India and Pakistan together have a population of 1.2 billion which is one-fifth of the human race now. And yet in these days of increasing stress on the need for regional economic cooperation between the developing countries and regional trade blocs that total volume of trade between them was only $381 million last year.

Kamal Nath, India's commerce minister in Islamabad for attending the fourth Saarc commerce minister's meeting describes that a dismal performance compared to the possibilities and the actual volume of informal trade between them.

The actual trade including trade through third countries and the frenetic smuggling is estimated at around $3 billion leaping from a billion dollars a few years ago. Such informal trading makes the goods more costly for our consumers when sold as if they had been formally imported.

The government of Pakistan has now announced inclusion of 81 items to the Positive List of items which are importable from India which raises the number of items in the positive list to 768 from 687 groups of items earlier.

The number of items importable into Pakistan from India seems very impressive but the actual imports from India have been only $300 million last year. While the volume of imports from Pakistan last year was only $81 million last year.

When the fourth round of Sapta negotiations ended India had agreed for tariff concessions for 223 more items from Pakistan. But the 81 items ware not included in the Positive List then. That omission has been corrected now after clearing the legal and procedural hurdles, says the Pakistan government.

While the number of items in the Positive List has been increasing in batches, the volume of trade has not been expanding correspondingly or in the same spirit. While the number of items in Pakistan's Positive list has risen to 768 from 687 tariff and non-tariff restrictions have been standing in the way easy and free flow of such goods even when businessmen on both sides are keen to step up the volume of trade and even go into cross-border investment.

Among the groups of items now importable by Pakistan from India are industrial raw materials, chemicals, pharmaceutical compounds, rubber and meat. In fact, Pakistan's commerce minister Humayun Akhtar had recently said he was recommending 300 new items for inclusion in Pakistan's Positive List to raise the total number in the List to 1,000.

He was making the recommendation to the government at the request of the industrialists and businessmen of Pakistan who needed the machine parts and chemicals for their industry to compete with the products of other countries under the WTO regime.

India has instead suggested replacement of the long Positive lists with small negative Lists of items not importable into Pakistan from India. The Pakistan government has not agreed to this list, and considerations could be political as well as economic.

President Pervez Musharraf told the Indian journalists who attended the South Asia Free Media Association conference in Lahore that while the Positive Lists on both sides have increased India was restricting the flow of goods from Pakistan through non-tariff restrictions. And Mr. Kamal Nath says those restrictions were to protect the farmers' interests in India there were no Pakistan-spefic barriers in India, he says. And while India wants the Most Favoured Nation treatment from Pakistan in the manner it has given to all other countries with whom it is trading the volume of trade with India has not increased after India gave the Most Favoured Nation treatment to Pakistan.

Implementation of the agreements reached under the Sapta through the auspices of Saarc has also been too sow. Mr Kamal Nath says the 81 items includes by Pakistan in its Positive List should have been done over two years ago.

If Sapta has been too slow in taking off the more ambitious Safta, which is to come into operation on January 1, 2006 can't be moving faster. Meanwhile India has signed Free Trade Area Agreement with Sri Lanka, and Pakistan is to sign the FTA with Sri Lanka in January.

President Musharaf wants the Saarc to have some political teeth to settle the political disputes between the Saarc members. If that is not possible it should be able to make headway in the economic direction when regional economic pacts and Free Trade Area agreements are getting to be too common with the richest country in the world, the U.S. leading it in every area.

When Prime Minister Shaukat Aziz visited Sri Lanka some lankans raised the prospects of a common currency for the Saarc countries. That like the Euro is the ultimate in cooperation in the economic and political spheres.

Former Indian Prime Minister Atal Behari Vajpayee had earlier? spoken of a common currency for the Saarc region as he envisioned a great economic future for it. But while the people of the region and the businessmen want maximum economic cooperation the governments are cautious and prefer a step by step move.

Meanwhile the fourth session of the council of the Saarc Commerce Ministers has come to an end in Islamabad on a positive note as the delegates say. They discussed all the trade and related issues and if they could not agree on the details of the four agreements under Safta that is not surprising.

Forming Free Trade Areas and making them a success is not an easy task. Disagreements will crop up at the initial stage, more so when a few countries in the alliance are too big and a few too small.

The ministers have rightly agreed to adopt a common approach to WTO as its next ministerial meeting at Hong Kong. They have also decided to raise the status of Saarc to be at par with other commercial blocs in the world.

The ministers have also proposed the study group to promote bi- lateral economic cooperation between Saarc members. The ministers have proposed Saarc Infrastructure Fund, the details of which remain to be settled. The fund has to be large enough to fulfil its objectives and may use foreign assistance for the purpose.

Earlier the businessmen of Pakistan were opposing large scale trade with India particularly those from the north as they feared they would be gobbled up by the more developed economy of India and its shrewd businessmen with their mass production. But now they want to trade with India as they can get cheap machine parts and chemicals from India for their textile industry. And they see the advantages of peace with India after conceding the horrors of war and they utter futility.

They are now not afraid of the competition from India as they face greater challenge from China and in fact many other countries of the world under the WTO regime. And the younger generation of Pakistani businessmen are more enterprising and adventurous and are ready to take on India commercially and forego a part of their large profits.