Regional trade

Published February 22, 2022

THAT Razzak Dawood, Pakistan’s top commerce official, favours the resumption of trade with India supports speculation that the two neighbours might be engaged in behind-the-scenes talks to improve bilateral ties. He is of the view that both countries should revive trade ties, which were terminated in the wake of India’s cancellation of autonomy for occupied Kashmir in 2019, since it is advantageous for all, especially Pakistan. Earlier this month, top businessman Mian Mohammad Mansha had also expressed similar views, saying that ongoing backchannel talks between the two states could yield positive results. It is encouraging to see both government officials and businessmen supporting improvement in bilateral relations and regional trade in South Asia, one of the least economically integrated regions in the world. It is an established fact that regional trade is one of the most crucial tools for economic progress and increased competitiveness of countries in various parts. According to a 2018 World Bank report on trade among the Saarc nations, Pakistan and India “collectively represented 88pc of the regional GDP, but the trade between them was valued at a little over $2bn”. This could be as high as $37bn, it added.

That intraregional trade in South Asia is among the lowest at about 5pc of the total trade compared with 50pc for East Asia and the Pacific regions means that it could be a while before impoverished Saarc can reap the benefits of shared land borders. Multiple factors including tariffs and para tariffs, real or perceived non-tariff barriers, broader trust deficit, political and territorial disputes, terrorism and higher connectivity costs have prevented Saarc nations from trading with one another. But the long-standing Kashmir dispute between Islamabad and New Delhi is the single-most important reason for the negligible regional economic connectivity. This has forced Pakistan and other Saarc countries to look towards the West and elsewhere for trade prospects. There’s growing realisation across the region that stronger trade ties and mutual economic dependence can over time build an environment of mutual trust, and help neighbours settle their political and territorial disputes in an amicable manner. Europe understood this after fighting two world wars and eventually coalesced into a large, strong economic bloc with a single, common currency. Why can’t South Asian states learn from its example and collectively work for the future of their two billion citizens? This will not happen overnight but the revival of trade across Wagah could be a first step.

Published in Dawn, February 22nd, 2022

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