Consumers to gain from Pak-India trade pact

The News International, October 02, 2011
Consumers in both countries can have huge gains from a more open trade between Pakistan and India and the agreement to expand bilateral trade up to $6 billion doubling the existing level is a welcome step.

The Sustainable Development Policy Institute and Consumer Unity & Trust Society-International (CUTS-International), a research partner of SDPI, stated this which are conducting an Asia Foundation supported study On the cost of economic non-cooperation to consumers in South Asia.

They estimated that annual welfare gain to Indian consumers on account of importing some products from Pakistan would be almost $4 billion. Much of this gain would accrue from importing rice and textile products. Similarly, Pakistan annually gains almost 280 million dollars as a result of increased import of pharmaceutical products, automobile parts and petroleum products from India.

Though cross-border trade between India and Pakistan is growing over the last few years, it is still much less than its potential. Informal trade including that routed through Dubai etc is much higher and consumers are paying more than what is required. Both countries are importing products at a much higher cost from sources other than themselves and from other South Asian countries.

The SDPI-CUTS found that lack of reference to consumer welfare gains in the academic literature as well as in popular media heavily influenced the perception of all categories of respondents.

Most respondents of the study believed that currently intra-regional trade among South Asian countries is under-performing and its potential is highly under-rated. A striking observation is that consumer groups in general are more unaware about consumer welfare gains from a more open trade regime than most other groups because they have little or no representation in trade policy making process in the region and, hence, minimal exposure to the subject.

As against a popular perception, most stakeholder groups in the region have positive expectations from enhanced intra-regional trade but it is mostly hidden as a result of pessimism about political relations. The general positive expectation can be tapped best by building networks of producers and exporter groups and consumer organisations.

It said that intra-regional trade among South Asian countries is around five per cent of their total trade and is the lowest among all regional groupings in the world. Most stakeholders believe that it can be enhanced to more than 10 per cent within a next few years and for that to happen consumer groups should play a more assertive role.

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