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TODAY'S COLUMNIST

Once opportunities arise

Pradeep S Mehta

Posted: 2007-10-04 00:00:00+05:30 IST
Updated: Oct 03, 2007 at 2157 hrs IST

that fortified sugar is the health equivalent of iodised salt. The sobering truth is that vitamin A can easily be obtained via other food sources in a balanced diet.

Trade theory amply demonstrates that imports are an effective competition policy tool to reduce the local market dominance of domestic interest groups, a circumstance that delivers suboptimal outcomes which go against the interests of the consumer and economy at large. Domestic trade policy must never be held hostage to vested interests, and a perspective of the larger national welfare must never be lost in devising trade and other policy instruments and practices.

Engaging in mutual trade brings benefits to all. This is not rocket science, and even the common man understands this. Pointers in this direction were offered by a recent opinion poll conducted simultaneously in India and Pakistan by The Indian Express in alliance with Dawn News and CNN-IBN, as also by an NDTV 24x7 debate held in Karachi and telecast on June 18, 2007 (“Indo-Pak: Generation Gap”): people on both sides of the border feel that friendship and cooperation (read trade) are a prerequisite for improving relations between the two neighbours.

There are examples across the globe of trade playing a positive role in conflict resolution between neighbouring countries. Even regional trade agreements (RTAs) that expand trade flows, as some studies indicate, appear to have a substantial dampening impact on conflict. Mansfield & Pevehouse (2000) found that the outbreak likelihood of a militarised inter-state dispute declines by around 50% if both belong to the same regional trade agreement. As an RTA, Safta can provide institutions and a forum for the bargaining and negotiations needed to address tensions before they erupt in conflict. The EU, Asean and Mercosur are often cited as venues for improved political-military relations. In Africa, RTAs that address the management of cross-border resource issues are more effective in reducing military conflict than other RTAs.

There are examples galore of conflicts being contained by trade agreements. China imposed a ban in 2003 on Japanese rice by putting it on a list of agricultural imports deemed at risk of insect infection. But now, an agreement (“rice diplomacy”) has been signed between Japan, the world’s most expensive rice producer, and China, the world’s largest rice consumer, and this has rekindled the relationship. In 1979, Brazil signed an agreement with Argentina and Paraguay, thereby ending their dispute over the use of hydroelectric...

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