The Gross Domestic Product (GDP) of Pakistan could be at least 1.5 percent higher than the expected growth by 2014-15 if trade with India is fully normalised, trade experts said here Tuesday.
They were speaking at seminar titled, ‘Pakistan-India Trade Normalisation’ organised by the Ministry of Commerce. This was the first of a series of seminars to engage stakeholders in dialogue on the way forward for trade normalization with India.
The normalisation of trade with neighbouring country could create approximately 169,000 jobs besides saving Rs 70 billion annually on purchase of goods.
Addressing the participants, secretary commerce, Qasim Niaz said that regional trade was very important to spur development and growth.
He said that there were several examples of successful regional trade that led to development in European countries, South America and East Asia, so promotion of regional trade in South Asia would bring good fruits also.
He said that efforts were made in past to rationalise trade, however these could not materialize the full trade potential between two major economies of Asia, however added that paradigm shift was made in April 2011 by moving from positive to negative list of trade.
He expressed the hope that experts of the seminar would come up with concrete recommendations for the development of trade between both the countries.
Speaking on the occasion, Pakistan’s former ambassador to the World Trade Organisation (WTO) and renowned economist Dr Manzoor Ahmed identified five essential steps to normalise trade with India.
He said that granting Most Favoured Nation (MFN) status to India or eliminating negative list, opening new land routes, developing infrastructure and border stations, enhancing trade facilitation and building capacity of National Tariff Commissions were the major steps to normalise trade between the two countries.
With the help of trade data of last three years, he explained how the process of normalisation of trade had greatly benefitted the economy of Pakistan.
He said that Pakistan’s exports through Wagah had gone up from almost zero in 2009-10 to Rs 15.9 billion in 2012-13.
Similarly, the revenue collected has increased from just Rs 3 million in 2007-08 to almost Rs 3 billion.
He said that these are exceptional growths that Pakistan has not achieved with any other country adding if it wants to achieve higher growth, the trade normalization with India would be the best route.
During the seminar, the organizers disseminated a set of research conducted by the Institute of Public Policy (IPP) of the Beconhouse National University on the dynamics and impact of liberalization trade between Pakistan and India.
The research was led by renowned economist Dr Hafiz Pasha.
According to the research, conservative estimates indicate that the opening of trade with India will predominantly benefit Pakistan and could increase GDP by at least 1.5 percent in 2014-15 over the growth estimates.
It also indicates that normalised trade with India could create approximately 169,000 jobs over a three-year period and the estimated gain for consumers in terms of lower cost of goods purchased could be at least Rs 70 billion per year.
According to the research, benefits would accrue as Pakistan is able to substitute more costly imports from current import destinations with less costly imports from India.
Cheaper imports of intermediary goods used by Pakistan’s local production sectors will not only help in reducing inflationary pressure in the country, but will also help make Pakistani exports more competitive globally and thus contribute to an increase in Pakistan’s exports overall.
Joint secretary Ministry of Commerce, Robina Ather and Former president Rawalpindi Chamber of Commerce (RCCI), Kashif Shabbir, also addressed the gathering and highlighted the importance of liberalising trade with India.
They described Non-Tariff Barriers (NTBs) as impediment in bilateral trade between both the countries and said that there is need to work for alleviating these barriers to take benefit of bilateral trade.
They were of the view that only regional trade can guarantee future development as only those countries of the world made progress which engaged themselves in regional trade.
On the occasion, the participants concluded that both the countries should implement customs agreement to simplify customs procedures and furthermore both the countries should establish bank branches to facilitate traders.
