PAK-INDIA TRADE LIKELY TO REACH $50BN
Mar 19 - 25, 2012
Speaking at a seminar on expanding Pak-India trade organized by Pakistan Institute of Development Economics (PIDE) in Islamabad last week, the former director of IMF in Pakistan, Dr. Mohsin Khan claimed that Pakistan and India could boost their bilateral trade up to $50 billion per annum on a medium to long term basis by removing bureaucratic hurdles, placing required infrastructure and doing away with tariff and non-tariff barriers.
At present, the two countries are trading worth about less than $3 billion per annum and the balance is firmly tilted in favor of India
Mr. Khan claimed that if infrastructure were enhanced, trade volume would be doubled in the short time of few months since the trade conducted through the UAE conduit would be channeled through normal trade routes.
The most positive aspect, he said, was that the two countries have decided to separate trade issues from other bilateral issues such as Kashmir or Indus Water Treaty correctly realizing that stronger trade ties would pave the way for the resolution of other issues as well. According to Mr. Khan, India is poised to be main engine of growth in the South Asian region in the next decade and Pakistan could hook its wagon to the locomotive or risk getting left behind. He described the latest decision of the Pakistani rulers to promote trade with India and setting aside other issues as wise and most timely. He also advocated for granting of transit facility to India, which helps boosting regional trade.
He, however, observed that Pakistan was generous in terms of announcements but slow in implementation. Dr. who is presently associated with the Paterson Institute for International Economic Washington, USA as a senior fellow however, welcomed the change in the attitude of Pakistan towards India and its showing a desire to improve ties with India.
According to Pakistan's federal secretary of commerce, Zafar Mehmood, the $50 billion target is achievable provided impediments such as visa restrictions are removed and a level playing field is provided.
The well-known economist, Dr. Ashfaque Hassan who also spoke on the occasion sounded more cautious when he said that the enormous potential for trade could only be realized if Pakistani and Indian exporters are provided a level playing field.
Citing the WTO latest Trade Policy Review, he said that the Indian trade regime was highly complicated and restricted while Pakistan was more liberal. So, while India needs to lower trade barriers vis-a-vis Pakistan, Islamabad needs to reduce the number of items from the negative list.
Speaking on the occasion, Vice Chancellor PIDE, Dr. Rashid Ajmal lauded cabinet decision regarding Most Favored Nation status (MFN) to India. He said that despite opposition from some circles, it is rightly felt that the trade with India is in the interest of Pakistan. However, we need to be cautious to protect our interest, he said adding that there is need that we take advantage of the engine of growth that is moving in the region for our own interest.
It now appears that Pakistan has decided in principle to complete the process of granting India the MFN status by the end of this year. India has welcomed this decision as it would be able to sell Pakistan a lot more. Even though the anti-trade lobby is loosing support, it is still active and assertive that liberalization of trade is more in favor of India and we must try to avail this opportunity to settle the pending issues of Kashmir and unhindered flow of water to Pakistan as envisaged under Indus Basin Water Agreement.
The other side, however, argue that Pakistan can increase cooperation with India while maintaining its principled position on these pending issues. The long struggle and sacrifices of Kashmiris will force India to look for a solution. The trade and growing commercial interest between the two countries will be an additional factor forcing India to solve these pending issues. In the emerging global trend of lowering the trade barriers, Pakistan cannot afford the luxury of shutting local markets without being seen as spoilers.
In view of the emerging scenario, experts are of the opinion that, barring some unforeseen developments, from 2013 onward Pakistan-India trade will be moving in the fast lane. We will see a rapid growth of trade and also experience tit for tat safeguard measures.