At issue is Pakistan’s failure to move from a “positive list” – where only the items allowed for trade are defined and the rest banned – to a short “negative list”, which consists only of a few items that are disallowed for trading and legalizing the rest. Had the ‘lists’ been fine tuned now as expected even as the MFN status for India is pushed to the political back burner, it could have been the high water mark of the Sharma visit. Trade between the two countries is a mere $2.7 billion a year, far below its potential.
A former president of the Lahore Chamber of Commerce said that 3-5 years might be a more appropriate timeframe to phase out the lists. He complained that the industry was not consulted by the decision makers. Going by the media reports from Islamabad, one reason for the Gilani cabinet to reject the negative list as prepared by the Commerce Ministry was the complaint from other ministries that they were not taken on board. Any decision must carry all the stake holders; consensus should not be made a hostage to unanimity and the big picture must be not missed for whatever reason.
Even a lay student of India-Pak relations will not hope for a sudden turn around in the trade relations in this election year for Pakistan. More over, the religious orthodoxy led by Jamaat- ud- Dawa, acting as the proxy for the vested interests of the Pakistani system is going around the country with its Defence of Pakistan Council (DPC) rallies US drones and India trade alike. Government is also in trouble with the judiciary, doesn’t enjoy good relations with the army, which controls the country’s foreign policy, and is facing a bristling opposition in parliament.
India understands Zardari’s difficulty. It knows from its own experience of economic reforms how difficult it is to change the mind sets. Any how at the end of the day, the governments’ role in trade matters is limited to making policies and creating conducive atmosphere.
Business knows how to get around the freezer in its own best interests. That is why ‘informal trade’ between Pakistan and India is touching $10 billion though to the disadvantage of Pakistan’s exchequer. Another case in point is shifting of base to Bangladesh by the biggies of Pakistan textile industry. This story will have an Indian echo if Pakistani businessmen find it easier and worth the while if India’s FDI regime is tweaked and if Pakistani investments are allowed to cross the Wagha border. This is an issue that will be viewed as much from security angle as political angle. It may not be difficult to address going by India-China trade experience.
There is no denying however that India and Pakistan have come a long way from the low point of Mumbai mayhem. India has removed its objection to European Union’s decision to allow concessional trade in 75 Pakistani commodities. The Sharma visit has seen the signing of a Customs Cooperation Agreement, Mutual Recognition Agreement and Redressal of Trade Grievance Agreement; these accords put flesh on the bones of diplomatic niceties, as the Express Tribune said editorially. The apex banks of the two countries. A liberal visa regime for businessmen in particular is on the cards. It should prove to be a historic step in reducing if not removing the trust deficit over time through improved contacts at the people –to-people level.
