Politics Of Trade

Updated: Jul 26 2002, 05:30am hrs
Given the state of India-Pakistan relations, it may come as no surprise to many that the new Pakistan Trade Policy for 2002-2003 makes no reference whatsoever to India. Neither does India figure in a discussion of Pakistan’s overall trade priorities nor in the elaboration of its views on regional and bilateral free trade agreements. This is particularly striking given the fact that Islamabad is getting ready to sign FTAs with Bangladesh, Sri Lanka, Kenya and Morocco. When questioned about this “lapse”, the Pakistani Minister for Commerce and Industries, Abdul Razak Dawood, justified the decision saying that when two countries are in an “eyeball-to-eyeball” confrontation, there was no question of signing trade agreements! Obviously, Pakistan does not see any discrepancy in the fact that while it refuses to even consider increasing the list of importable items on its trade list with India beyond the existing 650 items, the country enjoys a Most Favoured Nation status with India. Never mind that the business communities in both countries have been begging Islamabad to liberalise its trade policy for years now, or that Indian goods such as computer software, textile machinery and pharmaceutical items are in great demand in Pakistan. In fact, the Generals seem pretty sanguine about the fact that those items which are not accommodated on the import list nevertheless make their way into the country via unorthodox channels, or that Pakistan has to pay an extra 25 per cent for these items, as they are re-routed through third countries! Mr Dawood is upbeat that the Pakistan export figure will cross the $10 billion mark, thanks to increased exports to the US, Europe and the impending FTAs. As for India, he is quite clear that unless New Delhi resolves the Kashmir issue, it will not be included in the FTA list.

While Islamabad’s willingness to sign FTAs with other South Asian countries should be wholeheartedly welcomed by India, it is important for us to reiterate the point that economic relations should not be held hostage to political differences. India and China have serious political differences and continue to differ on the border issue. Yet, trade between India and China is flourishing. After all, even Islamabad has advocated every now and then the commercial route to better political relations. Indeed, it was Pakistan that scoffed at India’s security concerns regarding the gas pipeline from Iran to India transiting through ‘hostile’ territory. Be that as it may, Pakistan’s decision to pursue bilateral FTAs with neighbours should be regarded by India as a step forward in the direction of a South Asian regional FTA, given that India too has an FTA with Sri Lanka and Nepal and is negotiating one with Bangladesh. It is through such discrete steps that the South Asian regional FTA may one day become a reality. For our part, we must pursue membership of even larger free trade groups in Asia and the Indian Ocean region.