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Trade deadlines with India


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AN important deadline has just been missed. Pakistan had committed to itself that from Jan 1 onwards, it would remove the so-called ‘negative list’ under which it trades with India, and inaugurate a fully normalised trade regime with its neighbour.

Of course that date came and went without any such thing happening. The government of Pakistan has rightly moved to manage the inevitable disappointment on the other side by saying that the delay is temporary, and very soon the negative list will be phased out.

The disappointment is entirely warranted, but here’s a plea to hold the tiller firm. The whole rapprochement has become possible because of a new approach towards each other that both countries have struggled to implement since at least the Lahore Declaration of February 1999.

The idea behind this new approach was to separate the various issues around which there is dispute, and pursue each dispute in its own separate compartment and prevent linkages from forming.

There were three main issues to be discussed. One related to how lines ought to be drawn on a map and policed on the ground.

The second related to the sharing of river waters. And the third related to the normalisation of trade ties.

The good news is that after more than a decade of trying, these three issues are being successfully settled in their respective compartments. Stray voices are still to be heard from time to time demanding that linkages be formed between these issues, but such stray voices are becoming increasingly marginalised, a development that needs to be appreciated.

Having accomplished this crucial first step, now comes the time to redeem the pledge, to borrow a few words.

After all, the talks are not an end in themselves, but a means to an end, and in the compartment where they sit talking about the normalisation of trade ties, that end is the free movement of goods and services and investible resources and entrepreneurial energies and the fruits of professional experience and technical expertise.

Having successfully disentangled the issues from each other, the government of Pakistan woke up to the realisation that trade talks are not a straightforward matter. Please realise one thing: this is the first time that Pakistan is engaged in negotiations to develop a bilateral trading regime of any depth and complexity.

There are some free trade agreements (FTA), such as with Sri Lanka and China, but none of these were really negotiated in any serious sense of the word.

With China, Pakistan doesn’t negotiate anything, and the FTA has been a disaster for local industry whose woes matter not a bit when it comes to the bizarre ‘strategic’ logic that subordinates all decisions in our dealings with China.

With Sri Lanka, the FTA is with a country whose share in our total exports is less than our exports to Spain and South Korea, and only marginally higher than those going to South Africa, meaning that it’s a very minor trading partner. And even here Pakistan did not seriously negotiate the FTA and did not have to worry about creating a consultative process for domestic stakeholders, or worry about non-tariff barriers.

Pakistan largely sleepwalked into the WTO, waking up to its realities only after the regime had been implemented, and was largely strong-armed into the Afghan Pakistan Transit Trade Agreement which was activated on the basis of an MoU.

So we’re new to this whole trade negotiation business. As a result our government has underestimated the enormity of the task and the intricacies of the negotiations.

The Pakistani idea of negotiating a trade regime is to ask for preferential trade access on the grounds that we’ve suffered a natural disaster or are bearing the brunt of the war on terror.

Now for the first time ever, Pakistan is being forced to consider what its economic interests are in a complex engagement. For the first time, the government is reaching out to domestic stakeholders asking them for their input into the formulation of a large and intricate economic road map, something that has not happened before in this country where a thin line separates processes like stakeholder consultations and collusion and rent-seeking access.

It is by now well-known that three major industries are expressing their reservations regarding trade with India. These industries are pharmaceuticals, textiles and automobiles. But not all reservations are equal in these cases.

In textiles, the largest industry group — APTMA — that represents spinners, is in favour of normalising trade ties because they see enormous markets to the east.

Those opposing are the so-called ‘value-added’ sector, who argue that their Indian counterparts enjoy enormous economies of scale, and will buy up all the yarn in Pakistan and drive out the value-added sector.

In pharmaceuticals, there is also a divide between the large-scale operators based out of Karachi, who see great benefits through access to India’s world-class pharma raw materials and consultancy services.

Those opposing belong largely to the clusters of small producers based around Lahore, the cottage industry so to speak, who have brought us fake cough syrups and other drugs that claimed more than 100 lives last year.

The automobile sector is a different story. It’s hard to find a single person who sympathises with their concerns, and their growing dependence on government protection. In any event, their case to be included in the sensitive list can be accommodated while a more lasting solution is sought and productivity enhancements encouraged.

The point is simple. There is no real opposition to normalising trade ties with India, except by those who prefer to keep all relations with India entangled in considerations arising from lines on a map.

The hard-fought battle to disentangle the issues has been successfully concluded. But a little more patience will be required for the fruit of cooperation to ripen.

The writer is a Karachi-based journalist covering business and economic policy.

Twitter: @khurramhusain

The views expressed by this writer and commenters below do not necessarily reflect the views and policies of the Dawn Media Group.

Comments (13) Closed

G.Sharma Jan 04, 2013 01:10am
I do not believe that Govt. of India was unaware of Pakistan not adhering to its deadline. There should not be any disappointment because this is not the first time that Pakistan has not been able to live upto its committment.
Different View Jan 03, 2013 10:41pm
Good insights in the process of negotiations. Don't you get it? India was in the same situation just a few years ago, and China a few more years ago? We just learnt that we can trade and it has positive effects on the economy. There are more jobs, people get money, they want to spend their money, and even more jobs are created. This is proven cause and effect theory. This is how economy works. It doesn't matter what religion we follow, or if we even follow a religion. Religion should be a personal choice. Pakistan, just like India has to shed its inhibitions and paranoia and sign much more agreements with other trading nations. Pakistani people are as hard working and talented as anyone. They just need an opportunity.
Gohar Jan 03, 2013 09:54pm
This has nothing to do with religion dude, trade with India is NOT in Pakistan's interest. Most Pakistani's and economists dont want trade with India as it does not make any economic sense nor is it prudent to sign such an aggreement giving the fact that India continues to occupy Kashmir and is building dams against the convention it has signed with Pakistan. India must also stop maligning Pakistan in its media and news.
Ajaya K Dutt Jan 03, 2013 02:09pm
The most important and influential "stakeholder" that writer missed is Mullah community. A number of comments in other such articles point out "No Free Trade Agreement with India, period". The cause for this is not lack of "benefits" from trade but the "Hindu" factor of it. It would have been decades old "agreement" if India was part of Ummah, or it was within "Kilafat" control. I wonder why seemingly intelligent people are blind to obviouis.
mukesh Jan 03, 2013 06:15pm
trade ties will help pakistan more than to india. you need not to be a genius to figure it out. india must help pakistan in this sphere. it will help countering the propaganda of mulla brigade against india.
sham Jan 04, 2013 03:07am
One more check mark - Pakistan cannot be trusted in trade either!
Tribal Mento Jan 03, 2013 05:51pm
India and Pakistan are going on positive notes and they should continue. This is the only way forward for us neighbours. We need to ignore the stray voices. Trade along with sports can lead to us to the point where one day both the countries would sit and give a serious though to solve their outstanding issues. I want a peaceful sub-continent, do you?
SKChadha Jan 03, 2013 03:07pm
He he he .... is there any other way ..... :-)
(Dr.) B.N. Anand Jan 03, 2013 11:16am
Though a consoling article in nature,yet it does reflect some positivity on the mindset of trading community on the other side of the border. The visa agreement was also delayed when the time of implementation came and now the expected trade agreement. By postponing such decisions under the pressure of public leaves little credibility for the govt. in international negotiations, especially when a lot of time and efforts have gone in arriving at these agreements. If Pakistan falters at every negotiated agreement, then is it worth pursuing the course of negotiations when no one is sure whether it will stand to the scrutiny of opposition political parties and a section of trading community to the mutually agreed agreement. BNA
pathanoo Jan 03, 2013 04:13pm
Pakistan has schizophrenic personality when it comes to dealing with India. They know that they do not have a choice but to improve relations with India if they want to improve their standard of living by reducing military expenditures as a result. But, Oh! the hatred is so deep. Pakistan is only hurting itself when it tries to hurt India. India is on the march and is not obsessively occupied with Pakistan as Pakistan is with India.
abbastoronto Jan 03, 2013 04:03pm
Pakistanis worry needlessly. In the coming era of Globalization and Free Trade Muslims in general and Pakistanis in particular will win no matter what. Religions are socio-economic systems that answer best to the fundamental question of existence ? Survival, Growth, Evolution. Every religion has the following traits. 1. A natural economic environment 2. An optimal unit building block 3. An central idea as the Axis 4. A Planning Horizon 5. An investment source strategy 6. An output distribution formula Take for example the 3 Abrahamic religions of Moses, Jesus, and Mohammed (AS). The Economic environments are Pastoral, Agrarian, and Trading, respectively. The optimal building blocks are the Tribe, the Family, and the Individual. The central ideas are Equity (Insaf), Love, and Justice (Adl) around which the whole system revolves, etc. Mohammedan Islam was conceived for the resource-poor, land-poor, trading society of Arabia, so after brilliant local success became sub-optimal in the wider environment that was still agrarian. But now, the world is becoming Arabia 7th century writ large ? resource poverty, land poverty, and trade. So Islam is becoming popular again. While churches empty, mosques fill to capacity worldwide. In a globalized world soon Muslims will be living in a world like fish in water. The Memon, Ismaili, Khoja, Bohra communities are successful traders already. Pakistanis diaspora of 10,000,000 is a worldwide network. With Quran as a trading manual for today stressing travel and trade, who needs Agreements?
Cyrus Howell Jan 03, 2013 07:12am
Dawn knows deadlines. The government of Pakistan does not know deadlines. The Pakistani courts know only extensions and continuances. "Never do today what you can put off until tomorrow; and never do tomorrow what you can put off until the day after tomorrow." (My first university roommate, a jet fighter line mechanic in South Korea) . "Come to think of it, I don't have any rules." (Beetlejuice)
M.Parikh Jan 11, 2013 03:05am
My understaing, from writers wording, is that the dead line was Pakistan's commitment to itself and not to India. If delay occur from any reason, its Pakistan's concern and not that of India. Generalising on every little thing is certainly not going to help the case of positive biliteral relations.