Sat. Dec 14th, 2019

India, Pakistan look to tap trade as peace dividend

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By Sachin Parashar

As part of the new comprehensive bilateral dialogue mechanism, India is looking to give Pakistan preferential access to its large market under the South Asian Free Trade Area (SAFTA) regime provided Islamabad can keep its promise to give India MFN status, known in the neighbouring country as non-discriminatory market access (NDMA).

Pakistan, in fact, was on the verge of giving India NDMA in early 2014 before the Nawaz Sharif government backed out because of, according to Indian officials, pressure from the Pakistan Army.

Economic and commercial cooperation is one of the pillars of the comprehensive dialogue, as indeed it was under the composite dialogue process. Foreign secretary S Jaishankar is scheduled to travel to Islamabad on January 15 to discuss the modalities and schedule of the comprehensive bilateral dialogue with his counterpart Aizaz Ahmed Chaudhary.

India believes that Pakistan can greatly ease its foreign exchange constraints and provide stimulus to its exports with access to the Indian market. India also believes that trade normalisation could be one of the low hanging fruits after the leg-up to the relationship in the form of PM Narendra Modi’s unexpected Lahore stopover.

After he came to power in 2013, Sharif had signalled that his government could look at reviving the September 2012 roadmap under which both countries were meant to initiate trade in gas and electricity to help Pakistan overcome its power woes. Late in 2013, according to India, the Sharif government did a complete turnaround over the issue as it perhaps felt that trade normalisation would perhaps be too much of a concession to the outgoing UPA government.

Pakistan though is likely to wait until Modi’s visit to Islamabad later this year before taking any decision on NDMA to India. It continues to maintain that it is only seeking a level playing field with a view to making trade mutually beneficial. Pakistan high commissioner Abdul Basit said in November that non-tariff barriers on the Indian side were adversely impacting Pakistan’s exports to India. India counters this by saying that Pakistan has never specifically spelt out these barriers. “As far as we know, Pakistan has only taken mentioned issues like poor connectivity with Lahore and the stringent visa regime,” said an official.

The Sharif government for a brief while in early 2014 indicated that it could consider opening up the Wagah border for trade but later backtracked. According to Pakistani sources, Islamabad has not given up the idea but it will wait for India to make the right concessions to facilitate it.

Commerce and industry minister Nirmala Seetharaman had said in Parliament in the winter session that Pakistan had not provided MFN to India and that it had also not removed trade restrictions on the land route.

When Sharif and Modi met last year in May, they discussed the possibility of quickly normalising trade relations with the Indian PM specifically mentioning the issue of MFN.

India and Pakistan have in the past had several rounds of informal discussions to facilitate trade normalisation with Pakistan even sharing its list of 185 items which are of export interest to it. The Indian commerce ministry under UPA had indicated it would provide SAFTA tariff concessions on these and both sides even shared the texts of their respective gazette notifications in that regard.

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