In South Asia, economics often runs a distant second behind politics. But the tortoise is starting to catch up as news breaks that Pakistan has taken a crack at bolstering trade by conferring MFN status upon India.
The announcement by the commerce secretary signals pragmatism on the part of usually belligerent politicians by putting aside squabbles and taking the first tentative steps in recognising the importance of regional trade in the context of economic growth. As the Asian Tigers have highlighted, economic activity is predicated upon building regional commercial links. But the MFN can only go so far. India first granted MFN status to Pakistan 16 years ago, there is precious little to show for it. Non-trade barriers (NTB) still remain very much in force. Although both sides have voiced resolve to change the status quo, let us hope this is not cant for the cameras. Certainly, India’s visa policy leaves a lot to be desired with 90 percent of business visas rejected and 27 NTBs obstructing Pakistani goods being pinpointed by the government.
Both states need to consider the implications of trade. Currently trade with India is managed; a liberal trade regime poses both challenges and benefits. A precedent must be set for fair, not only free, trade. A sharp trade imbalance may only exacerbate tensions and add an economic dimension to an already complex conflict. On the other hand, India is such a potentially lucrative market for Pakistani businessmen, it seems only sensible to build business ties. The Indians probably feel the same way.
Furthermore, it is heartening that the slow thaw in relations with India since Mumbai has not been marred by the hate-laced diatribes politicians on both sides of the border are wont to launch into. But the frayed nature of relations remains a serious hurdle in any genuine development of vibrant commercial ties. Ultimately the real issue is one of trust and whether the two sides can tackle the Gordian knot that is Kashmir and other only slightly less vexing problems.
