Pakistan Observer

Pakistan must define rules of engagement for trade with India

Ishtiaq Hussain Siddiqui

Sunday, February 10, 2013 - The trade and industry is already deeply and passionately divided on the issue. For and against lobbies on the issue of Indo – Pakistan trade have failed to achieve a consensus. Those among trade and industry against granting MFN status to India before resolving the nagging issues of Non Tariff Barriers (NTBs) and Technical Barriers to Trade (TBTs) facing Pakistani goods trying to enter Indian market, got a great boost with the entry of agriculturalist lobby into the debate. The agriculturist lobby jumped into the fray after ably organized by Sughra Imam. She reportedly made a strong case in the Presidency and was able to register successfully the reservations of the agriculturist lobby. Working behind the scene and shunning media attention she has successfully turned the tide against pro-India lobby – at least for the time being.

The Cabinet in a meeting on January 03, 2013, reiterated its resolve to grant MFN status to India. It directed the Ministry of Commerce to “……. implement the decision of February 28, 2012, in letter and spirit”. This opened floodgates of statements from all and sundry. The issue has become even more controversial as time passes. In addition to the hardening of positions of the opposing viewpoints in industry and trade, the Government functionaries themselves have revealed deep divisions inside different ministries and arms of the Government.

While Makhdoom Shahab-ud-Din, Federal Minister for Textile Industry and FidaousAshiqAwan now holding the portfolio of National Regulations and Services openly opposed Ms. Khar the Foreign Minister in the Cabinet meeting of January 3rd, national press also reported deep division among the Foreign Ministry itself. While Hina Rabbani Khar was taking a strong stand in the Cabinet meeting to grant MFN status to India her own secretary Jalil Abbas Jilani, while taking to media in the parliament house stated that “Pakistan has some reservations about granting MFN status to India”. A very rare show of defiance at these levels.Makhdoom Amin Fahim another senior member of the Government and the Federal Minister for Commerce has said that MFN process is under review as India has failed to deliver on its commitments to allow access to Pakistani products. In Islamabad and in the industrial hubs of Karachi and Lahore a report by Mr. Tasneem Noorani, former Secretary of Commerce is gaining attention. This rather well written report with arguments supported by facts and figures has somehow till now sailed around under the radar. The author has also not found space on debating forums as presumably the pro-Indian lobby with strong support from International quarters was much influential till recently. With change in government apparent and the deadline of 2014 for withdrawal of US troops from Afghanistan drawing closer the tide seems to be turning.

Noorani report states“The key to trading with the ‘enemy’ therefore, is of mutual benefit. As mentioned earlier in this piece, Pakistan’s export to India was US $ 288 million in 2004-2005, while it was US $ 264 million in 2010-2011, a decline of 8% while India’s export in 2004- 2005 to Pakistan was US $547 million and US $ 1743 million in 2010-2011, an increase of 218%. Now this is a discomforting scenario, considering that Pakistan is not even working on MFN basis, and the trend is already adverse. What could happen to the balance of trade when India is given the MFN and imports of many items will be allowed?”

Following are some of the major issues relating to Indian NTBs faced by Pakistan:

a. Custom documentation: Custom’s extensive documentation inhibits free flow of goods. These delays are due to complex tariff structure and multiple exemptions. Instructions in a consolidated form are not available in one volume.

b. Import Licenses: While Pakistan has done away with the need for import licenses, India continues to use these especially for the import of vehicles and motorcycles.

c. Food items: The precaution of Adulteration of Food Rules 1955 relating to packing and labeling has 30 provisos and provisos within provisos. After these, the Post Health Officer draws samples to be sent to the Central Food Laboratory.

The report has actual examples of non-tariff and technical measures being employed by India against Pakistani products. One feels that this report may soon become rallying call for the groups calling for level playing field for Pakistani products. It is a document that is far removed from the papers so far produced mostly by western trained and sponsored Pakistani academics. Local trading oriented business interests happily support such initiatives. Such reports tend to conclude first and analyze latter. In such an environment, the far more analytical and well thought out Indian position gets an intellectual advantage, something both Siri Lanka and Bangladesh have suffered from. It is high time Pakistanis analyze first and position their talks accordingly. They can take a cue from Tasneem Noorani report.

The debate within the Government and between the trade and industry lobbies is for some good reason.

In an environment where a small border scrimmage can reverse as advance an initiative as the present trade normalization negotiations between the two nations and that too under the strong “parental guidance” of worlds only military super power and other economic giants of our time should force our economic managers to consider what this nation has learned over its 65 years history. Pakistan cannot allow its economic independence also be threatened as soon as its geographic integrity is under threat. If our major source of raw material and food stuff is from India and, with lot of good luck, our major export destination of finished and semi finished products also becomes India, the billion dollar question is “what will be the fate of our economic independence in case of a firing incidence somewhere along the thousands of miles of Pak-India border?” Where your hockey players are turned back and your women team is threatened and not allowed to stay in hotels and your students and academia are forced to commute between cities for more than 72 hours to get registered with police and other security apparatus, what will be the fate of our businessmen and businesses? Do we hear any answers?

The way forward has to sprout from a well thought out and analyzed plan by Pakistani intellectuals and negotiators. Sustainable trade relations have to be a win-win situation for both countries. One sided trade cannot be sustainable. Any amount of sponsored intellectual hammering cannot fool “all the people all the time”. Rules of the game have to be defined which are fair to both trading partners. Pakistan has to position its talks on concrete facts on the ground and not try to fool itself by suggesting to its business community that once the MFN is granted to India all Indian NTBs will come down automatically and access to Pakistani products and services to Indian market with naturally follow. We have examples of Brazil and even Argentina who got successful deals from their very strong neighbor and the NAFTA block is an example of a successful trading block. Credit for NAFTA’s success has to be given to USA also as they were willing partner in the “Big Brother Approach”. On the other hand the “Big Bang Approach” that called to open all trade and asked to put faith in market forces to take care of the rest has run into a solid wall of sorts as in case of European Union. Pakistan need not put its sovereignty on line just to appease a few quarters – either local or foreign.

— The writer is CEO of S.M. Engineering & Metal Works
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