Positive list to double trade with India

Dawn, Pakistan, December 07, 2006

By Mubarak Zeb Khan

A study has revealed that the formal trade with India could be double from $1 billion to $2 billion after a recent action by Pakistan to increase the positive list of tradable products from 773 to 1075 items.

But, the exchange can quadruple, if only there is closer economic cooperation and that could lead to better peace. Whenever one speaks about the peace-promoting economic relations between India and Pakistan, critics opine that relations between the two are marred by the Kashmir dispute and the cross-border infiltration.

These facts were revealed in a joint research study conducted by secretary general of CUTS International–an India based leading research and networking group–Pradeep Mehta and its Pakistani partner Ms Huma Fakhar–the Lahore-based lawyer of Fakhar Law International and Market Promotion.

Hence, to expect more peaceful relations between the two fast growing economies through trade is a dream. But the researchers said that they did not agree with the assumption that trade could not help in normalising relations between the two arch rivals.

According to the study, a copy of which made available to Dawn, it was suggested that the US government can promote mutual trade between the two countries by offering duty-free imports, if one used the other’s inputs in their exportable items to the US. This idea, the researchers said played positive role in case of many countries.

The study pointed out the example of US scheme of qualified industrial zones (QIZs), which was in operation since 1996, in a bid to promote peace in the Middle East between Israel with Jordan and Egypt. The scheme allowed duty free export to US market from Jordan and Egypt in case a minimum level of inputs from Israel was used in the manufacturing of these products.

Since both India and Pakistan are currently preparing to or entering into various preferential trade agreements (PTAs), bilateral as well as regional) with other countries and regions both with developed and developing countries, it would be sensible to include QIZs type arrangements in some of the agreements, particularly with EU, US and China and even within Safta and the proposed Asean-India FTA.

Such arrangement would help both Indian and Pakistani exporters and importers to reap benefits of free trade as well as promote greater cooperation, the research paper said.

The report says the mega projects like the Turkmenistan-Afghanistan-Pakistan and the Iran-Pakistan-India gas pipeline projects would help in promoting trust and regional economic cooperation between India and Pakistan.

Though both India and Pakistan are moving closer, it is at a snail’s pace and constantly encountering hurdles. Some of these measures could divert attention from sticky matters and accelerate the speed of greater economic cooperation between the two nations through reduction (if not elimination) in tensions and mistrust and bringing in peace and tranquillity in this region, the researchers opined.