- Benefits everybody?
Leave it to the foreign press, as usual, to enlighten Pakistanis about potentially groundbreaking developments. Apparently the American ambassador to Afghanistan has told an Indian newspaper that Islamabad approached Washington earlier in the year to discuss the Afghan Transit Trade (ATT). The news item puts the timing of this outreach to ‘a few months ago’, which is strange considering that would have meant the last government’s last few days in office. Yet there must be some truth to this story since it comes from a very highly placed US State Department official.
Eventually South Asia will have to open itself up to more liberal trade. As the emerging market sell off currently underway shreds economies in this region as well, there is a more compelling case than ever to expand trade ties. Pakistan’s new government has already made it clear enough that it is willing to constructively engage in talks, with all partners, aimed at overcoming political deadlocks and improving mutual commerce. But even as the government irons out political differences, it has its work cut out on the economic front. If Pakistan is moving the pieces to allow ATT, it must urgently do some necessary homework.
The economy, unfortunately, is not in a position to take advantage of any sort of trade stimuli. It has a weak manufacturing base and offers little, if any, value addition to production. That is why we made a hash of every opportunity from the GSP-plus window to currency devaluation. Simply relaxing border controls at this point will only allow the more competitive nations to walk over the national economy. Therefore, the finance minister must finally unveil the magic plan that he’s been talking about for years. So far, all we have is vague hints about possible directions, but nothing nearly concrete. Investors have grown wary and the market is fluctuating in anticipation. The sooner this vacuum makes way for an actionable plan, the better all relevant sectors can begin preparing for what’s to come.