LEVEL PLAYING FIELD MUST FOR TRADE
Nov 7 - 20, 2011
There are both opponents and supporters of liberalized trade regime with India . Those supporting the idea of free trade with India are arguing that it would help further improve the national economy while those opposing the idea are of the view that it would spoil the already struggling Pak industry.
Though the theory of free trade is being globally propagated, yet equally the world is witnessing the coming up of a number of trade blocs such as Nafta, EU, Asean, etc.
Beside the getting advantage of geographical proximity, the primary objective of these blocs is to give preferential tariffs to the member states. If the south Asian states manage to promote their trade under SAARC, this would mean that a huge market of around 1.3 billion people, only next to China, could be created.
The member states will have a number of advantages based on specific factors of extreme convenience. Analysts are of the view that India and Pakistan can increase trade volume of up to $10 billion.
By removing barriers, both the countries can reduce the additional costs and increase the trade volume of up to $10 billion and can also reduce our dependence on the other global sources of trade which are relatively costly, they said.
According to them, the trade communities of both sides need to have a closer interaction with each other to explore the opportunities in the field of trade and investment. Pakistan has revised its long positive list of imports other than smaller negative list thereby increasing the opportunities of trade with India.
Business leaders said that SAARC Preferential Trade Agreement (SAPTA) was implemented on Nov 8, 1995. Under this arrangement, India being a big country agreed to allow concessional duties on import of 106 items from other member countries and Pakistan on 35 items.
Another breakthrough was SAARC Free Trade Agreement (Safta) concluded in the year 1998, and was to be implemented this year. However, SAARC has reached an understanding at Kathmandu summit that Safta would be implemented in 2005.
The Lahore Chamber of Commerce & Industry (LCCI) President Irfan Qaiser Sheikh, Senior Vice President Kashif Younis Meher, and Vice President Saeeda Nazar have appreciated the federal cabinet decision to grant MFN status to India.
They asked the government to take pharmaceutical, automobile, motorcycle, petrochemical, auto parts, sugar, textile, cooking oil and ghee industries on board or into confidence before signing MFN treaty document with India.
According to them, the LCCI was in favor of promotion of trade with regional countries especially with the next-door neighbors for the sake of peace, prosperity and economic revival.
But, the MFN must not be at the cost of industry, therefore, it must be taken into confidence before signing MFN treaty with India .
The LCCI office-bearers said that the Pakistani policymakers should take up the issue of non-tariff barriers (NTBs) with their Indian counterparts so that both the sides have a level playing field to do business with each other.
They said "We are in favor of promotion of trade especially with our neighboring countries because we believe that by enhancing the trade ties with our neighbors we can succeed in bringing economic boost and reviving our industry. But, we do not favor any agreement at the cost of industry which is currently making all-out efforts to survive in the presence of acute energy crisis, rising inflation, widespread corruption and deteriorating law and order situation."
The LCCI office-bearers said that there are complex domestic, political and security compulsions on both sides, which are bearing heavily on the existing framework for bilateral trade. They said the business community strongly feels that despite having granted Pakistan MFN status, a great deal of non-tariff and Para-tariff barriers are still in place on exports to India.
They said that both Pakistan and India should harmonize their custom procedures for testing compliance of safety and quarantine standards. In this regard, special quarantine centers and labs for compliance with safety standards should be established at border crossings.
They urged the government to take up with India the various hurdles being faced by Pakistan's business community. They said that lack of infrastructure to comply with food safety standards, acquisition of certificates from labs situated far away from border crossing points are also coming in the way of bilateral trade.
On the other hand, fact of the matter is that the volume of informal trade is still by far larger than formal trade between all the member countries of SAARC, but it is equally encouraging to see that there is a persistent growth in the formal trade as well.
Presently, around three to four billion dollars informal trade is still going on between all the seven member states of SAARC. Out of this Pakistan and India exchange goods to the tune of one billion dollar per annum through traditional sources like cross border smuggling and personal baggage. Besides, a sizeable quantity of capital goods, dyes and chemicals, iron and ore, spices and fruits find their way to Pakistan through third country. Pakistan having annual import bill of around $12bn is importing goods worth around $600 million or around two per cent only from the Saarc member countries.
Critics believe that Pakistan and India could boost bilateral trade by enhancing cooperation between small and medium enterprises (SME) sectors from both sides.
Trade visa policies need to be given much importance and discussions in this regard are going on. Business communities of the two countries want to develop good relations and increase trade between Pakistan and India.
According to federal commerce minister, Makhdoom Amin Fahim, increase in bilateral trade between Pakistan and India would be beneficial for both the countries.