Soon after coming to power in May 2013, a confident Prime Minister Nawaz Sharif set upon improving Pakistan’s trade relations with neighbours. However, his dream to regain civilian control over foreign policy and use it as a tool for promoting lucrative trade in a globalised world failed to take off.

In an agreement with the IMF, the government committed to “normalising trade relations (with India) to deliver the much needed competitive environment”. Under the $6.8 billion programme with the fund, the government committed to “move forward with eliminating the negative list on trade with India and extending the most favoured nation status, and shifting to a sensitive list under the SAFTA regime to facilitate increased regional trade.”

Fourteen months down the road in August, he grumbled before a national security meeting — also attended by senior military leaders — that Pakistan either had adversarial, or did not have good relations with any of its neighbours, except China.

And the potential fruits of economic cooperation with the best friend and the most powerful regional power and industrial giant stands delayed for now, though hopefully not trampled for good. Unfortunately, friends and foes, including those claiming monopoly over national interests, played a role that would go down in history as a black spot.

All stakeholders in Pakistan need to look outside their cocoons to see how adversaries in the region are building bridges for mutual benefit, instead of creating walls that only reduce the available space

As had happened with the PPP government that worked to deliver the most favoured nation status to India by December 2012, the PML-N’s move to grant MFN status by this March was torpedoed at the last moment. The granting of the MFN status has since been deleted from the subsequent memorandum of understanding with the IMF.

Whatever trade (about $2.5bn) that Pakistan and India have today got a boost in 2005 when former President Musharraf opened the Wagah-Attari border and cross-LOC trade in Kashmir. However, Pakistan has not been able to access Nepal, Bangladesh and Bhutan via Indian territory, and India has not been able to reach Afghanistan through Pakistan. The 2005 bilateral agreement to have two bank branches, one of Pakistan-India in each country, has not materialised yet either.

The postponement of the visit of Chinese President Xi Jinping to Pakistan would delay Chinese investment worth $32 billion. This would have been the highest-ever contract signing in a single year with any country. In the past, China had signed highest contracts of $14 billion in Pakistan, almost 70pc of which is reported to have been realised by now.

As Mr Xi visits New Dehi while skipping Islamabad — despite having adversarial relations with India since 1962 — Chinese companies would be signing $7bn worth of investment deals for two special industrial parks, including one in Gujarat — the state that graduated Narendra Modi to the post of prime minister of the second largest regional power.

A few weeks earlier, Mr Modi is reported to have returned from Japan with a bag full of $35 billion worth of investment agreements. Pakistan’s hopes of reviving Japanese investment and financial assistance have also become uncertain after the recent political tensions in Islamabad, which led to non-completion of the fourth review with the IMF, hampering the disbursement of the $550 million tranche due this month.

India also wants China to remove difficulties that Indian products and services face while entering the Chinese market, particularly pharmaceuticals, agricultural products, information technology and the new industry of ITES (information technology enabled services) like finance, insurance, banking and telecommunications.

China, however, is more interested in a regional trade agreement (RTA) with India — the likes of which New Delhi has with Singapore, South Korea, ASEAN and Japan etc — which, it believes, should reduce tariff and non-tariff barriers. But India wants this as a quid pro quo and puts an interesting onus of responsibility on Beijing to create an environment in India to help convince Indian stakeholders about the benefits of RTAs by allowing higher imports from India into China.

India has not yet allowed visas to Chinese workers despite huge investments to ensure maximum employment to Indian workers, unlike in Pakistan, where the government has to create a special security apparatus to protect tens of thousands of Chinese workers even in areas where local labour is comparatively cheaper.

All stakeholders in Pakistan need to look outside their cocoons to see how adversaries in the region are building bridges for mutual benefit, instead of creating walls that only reduce the available space.

Published in Dawn, Economic & Business, Sep 15th, 2014