PAKISTAN’S exports to regional countries — including South Asian nations, Iran and China — have plunged by a hefty 22pc during the eight-month period from July to February, according to PBS data on international trade. Even without the full-blown impact of Covid-19, the downturn in the country’s exports to the region would not have come as a total surprise. Pakistan’s trade with regional economies, with the exception of China, has historically remained far below its potential. The data shows that trade with almost all our neighbours, especially India and Afghanistan, has been on the decline for some years. Decades of efforts to boost trade between Saarc nations notwithstanding, South Asia continues to be among the least economically connected regions in the world. The realisation that regional trade is one of the most crucial tools for economic progress and increased competitiveness of countries in various parts does not seem to matter. The close economic and trade relations between the Southeast Asian countries, for example, has played a major role in their turnaround in recent decades, and helped them cut poverty.

There are multiple factors which have long prevented economic connectivity of the Saarc countries that also include Afghanistan. Long-standing political and territorial disputes between individual states, terrorism and poor security conditions in other countries, non-tariff barriers created by some to protect their local businesses, higher cost of trading within the region etc are only a few of the many issues stalling the development of closer economic ties. There are also certain ‘exogenous’ issues such as the international sanctions against Iran, which keep Pakistan and others from developing commercial ties with the affected country. All these factors have been there for a very long time with little hope for their resolution anytime soon, forcing Pakistan and others to look to the West and elsewhere for trade prospects. Although Pakistan’s economic ties with China have improved since the two countries signed an FTA more than one and a half decades ago, a similar arrangement with Sri Lanka has not helped boost trade with Colombo. Pakistan and the rest of the countries in the region possess huge potential to tap into one another’s markets and enhance the value of their trade. But that will not be possible unless they, especially India and Pakistan, take serious steps to start a conversation aimed at settling political and other disputes in the larger interest of their people.

Published in Dawn, March 25th, 2021