Our policymaking institutions appear to be split over trade with India. One faction wants to wait for the new government to be elected in India, before the commitments are made by Pakistan to accord non-discriminatory market access (NDMA) regime status to India; while the other segment wants the government to go ahead and meet the commitments/assurances given by Commerce Minister Khurram Dastgir Khan on his last visit to India while the Congress-led government is in power and not wait for the coming general elections in India. Obviously those who resist enhanced trade with our eastern neighbour would use any pretext to delay the grant of NDMA status. The opposition lobby comprises both; businessmen (who fear that opening of trade with India would adversely affect their business) as well as present and past top military generals who would plausibly seek to link it with other disputes between the two nuclear armed neighbours.
It is no secret that indirect trade between India and Pakistan is taking place in big way; and this mode of trade that takes place via a third country just raises the cost of goods with middlemen charging for circuitous routes. Direct trade would eliminate the middlemen and lower the cost of goods imported to the benefit of consumers. In addition, it would be worthwhile to remember that policymaking in India is more or less an institutionalised chore and the civil service there can override politicians anytime. Therefore, a change in government in India after the elections would have a marginal effect on the state of relations between the two countries. So let us stop confusing the nation as well as our neighbours. Once we make a promise we need to adhere to it.
Trade relations need not be held hostage to the machinations of civil and military bureaucracy on both sides. The Reserve Bank of India is waiting for the central government's 'NOC' to give permission to Pakistani banks to set up branches. SBP is ready to give permission to three Indian banks - but waiting for reciprocity. This bureaucratic rigmarole is a prime example of how decisions and plans run into snags. India needs to open up its trade with its immediate neighbours - as enunciated in the Gujral doctrine. India will always run large trade surplus with its smaller neighbours (in the Saarc) as its industry enjoys economies of scale. Pakistan retains the option under the World Trade Order (WTO) to put countervailing duties as well as anti-dumping protective duties if any sector or industries are being adversely affected. In any trade opening there are bound to be some winners as well as losers. However, consumers are always among the winners as they get goods at lower prices. If Pakistani industry can survive after a free trade agreement between China and Pakistan - so can it with opening of trade with the Indians. The only sine qua non is drastic liberalisation of the visa regime as well as creation of more trading posts for quicker and shorter access to the markets on both sides of the border. A stable and economically stronger Pakistan will be a guarantee of good neighbourly relations as well as betterment of people on both sides. Tensions arising from unsavoury actions of non-state actors as well as intelligence agencies need not hold hostage the composite dialogue to resolve all issues in a peaceful manner. That non-state actors with their official handlers, on both sides, choose actions that make a big impact to attract media attention and reinforce forces who do not still countenance the partition of subcontinent. They derive a new strength from every stalemate that the two countries hit. Let us learn to ignore them. And instead, concentrate on working for peace and development to improve the quality of life of our people.
Giving NDMA status needs to be de-linked with any 'transit' facility. India needs to ensure easier access to Pakistani exports to its market and at the same time, Pakistan needs to allow and encourage Indian investment. Increased mutual dependence will force Islamabad and New Delhi to improve their bilateral ties in an effective and meaningful manner. Last but not least, both China and India must not lose sight of the region's big picture that says eloquently and loudly: free trade is not based on utility but on justice.
Wednesday, March 26, 2014
Pakistan: No nation was ever ruined by trade?
Our policymaking institutions appear to be split over trade with India. One faction wants to wait for the new government to be elected in India, before the commitments are made by Pakistan to accord non-discriminatory market access (NDMA) regime status to India; while the other segment wants the government to go ahead and meet the commitments/assurances given by Commerce Minister Khurram Dastgir Khan on his last visit to India while the Congress-led government is in power and not wait for the coming general elections in India. Obviously those who resist enhanced trade with our eastern neighbour would use any pretext to delay the grant of NDMA status. The opposition lobby comprises both; businessmen (who fear that opening of trade with India would adversely affect their business) as well as present and past top military generals who would plausibly seek to link it with other disputes between the two nuclear armed neighbours.
It is no secret that indirect trade between India and Pakistan is taking place in big way; and this mode of trade that takes place via a third country just raises the cost of goods with middlemen charging for circuitous routes. Direct trade would eliminate the middlemen and lower the cost of goods imported to the benefit of consumers. In addition, it would be worthwhile to remember that policymaking in India is more or less an institutionalised chore and the civil service there can override politicians anytime. Therefore, a change in government in India after the elections would have a marginal effect on the state of relations between the two countries. So let us stop confusing the nation as well as our neighbours. Once we make a promise we need to adhere to it.
Trade relations need not be held hostage to the machinations of civil and military bureaucracy on both sides. The Reserve Bank of India is waiting for the central government's 'NOC' to give permission to Pakistani banks to set up branches. SBP is ready to give permission to three Indian banks - but waiting for reciprocity. This bureaucratic rigmarole is a prime example of how decisions and plans run into snags. India needs to open up its trade with its immediate neighbours - as enunciated in the Gujral doctrine. India will always run large trade surplus with its smaller neighbours (in the Saarc) as its industry enjoys economies of scale. Pakistan retains the option under the World Trade Order (WTO) to put countervailing duties as well as anti-dumping protective duties if any sector or industries are being adversely affected. In any trade opening there are bound to be some winners as well as losers. However, consumers are always among the winners as they get goods at lower prices. If Pakistani industry can survive after a free trade agreement between China and Pakistan - so can it with opening of trade with the Indians. The only sine qua non is drastic liberalisation of the visa regime as well as creation of more trading posts for quicker and shorter access to the markets on both sides of the border. A stable and economically stronger Pakistan will be a guarantee of good neighbourly relations as well as betterment of people on both sides. Tensions arising from unsavoury actions of non-state actors as well as intelligence agencies need not hold hostage the composite dialogue to resolve all issues in a peaceful manner. That non-state actors with their official handlers, on both sides, choose actions that make a big impact to attract media attention and reinforce forces who do not still countenance the partition of subcontinent. They derive a new strength from every stalemate that the two countries hit. Let us learn to ignore them. And instead, concentrate on working for peace and development to improve the quality of life of our people.
Giving NDMA status needs to be de-linked with any 'transit' facility. India needs to ensure easier access to Pakistani exports to its market and at the same time, Pakistan needs to allow and encourage Indian investment. Increased mutual dependence will force Islamabad and New Delhi to improve their bilateral ties in an effective and meaningful manner. Last but not least, both China and India must not lose sight of the region's big picture that says eloquently and loudly: free trade is not based on utility but on justice.
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