The free market prevails (or arm-twists its way into) another day. The Prime Minister has finally allowed the export of onions to India after a ban that threatened to upset far more than the profits of vegetable growers in Pakistan. On the face of it, the ban could be interpreted as either a trade war or a necessary attempt at protectionism or needless bickering between countries that have a far from ideal past. But in essence, it captured that perennial debate on the free market versus the duty of the state, all in the context of larger international interests.
Apparently, Pakistan was prompted to ban the export of onions because we were not getting what the commerce mandarins thought was an adequate amount of cotton from the Indians for the textile industry, which happens to be the mainstay of our industrial sector. Now the Indians like their onions and the prices of this staple feed into the political situation in an unforgivably direct manner. This issue has actually felled governments at various tiers in the past. So the Indians responded by banning export of vegetables. They were also contemplating banning import of Pakistani cement. Rational national self-interest prevailed. The ban is over. Not exporting onions yields as many tears, apparently, as peeling them.
The problem, however, is that things are not that simple. The Pakistani market itself was facing a spike in the prices of onions. Was the government really out of line by doing what states do? Yes and no. The former, because we have to watch out for our own even if it means deviating from the mantra of the free market occasionally. The latter, because we cant enjoy cheap Indian inputs for our industries and then protect our own when prices here get high for comfort in another sector. Unless we grossly mismanage our agricultural goods market, like we manage to do with wheat every other year, the whole Indo-Pak trade thing isnt too complicated to be solved. With its advantages, come its disadvantages. True, in cases such as agriculture, the urban poor and middle classes are hardest hit, but the rural farmers and entrepreneurs usually benefit a lot. Trade between the two countries is going to be beneficial for both the countries in the longer run. Itll just need some getting used to.
