June 30, 2003	Monday	Rabi-us-Sani 29,1424

A delegation of 100 Pakistani businessmen going out to India for 10 days from July 2 is too large a group in the present state of slowly thawing India-Pakistan relations.

When the top officials of the country beginning with president Musharraf are asserting that trade between the two countries depends on settlement of the basic disputes between the two states, beginning with Kashmir or at least earnest discussions, a 100 member trade delegation to India is a excessively large one.

People on both side to want better contact with each other. And traders certainly want larger trade; but the political road blocks that have stood in the way, have to be cleared or kept aside through mutual agreements.

The Indians on their part are prudent. They have sent a parliamentary delegation of 12 members headed by columnist and Indian Rajiy Sabha member Kuldip Nayar who knows Pakistan well. They are also sending a tea delegation of 12 members. They may be followed by trade delegation which may not certainly have anything close to 100 members.

Pakistan took the initiative first by sending a parliamentary delegation of 12 which did meet with some hostile demonstrations at places in the Hindu heartland of India. It is hence prudent to send a small team from here now.

Meanwhile, the rhetoric on both sides on trade relations between the two countries is profuse. Senator Ilyas Bilour, Co-president of the India-Pakistan Chamber of Commerce and Industry, brushes aside the talk of the Indian prime minister Atal Behari Vajpayee of inflicting a fourth defeat on Pakistan in case of war, and says that political issues should be left to politicians and traders should focus only on their related subjects.

He says the Pakistan traders’ top priority should be free trade with India which can open various new vistas of commercial cooperation. He says he if going to India with an open heart and open mind and would offer a long list of tradable items to the Indian businessmen. He also wants to strengthen the India-Pakistan chamber. He says India had been offering free trade with Pakistan for long, but Pakistani officials had rejected that.

Kuldip Nayar, speaking at the Lahore Chamber of Commerce, has suggested a common market for South Asia, including other members of the SAARC and wants joint industrial ventures in South Asia with individuals owning shares of companies in other countries as done in the West.

Nayar wants the people of the region benefit by the higher economic growth of India and other economic developments there.

Earlier, on a visit to India for an international monetary conference, the governor of the State Bank of Pakistan said he preferred open trade between the two countries to replace rampant smuggling. Dr Ishrat Husain said earnest talks between the top officials of the two countries would give an impetus to trade.

The KCCI too, has come out with a detailed study focusing on the various advantages to Pakistan and India of large scale mutual trade. In the short-run, trade with India may be disadvantageous to Pakistan but in the long run it would be gainful. If Pakistan can successfully compete with India in foreign markets, the study says there is no reason why it can’t compete with Indian goods within Pakistan itself.

The KCCI study, too, suggested investment by one country in another and identified the areas where such investment could be made. It also wants Pakistan to profit by the higher technological advance of India in several areas, particularly agriculture and urged the government to reduce the cost of power so that the cost of production can come down and Pakistani goods can become more competitive.

India wants Pakistan to give it the most favoured Nation treatment, which in fact, is the most common treatment between trading nations. But Pakistanis have been to stupefied by the expression “most favoured nation” to a country whom they regard as the adversary, if not enemy. Pakistan has hence tied up ending this stalemate with at least a serious attempt at resolving the Kashmir issue.

Pakistan instead keeps on increasing the number of items importable from India which was earlier almost 700. Recently 78 more were added to the tradable list. But a long list and small trade do not give any satisfaction to the businessmen on both sides.

In the absence of proper trade between the two neighbours there is large- scale smuggling across the borders and through third countries. The volume of trade is estimated between half a billion to $1.5 billion. The textile industry in Pakistan wants cheaper chemicals and textile machine parts from India or via India to make their exports cheaper. So, if they can’t get them across the border they obtain them through third countries or through changing the manifests of ships bringing such goods.

Pakistani businessmen now feel more confident of competing with India as their textile industry in particular has developed more and has been successfully competing with Indian textile exports. But they want cheaper inputs, beginning with power and lower taxes and a reduction in corruption and law and order costs. They are happy over the sharp fall in interest rates and export finance to around 3 per cent. Even otherwise the cost of production of textiles has be brought down sharply before the textile quota system expires on December 31 next year around the world.

Under the new trading pattern that is emerging Pakistani exporters should be able to get their inputs from the cheapest sources and export their goods to the most profitable markets. And along with reducing the imports of industrial inputs, we should focus on the value-added which demands technological improvements all round.

Of course, before we think of mutual investments and share holding by people in the country of the other country, stability has to be achieved in the relations between the two countries. And newspapers and other publications of one country should be easily accessible to the other country. Clearly, the business leaders are not thinking of the old pattern of trade relations but of new inter- corporate relations, and for that we need a truly open house relationship without fear and distrust.

It is the poor and middle class consumers who want commercial relations with India. But one of the factors that may stand in the way is the ten rupee difference in the exchange rate of the dollar. While the dollar costs Rs48 in India it costs Rs58 here. The Indian goods may be more expensive to Pakistanis and Bangladeshis and Pakistani goods cheaper to the Indians. To what extent that will stand in the way of a free flow of goods between the two countries eventually remains to be seen.

Currently, the Indian books cost 50 per cent more in Pakistan than the their printed prices and that has made the Indian books more costly and less in demand than before. That may not be the case with other Indian goods as their volume of sales may be larger and so the price differential less.

Following the arrival of the parliamentarian delegation in Karachi, Kuldip Nayar addressing the FPCCI.

He exhorted India to lift the taxes and import duties on Pakistan goods and allow them into India and Pakistan to accord the Most Favoured Nation status treatment to India. He also urged India and Pakistan to abolish visa for businessmen on both sides as has been done in respect of parliamentarians. Good-will is overflowing: Will trade do the same without the political road-blocks?—S.A