Thaw in tensions stimulates trade diplomacy
Muddassir RizviPublished: May 23, 2003 11:32 PM | Updated: Jan 29, 2008 10:21 AM
Trade leaders in Pakistan and India are eager to explore the business potential between their two countries and are working to exchange visits soon, as their governments make gestures of peace tobreak their two-year-old stalemate.
The parallel process of trade diplomacy now unfolding is underlined by recent statements by Pakistani Commerce Minister Humayun Akhtar, who has expressed his country's readiness to start trade with India at the bilateral and regional levels.
His statement was a departure from Pakistan's earlier position that it would freely trade with India only after the resolution of the long-standing dispute over Kashmir.
Trade leaders in Pakistan and India are eager to explore the business potential between their two countries and are working to exchange visits soon, as their governments make gestures of peace tobreak their two-year-old stalemate.
The parallel process of trade diplomacy now unfolding is underlined by recent statements by Pakistani Commerce Minister Humayun Akhtar, who has expressed his country's readiness to start trade with India at the bilateral and regional levels.
His statement was a departure from Pakistan's earlier position that it would freely trade with India only after the resolution of the long-standing dispute over Kashmir.
Pakistan has not accorded the Most Favoured Nation (MFN) status to India and allows trade in just 600 items from its eastern neighbour.
Hopes up
But Prime Minister Zafarullah Jamali has allowed the importation of 78 more items after the recent thaw in the relations with India, a move welcomed by the two countries' business sectors. Pakistan had agreed to the inclusion of these items at the South Asian Preferential Treaty Agreement level.
Business leaders' hopes are up amid Pakistan's explicit willingness to discuss all issues with India.
"The government of Pakistan's policy is that Pakistan is ready for composite dialogue on all outstanding issues with India, including the core issue of Kashmir," foreign office spokesman Aziz
Ahmed Khan said at a press briefing.
These renewed hopes for dialogue between the South Asian rivals has already prompted increased communication between the business groups of India and Pakistan in the past few weeks.
Officials at the Islamabad Chamber of Commerce and Industry (ICCI) said the Indo-Pakistan Chamber of Commerce and Industry has contacted them to nominate members of a delegation due to travel to India in June.
"The visit is still subject to visa and other formalities that need to be taken care of. We don't yet know the exact dates or the programme, but there is a lot of interest among Pakistani businessmen in seeing stronger trade relations with India as well as the region," confirmed one ICCI official.
SAARC delegation
Pakistani newspapers quoted the co-president of the Indo-Pakistan Chamber of Commerce and Industry, Illyas Ahmed Bilour, as saying that the chamber is organising a group 40 to 50 Pakistani businessmen to go to New Delhi for talks with Indian business leaders. Similar statements from
Indian trade leaders have also appeared in the press.
At the same time, the chamber of commerce and industry of the South Asian Association for Regional Cooperation (SAARC) is considering a proposal to send a delegation to meet the prime ministers of India and Pakistan.
The delegation would ''apprise them (prime ministers) that businessmen will provide all-out support to normalise relations between the two arch rivals," said a press note from the chamber's Islamabad office.
Government officials as well as business leaders recognise the tremendous economic benefit of free trade between the two countries, if only it politics did not get in the way. The bulk of trade now is conducted through unofficial channels.
Between them, Pakistan and India trade goods amounting to an average of US$250 million annually. Official statistics suggest that during the first eight months of the current fiscal year, Pakistan's exports stood at 40 million dollars against imports of US$107 million from India.
Low trade volume
An official of the Pakistani Commerce Ministry said that this trade volume is extraordinarily low, accounting for less than one percent of the global trade of the two countries. In 2000-2001, India exported only US$186 million worth of goods to Pakistan, out of US$44 billion in total exports. Pakistan's exports totalled US$8.8 billion, but only US$65 million went to India.
Independent studies put the real volume of bilateral trade at between US$1 billion and US$2 billion, most of which occurs smuggling or circular trade through third countries.
As many as 16 items that are not included in Pakistan's list of permissible trade items are either smuggled into Pakistan directly or brought in from Dubai, Singapore or Hong Kong.
Pakistani officials agree that the country loses some US$500 million annually in customs duties to smugglers. But they say that the political, environment and security issues are paramount in the country's foreign policy. The pressure from right-wing Islamist groups has also deterred the government from pursuing a 'peace through trade' policy.
These groups maintain their position even now. "The core issue between the two countries is Kashmir and it should be solved first. Trade, sports and other issues must be dealt with after resolving this major issue," said Syed Munawar Hasan, secretary general of the Jamaat-i-Islami party, which is part of the religious parties' alliance called Muttaheda Majilis-i-Amal (MMA).
The religious parties believe that the latest peace overtures by India arose out of its economic and political compulsions, instead of a real interest in harmony with Pakistan.
In addition to huge costs of maintaining a military buildup, India is open to talks with Pakistan to restore an economical air connection with Afghanistan and to reduce the losses suffered by Indian airlines because of Pakistan's ban on overflights, they say. This, they add, is also hindering India from playing an effective role in Afghanistan's reconstruction.
Beneficial
They add that India is now also eager to get access to cheaper energy resources in Iran and Central Asia, which is not possible without durable ties with Pakistan. "We must exploit India's compulsions, rather than giving it concessions," said Munawar Hasan.
But independent analysts and groups say that peace between India and Pakistan will in the end be beneficial to both countries.
According to the latest briefing paper of the Washington-based Centre for Strategic and International Studies: "One estimate of the impact of complete free trade within the South Asian region puts the total at US$14 billion.''
"Legalising trade that now moves through third markets would cut transport costs and transit time for goods, resulting in lower prices for the consumers. Bringing smuggling into official channels would provide a much needed revenue stream to both governments," it said.- IPS
The parallel process of trade diplomacy now unfolding is underlined by recent statements by Pakistani Commerce Minister Humayun Akhtar, who has expressed his country's readiness to start trade with India at the bilateral and regional levels.
His statement was a departure from Pakistan's earlier position that it would freely trade with India only after the resolution of the long-standing dispute over Kashmir.
Pakistan has not accorded the Most Favoured Nation (MFN) status to India and allows trade in just 600 items from its eastern neighbour.
Hopes up
But Prime Minister Zafarullah Jamali has allowed the importation of 78 more items after the recent thaw in the relations with India, a move welcomed by the two countries' business sectors. Pakistan had agreed to the inclusion of these items at the South Asian Preferential Treaty Agreement level.
Business leaders' hopes are up amid Pakistan's explicit willingness to discuss all issues with India.
"The government of Pakistan's policy is that Pakistan is ready for composite dialogue on all outstanding issues with India, including the core issue of Kashmir," foreign office spokesman Aziz
Ahmed Khan said at a press briefing.
These renewed hopes for dialogue between the South Asian rivals has already prompted increased communication between the business groups of India and Pakistan in the past few weeks.
Officials at the Islamabad Chamber of Commerce and Industry (ICCI) said the Indo-Pakistan Chamber of Commerce and Industry has contacted them to nominate members of a delegation due to travel to India in June.
"The visit is still subject to visa and other formalities that need to be taken care of. We don't yet know the exact dates or the programme, but there is a lot of interest among Pakistani businessmen in seeing stronger trade relations with India as well as the region," confirmed one ICCI official.
SAARC delegation
Pakistani newspapers quoted the co-president of the Indo-Pakistan Chamber of Commerce and Industry, Illyas Ahmed Bilour, as saying that the chamber is organising a group 40 to 50 Pakistani businessmen to go to New Delhi for talks with Indian business leaders. Similar statements from
Indian trade leaders have also appeared in the press.
At the same time, the chamber of commerce and industry of the South Asian Association for Regional Cooperation (SAARC) is considering a proposal to send a delegation to meet the prime ministers of India and Pakistan.
The delegation would ''apprise them (prime ministers) that businessmen will provide all-out support to normalise relations between the two arch rivals," said a press note from the chamber's Islamabad office.
Government officials as well as business leaders recognise the tremendous economic benefit of free trade between the two countries, if only it politics did not get in the way. The bulk of trade now is conducted through unofficial channels.
Between them, Pakistan and India trade goods amounting to an average of US$250 million annually. Official statistics suggest that during the first eight months of the current fiscal year, Pakistan's exports stood at 40 million dollars against imports of US$107 million from India.
Low trade volume
An official of the Pakistani Commerce Ministry said that this trade volume is extraordinarily low, accounting for less than one percent of the global trade of the two countries. In 2000-2001, India exported only US$186 million worth of goods to Pakistan, out of US$44 billion in total exports. Pakistan's exports totalled US$8.8 billion, but only US$65 million went to India.
Independent studies put the real volume of bilateral trade at between US$1 billion and US$2 billion, most of which occurs smuggling or circular trade through third countries.
As many as 16 items that are not included in Pakistan's list of permissible trade items are either smuggled into Pakistan directly or brought in from Dubai, Singapore or Hong Kong.
Pakistani officials agree that the country loses some US$500 million annually in customs duties to smugglers. But they say that the political, environment and security issues are paramount in the country's foreign policy. The pressure from right-wing Islamist groups has also deterred the government from pursuing a 'peace through trade' policy.
These groups maintain their position even now. "The core issue between the two countries is Kashmir and it should be solved first. Trade, sports and other issues must be dealt with after resolving this major issue," said Syed Munawar Hasan, secretary general of the Jamaat-i-Islami party, which is part of the religious parties' alliance called Muttaheda Majilis-i-Amal (MMA).
The religious parties believe that the latest peace overtures by India arose out of its economic and political compulsions, instead of a real interest in harmony with Pakistan.
In addition to huge costs of maintaining a military buildup, India is open to talks with Pakistan to restore an economical air connection with Afghanistan and to reduce the losses suffered by Indian airlines because of Pakistan's ban on overflights, they say. This, they add, is also hindering India from playing an effective role in Afghanistan's reconstruction.
Beneficial
They add that India is now also eager to get access to cheaper energy resources in Iran and Central Asia, which is not possible without durable ties with Pakistan. "We must exploit India's compulsions, rather than giving it concessions," said Munawar Hasan.
But independent analysts and groups say that peace between India and Pakistan will in the end be beneficial to both countries.
According to the latest briefing paper of the Washington-based Centre for Strategic and International Studies: "One estimate of the impact of complete free trade within the South Asian region puts the total at US$14 billion.''
"Legalising trade that now moves through third markets would cut transport costs and transit time for goods, resulting in lower prices for the consumers. Bringing smuggling into official channels would provide a much needed revenue stream to both governments," it said.- IPS
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