In the latest development of the ‘composite dialogue’ between regional arch enemies Pakistan and India, both countries have shown willingness to positively address issues pertaining to trade, commerce and industry.
Amin Fahim meets Manmohan Singh
New Delhi wants to see a stable and prosperous Pakistan, said Indian Prime Minister Manmohan Singh during his meeting with the Federal Commerce Minister Makhdoom Amin Fahim. It is pertinent to mention that India, in a welcome move, announced the decision to remove its objection over unilateral concessional trade package for Pakistani goods in EU markets in the WTO, without linking it with Pakistan granting it MFN status. These efforts have come to fruition as a result of continuous efforts of the incumbent government and its respective departments, most importantly the ministry of foreign affairs. The dawn of democracy in 2008 provided impetus for improved relations between Pakistan and the EU, and it was agreed to hold EU-Pakistan summit level engagement. President Asif Ali Zardari visited Brussels for the first summit in 2009. In recognition of Pakistan’s sacrifices against extremism and Al-Qaeda, taking into account the economic losses suffered due to terrorism and devastating floods last year, the EU leadership decided to give Pakistan-specific tariff concessions in the form of autonomous trade preferences under which 75 Pakistani products would benefit from duty free access to European markets. These trade concessions however required a WTO waiver. The EU applied for the WTO waiver in January. The waiver request enjoyed the support of 150 of 152 members of WTO. India out rightly opposed it and Bangladesh expressed certain reservations, demanding compensation. However, after diplomatic engagements between the two countries, India has decided to remove its objection over the Pak-EU trade deal.
Doubling bilateral trade
Commerce Minister Makhdoom Amin Fahim was on a visit to India at the invitation of his Indian counterpart Shri Anand Sharma. After more than three and a half decades, this is the first visit by a Pakistan commerce minister to India. Accompanying him was a high level official delegation including the commerce secretary and 50 business delegates from Pakistan. The composition of this delegation underscores the importance that both sides attach to such visits and the mutual desire for better bilateral trade and commercial relations. The joint press statement issued after the meetings said the ministers agreed to jointly work to more than double bilateral trade within three years, from current levels of $2.7 billion per annum to about $6 billion. This goal shall also be facilitated through the memorandum of understanding (MoU) signed between the India Trade Promotion Organisation and the Trade Development Authority of Pakistan. The MoU shall foster better trade promotional activities, for the benefit of business communities of both countries. In his meeting with the Pakistani commerce minister, Manmohan Singh stressed both Pakistan and India to work together for economic prosperity of the poor masses and in facing future financial challenges. He assured the Pakistani commerce minister of his government’s full cooperation in boosting trade links between the two neighbouring countries.
Recent gains
During the visit, Pakistan’s trade diplomacy succeeded in softening India’s stance, getting it to de-link the MFN demand from Pakistan’s EU waiver. It is pertinent to mention that presently India accounts for a total of over one per cent of Pakistan’s total trade, while Pakistan accounts for a negligible 0.5 per cent of India’s trade. According to a study employing the Peterson Institute for International Economics (PIIE) gravity model, total trade between the neighbouring countries could increase to a phenomenal $42 billion if certain roadblocks were sincerely addressed. Shortly before the trade delegation, Pakistan’s Foreign Minister Hina Rabbani Khar was highly successful in achieving desired results, and with the current composite dialogue in place, one can certainly hope for better trade ties between the two countries. While other countries have also raised objections over the proposed trade package by the EU, sources claimed that these differences are expected to be chalked out before the next meeting of the World Trade Organisation’s (WTO).