Sunday, June 15, 2014

Indo-Pak Trade: Removing the Cobwebs

Majyd Aziz

Liberalization of trade and investment between Pakistan and India is not a new or abstract initiative, but the process is not an easy venture nor should one be naive that there would be a sudden upsurge in trade activities. Businessmen have always asserted that trade and investment should never remain hostage to other contentious issues or even to the usual accusations that emanate out of the hallowed halls of officialdom in Delhi and Islamabad. It is really difficult to make hawks and hardliners comprehend the critical mass that liberalized trade and inflow of investment can provide towards ushering in relative peace and sanity.  Ergo, the hackneyed mantra, that unless contentious issues are addressed, there should be no mega shift in the trade and investment regime.

During one of the Cabinet meetings, some Ministers, representing constituents from rural Pakistan, raised concerns about where the MFN would lead to. At the same time, powerful lobbies from the automotive and pharmaceutical sectors were banging on the doors of Commerce Ministry pleading for a revisit of the impending decision to grant MFN. A concerted protest program was initiated by pseudo-religious elements, mostly those whose bread and butter is dependent upon the funding and facilities provided to them by unscrupulous traders who are active in informal cross-border trade.

Thus, the Sharif government decided to rechristen the MFN nomenclature by terming it as Non-Discriminatory Market Access. As Shakespeare said, “What's in a name? That which we call a rose by any other name would smell as sweet.” The illogicality is that inspite of getting some strength in making the pragmatic decision, inspite of the assurances given by the Commerce Minister at various forums and meetings, and inspite of the avowed commitment of the Sharif government to grant the NDMA on a priority basis, the final decision is still in a limbo.

The apparent reasons floated are that the nation’s establishment has deep reservations as it is advisable to frame trade and investment decisions within the parameters of the composite dialogue process rather than dealing it as a separate subject. This is still a moot point and not entirely maintainable because if there were such profound objections from powers that be, then the whole exercise would have been nipped in the bud. However, due to political exigencies, Sharif has to walk on a thin line and so NDMA or such other issues are consigned to the back porch.

The installation of Narendra Modi and his very bold decision to invite Sharif to his swearing-in ceremony sent a very encouraging message. However, the damper came when the Indian Foreign Secretary and the Pakistani Foreign Advisor came out with conflicting statements about the fifty-minute talks between Modi and Sharif. This further gave impetus to those forces within Pakistan who are inimical towards granting any concessions to India or even liberalizing the visa regime.

Trade and investment is possible in a peaceful and trusted environment. Commerce gets waylaid whenever a hostile situation is omnipresent. The road towards liberalization of trade and investment, especially in the context of the two large SAARC nations, is very torturous and filled with boulders.  Ironically, there is a side road that is more or less well paved for trade movement. This is the avenue of informal trade.

The business leadership of India and Pakistan are on the same page when it comes to formalizing the process of trade and investment liberalization. The politicians and bureaucracy do listen to them and do grasp the imperative need to widen the trade windows. Unfortunately, the business leaders are unable to convince or motivate those elements who do not subscribe to a peace in the sub-continent. There is thus a modicum of distress within the business communities of both the countries, more so in Pakistan. This is the fear of being questioned about patriotism, of being responsible for a deluge of Indian goods in the domestic market, and of not getting equal treatment for their goods or services across the border due to the discriminatory usage of Non-Tariff Trade Barriers that many Pakistani businessmen claim are Pakistan-specific.

Therefore, the advent of a Corporate Prime Minister in New Delhi and the business-oriented thinking of Nawaz Sharif coupled with their commonalities have enforced the hopes and aspirations of the Pakistani businessmen who see a new paradigm in the bilateral relations. They do have their concerns that contentious issues would affect the trade regime in a see-saw mode but then there is always the desire to be optimistic and to sincerely lobby for removal of all cobwebs that are hampering trade and investment.

Pakistani industrialists and businessmen see joint ventures, outsourcing, technology transfers, Indian Special Economic Zones in Pakistan near the border, opening up of Munabao-Khokhrapar route for trade and people-to-people movement, facilitative visa regime, mutual recognition of standards, harmonization of customs regulations and procedures, SAARC regional cumulation, alternate dispute resolution mechanism, cross-border banking facilities, and more importantly, reduction in NTBs. The overall impact would be that trade and investment would be the designated game-changer that should, in the long run, bring about regional economic integration. A receptive Indian market for Pakistani products would be the ideal confidence-building measure that is so essential in thwarting the ulterior designs of hardliners and naysayers.  

There is an inbuilt mindset among many sections of Indian media and armchair analysts that always hype up negativity whenever there is a thaw in the bilateral relations. The same is the case among many of their counterparts in Pakistanis. The difference is that the Indian government-led accusations get global prominence while Pakistan is generally inclined to play on the defensive. This tends to vitiate the tense situation and further compounds it by attracting a rancorous chorus from the belligerent media, fundamentalist provocateurs, militaristic theorists, and parochial politicos. But, should all these become roadblocks in free trade and investment? Obviously, trade would be a catalyst and not relinquishing sovereignty.

The prognosis for the future does look rosy, albeit, it would require a strong determination of the business leadership to ensure that all decisions taken so far to liberalize and facilitate trade and investment are activated and put into effect. The two Corporate Prime Ministers should also think about posterity as they would achieve iconoclastic status if they are able to infuse a new dynamism in Indo-Pak trade and investment process.

The Greek shipping tycoon, Aristotle Onassis, aptly said, and this should be a guiding point for Shri Modi and Janab Sharif, that ”it is during our darkest moments that we must focus to see the light.”

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