ISLAMABAD: Top trade officials from Pakistan and India will open two days of talks on Wednesday to push commercial ties, as the countries seek to build on goodwill from last month's successful bout of “cricket diplomacy”.
While no major breakthrough seems likely, on the table would be an Indian offer to export electricity and possibly sell petroleum products to Pakistan, which is faced with an acute energy crisis, officials say.
“There will not be any dramatic changes, of course, but it can help put things on the right track for further progress,” a Pakistani official familiar with trade negotiations with India, said of the trade talks, their first in nearly three-and-a-half years.
“There is nothing specific on the agenda.”
Trade talks are part of a seven-year-old peace process the two sides agreed to resume in February, after the 2008 attacks on Mumbai by Pakistan-based militants killed at least 166 people and stalled the talks.
“There will not be any substantive gains but any positive development will help to improve the environment, and that is essential to take up contentious issues like Kashmir,” said Hasan Askari Rizvi, a political analyst.
After the last round of trade talks held in August 2007, the two sides added some 136 items to their trade basket - which now contains 1,946 goods - before the Mumbai attacks put the process on hold.
At that meeting, the two sides set a target of $10 billion by 2010. Today, even that seems unlikely, and pledges to open banks on both sides of the border remain only on paper.
CRICKET DIPLOMACY
But a visit in March by Pakistan's Prime Minister Yusuf Raza Gilani to India at the invitation of his Indian counterpart Manmohan Singh to watch a cricket World Cup semi-final between their teams raised hopes for further improvement in their ties.
After the Singh-Gilani meeting, dubbed “cricket diplomacy”, field hockey officials of the two countries are attempting to renew ties and there is talk of more cricket matches.
“We are optimistic. We are meeting after three, four years, and hope to make progress on decisions made in the last meeting,” said a senior Commerce Ministry official involved in the negotiations. “We will push for a decision on opening bank branches in each other countries.”
Pakistan would also likely discuss European Union plans to temporarily waive duties on some Pakistani imports to help it recover from last summer's floods, which have been frustrated by opposition from India and other members of the World Trade Organisation.
TRADE VS POLITICS
Trade ties between Pakistan and India were severed after the 1965 conflict.
Commercial relations have since recovered, albeit slowly.
Political differences are the major hurdles.
India granted a Most-Favoured Nation (MFN) status to Pakistan in 1996, but awaits a similar gesture by Islamabad, which has linked progress on trade to progress on political disputes, notably Kashmir, the disputed Himalayan region they both rule in part but claim in full.
Pakistani officials also question the utility of MFN status, given the balance of trade which remains heavily tilted in India's favour, citing “non-trade barriers” such as quality standards and customs procedure against Pakistani exports.
Indian exports to Pakistan stood at $1.2 billion while Pakistan exports totaled about $270 million in the 2009/10 (July-June) fiscal year.
Unregulated and illegal trade, often routed through Dubai and Singapore, is estimated at between $2 billion and $2.5 billion, officials say.
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