.
From the Indian government’s perspective, the whole issue of getting an MFN status from Pakistan (which in WTO language means nothing more than a trading partner who is getting the same treatment as other WTO members) would be much more than a moral victory for Manmohan Singh government over his rivals.
India is an emerging economic power and would not like its disturbed relations with Pakistan to be a bottleneck for its closer economic ties with Chin or the US. It is logical for any serious candidate for a permanent seat in the UN Security Council ought to resolve its issues with the neighbours on a priority basis.
A majority of the business houses and chambers of commerce in both the countries have backed liberal trading regime between the two countries. Prominent leaders of the FPCCI have conveyed the government of Pakistan that the issue of pruning the “negative list” should not be allowed to cast a shadow over the current positive developments.
Consumers’ support for trade normalisation can be gauged from their interest and participation in Expo India in Lahore, or Expo Pakistan in Delhi. They have been paying extra cost for the items of their choice traded through a third country.
While India used to demand a reciprocal MFN status from Pakistan, the latter was concerned about the non-tariff trade barriers in India. A positive outcome of the current round of talks between the commerce ministers is the signing of MOUs to remove three major irritants or non-tariff barriers to normalise the bilateral trade.
The three MoUs are Cooperation and Mutual Assistance in Customs Matters Agreement, Bilateral Cooperation Agreement on Mutual Recognition between Pakistan Standard and Quality Control Authority, and Bureau of Indian Standards, and Agreement on Redressal of Trade Grievances between Pakistan and India. The two sides have also agreed to open the branches of their central banks in each other’s country. Likewise, there are hopes for a liberal business visa regime too.
Implementation on these MOUs would help in bilateral trade dispute settlement and would reduce the cost and bureaucratic delays over quality testing and custom matters. The presence of Indian banks operating in Pakistan and Pakistani banks working in India would facilitate opening of LCs on both sides.
The most positive aspect of recent trade talks for energy starved industries of Pakistan is the possibility to import energy from India. Despite all the recent positive developments one needs to be mindful that it is a humble beginning.
Things will not yield positive results unless both the sides are genuinely interested in promoting people-to-people connectivity both through ease of visas and through a non-restrictive mode and port of entries.
Let me reiterate at the cost of repetition that amidst global financial crisis, Euro-zone turmoil and increased fuel prices one needs to explore alternative markets. We have a huge potential to increase regional trade not only with India but also with other neighbours, such as Iran and Afghanistan.
For decades, various internal and external actors did not let us work together. It is one of the rare moments when external powers, especially the US, looks for stability in the region and would support regional cooperation.
The writer heads Sustainable Development Policy Institute. He can be contacted at suleri@sdpi.org