India and Pakistan agreed to improve trade ties after wide-ranging breakthrough talks last week, but mutual agreements are anticipatory so far.
The meeting between commerce secretaries on April 27 and 28 was the first since the Mumbai terror attacks in 2008, for which India blames Pakistan. The change, though aspirational, is being seen as a sign that the ice is melting. The two sides even agreed to look into trading petroleum products and electricity. This coincides with a statement that Pakistan, India, Turkmenistan and Afghanistan are likely to sign a $7.6 billion gas pipeline deal by July 31.
Islamabad is unhappy with India’s red tapes on imports from Pakistan. New Delhi in turn has linked a preferential trade agreement to Pakistan’s promise to end non-tariff trade barriers by October 2011. A statement released after the meeting said Pakistan would “take immediate necessary steps to ensure that non-discriminatory trade regime is operationalised at the earliest” and was consulting with its businessmen to replace the present ‘positive list’ of items for which trade is allowed with India, with a ‘negative list’.
Pakistan’s Commerce Secretary Zafar Mahmood acknowledged in a statement that not granting India the Most Favoured Nation (MFN) status was a non-tariff trade barrier. The statement is likely to create controversy because using the term popularly misunderstood term ‘Most Favoured Nation’ for India does not go well with many in Pakistan. All members of World Trade Organisation agree to accord the MFN status to each other.
Eminent Pakistani politicians backed the move on the sidelines of an economic conference days later, but PML(N)’s Khurram Dastgeer advised caution, calling free trade “a double-edged sword”.
The commerce secretary said Pakistani businessmen were being consulted and that they did not oppose the move because it would lead to more economic opportunities for them. The two countries agreed to form a group that would help ease business visas. “In this regard,” the joint statement said, “the possibility of effective involvement of private sector through officially recognised joint chambers would be explored.” Plans also include cooperation in Information Technology and allowing banks to run branches across the border.
The SAARC chamber of commerce and industry hailed the “bold initiative”. Its vice president said in a meeting that other countries in the region “cannot grow unless relations between Pakistan and India are normalised”.
Despite concerns that Pakistani Prime Minister Yousaf Raza Gilani’s lobbying for the regional gas pipeline during his recent Afghanistan visit is part of Islamabad’s new plan to restore its influence in Kabul by developing mutual economic stakes, India agreed to “initiate and substantially expand trade in all types of petroleum products”. The Wall Street Journal had said Gilani asked Afghan President Hamid Karzai in their April 16 meeting to stop relying on US support and develop ties with regional economies including China. But there are no signs of concern in New Delhi, which agreed with Islamabad to set up a committee before June 15 to discuss cross-border pipelines. The group is assigned to meet before September. Another group, to be set up by June and meet by October, will examine the “feasibility, scope and modalities” of trade of electricity.
The two countries also agreed to explore trading BT cotton seeds to “help Pakistan’s farmers and its textile industry by significantly raising cotton yields and ensuring better cotton security”.
That is seen as contradicting India’s role in the WTO where it blocked a European Union move to allow unilateral tariff concessions to Pakistani exports, mostly textiles, planned as an aid to its flood-hit economy. India has said it did not oppose aid to Pakistan but a trade concession would affect other textile industries, such as that of Sri Lanka. Sri Lanka has not endorsed the stance. Pakistan says the EU will defend its own move. The two commerce secretaries said in separate statements that the matter was not discussed during the talks.
This indicates that economic codependency would not guarantee an end to rivalry between India and Pakistan. New Delhi’s anticipated lifting of a ban on export of wheat and ordinary-grade rice will mean the two South Asian economies will very soon compete for Asian and African markets. But promises made during the talks do signal game-changing aspirations of the two governments.
The writer is a media critic and the News Editor, The Friday Times. He can be reached at [email protected]
Looks like the Pak policies regards to commerce is as retarded as their foreign policy. It makes more sense to join India and the world and prosper, that will automatically take care of the inherent terrorism and other issues. when people have better things to do they wont waste their lives in order to plot and kill innocent people.
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