Pakistan’s Move on Trade With India Can Help in Wider Normalization of Ties

As Reported by The Economic Times

The reported move by the Pakistan government to phase out major restrictions on trade with India by switching to the negative list, and doing away with that too by the end of the year, is wholly welcome. Normalising trade relations with India will help establish a template of wider normalization of mutual ties.

An indication of deep-rooted animosities and suspicions which have stymied that goal can be seen in the opposition from quarters within Pakistan to Islamabad’s declared – and logical – aim of granting India the World Trade Organization-compliant Most Favoured Nation status next year.

But the arrangement to separate commerce from thornier issues like Kashmir and Pakistan’s actions against those accused of terror attacks against India can lay a foundation for minimising mutual distrust. For New Delhi, this would be in keeping with the idea of engaging various power centres in Pakistan, given the fractured power structure in that country.

While being perfectly aware that policy on India, like in other areas deemed to be ‘strategic’ by the military, is mostly determined by the latter, the aim should be to defang and isolate hardline elements by positing the real and tangible benefits enhanced mutual trade can offer Pakistan.

And there certainly is ample scope to do that: direct Indo-Pak trade is less than 1% of their global trade; annual mutual trade was around $2.7 billion through March 2011, which, despite being up 50% from the previous year is still measly compared to, say, India’s $60 billion annual trade with China or the potential.

But a beginning has been made with Pakistani industry backing the new move, which, in turn, can help allay fears that Indian goods will swamp Pakistani markets. What will happen is the ending of trade routed through third countries (mostly Dubai).

Legitimate mutual trade can lead to both countries envisaging cooperation in a wider trading entity comprising Afghanistan and Central Asia, with obvious benefits for regional stability. This might sound utopian for now, but mutually-beneficial commerce does have a way of tempering hostilities.

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