Posts Tagged ‘ Most Favoured Nation ’

India, Pakistan Ties Hinge on Hope

By Mir Ayoob Ali Khan for The Times of India

When hope is lost, everything seems to be lost. But when we hear the adage, Ummid pe dunya khayam hai (the world stands on hope), we visualize a ray of light at the end of a tunnel.

The rollercoaster ties between India and Pakistan are an unending reading in despair. It is hope that makes people believe that one day, some day, we will live like good neighbours. That someday becomes believably close when we hear that Indian and Pakistani politicians, officials and members of the civil society are ‘seriously’ talking about the benefits of developing stronger economic and commercial links between the two nations. Or, when the Supreme Court of India allows aging Pakistani virologist Mohammed Khalil Chishti, a murder convict, to visit his hometown Karachi.

It is an unprecedented move by the Supreme Court which took a humane approach in a murder case. The apex court spoke of Chishti’s age (82), his global reputation as an accomplished microbiologist and his previous clean record to say that he is free to go to his country but on certain conditions. He should be back in India in November to face trial in court. Though the Supreme Court’s order is solely based on the prudence of the judges, there is hope that Islamabad would show some reciprocation with regard to Indians stranded in Pakistan prisons. For instance, many are waiting to see if they would free Sarabjit Singh, an Indian convicted of life imprisonment in a case of mistaken identity.

Chishti and Singh have been in the public eye owing to the extensive coverage of their plight in the media. However, there are numerous Indians languishing in Pakistani prisons and vice versa who have hardly been covered by any media agency or their cases taken up by any human rights organization seriously. They too deserve attention as their loved ones are waiting to see them. In the meantime, the air over India and Pakistan is thick with hope that the two countries are about to enter into a new era of trade and commercial cooperation. Activity in this direction gained momentum ever since Pakistan decided to give the MFN-the Most Favoured Nation-status to India last year.

The two sides have realised that the trade volume was a paltry $2.6 billion in the year ending 2011. Officials and members of the trading community believe that this could be taken to $10 billion to $12 billion in the next three to five years. In the forefront of trade with Pakistan which is expected to grow in the coming weeks, not years, are tomatoes from Maharashtra. About 4,000 trucks carrying tomatoes have crossed over to Pakistan in the past three months. Lorries containing soya beans followed. Not to lag behind, Pakistan has started exporting cement and other construction material to India. Talks are on to allow 8,000 items from Pakistan to enter India in the next couple of years.

Hope is now fuelled by the foundation laying of an oil refinery in Bathinda, a town in Punjab which is160 km from Lahore, by billionaire Lakshmi Mittal and Indian Oil Company Ltd costing $4 billion. Pakistan that is already importing kerosene and diesel from India is hungry for petroleum products. The refinery in Punjab and another one owned by the Reliance Group in Gujarat which is close to Karachi could meet the fuel needs of Pakistan, at least to some extent. There are also talks to dismantle hurdles in matters pertaining to education and IT sectors, visa regimes, especially for the business community and tourists, opening of more land and air trade routes.

In India-Pakistan relations, hope is the key word. Let’s hope that it becomes a reality extending benefits to the people of the two neighbouring nations.


India, Pakistan Try ‘Trade Diplomacy’

As Reported by AFP

India and Pakistan, still at loggerheads on Kashmir and no closer to a full peace deal, are channeling their efforts into increasing trade in the hope that business can bring them together.

31-year-old Karachi food trader Kashif Gul Memom is among those eager to seize the opportunities offered by easier links between the estranged neighbours, which have fought three wars since independence in 1947.

“This is a change for the good. It’s an exciting time,” said Memom, one of the generation born after the painful partition of the subcontinent that gave birth to India and the Islamic republic of Pakistan.

“My generation of business people is putting the past behind us. We’re looking to the future, India is such a huge market for us,” Memom told AFP while at the largest ever Pakistani trade fair held in India.

The improved relations between the nuclear-armed rivals stem from Pakistan’s decision to grant India “Most Favoured Nation (MFN)” status by year end, meaning Indian exports will be treated the same as those from other nations.

In further progress, the neighbours opened a second trading gate in April along their heavily militarised border, boosting the number of trucks able to cross daily to 600 from 150.

India now also says it is ready to end a ban on investment from Pakistan and the countries are planning to allow multiple-entry business visas to spur exchanges — a key demand by company executives.

The warming commercial ties underline the new relevance of the private sector in the peace process, with prospects still low for any swift settlement of the “core issue” of the nations’ competing claims to Kashmir. The divided Himalayan territory has been the trigger of two of their three wars since independence.

Indian and Pakistani officials have been looking at the so-called “China option” as a model, with deepening economic engagement seen by experts as crucial to establishing lasting peace in the troubled region.

Beijing and New Delhi have been pursuing stronger economic ties while resolving outstanding political issues, such as a festering border dispute that erupted into a brief, bloody war in the 1960s.

“There is no other option but economic partnership between India and Pakistan — this leads on to other partnerships,” Indian Commerce Minister Anand Sharma said at the April trade fair in Delhi, a follow-on to a similar venture in Lahore earlier in the year.

“We have to recognise our true trade potential and leave our children with a legacy that ensures prosperity, harmony and peace.”
Some Pakistani businesses have protested against the trade opening, fearing they may be swamped by cheaper Indian goods, especially in drugs, auto parts and consumer goods. But others eye the possibilities India’s market offers.

“India with 1.2 billion people gives us great potential,” Mian Ahad, one of Pakistan’s leading furniture designers, told AFP.
Indian businessmen are equally enthusiastic, saying there is an opportunity for trade in areas from agriculture, information technology, pharmaceuticals, and engineering to chemicals.

Official bilateral trade between India and Pakistan is just $2.7 billion and heavily tilted in New Delhi’s favour.
But Indian business chamber Assocham estimates up to $10 billion worth of goods are routed illicitly — carried by donkeys through Afghanistan or shipped by container from Singapore and the Gulf.

Indian commerce secretary Rahul Khullar told AFP that Pakistan’s decision to grant India MFN status by the end of the year was “the game-changer.”
MFN status will mean India can export 6,800 items to Pakistan, up from around 2,000 at present, and the countries aim to boost bilateral trade to $6 billion within three years.

“I’m cautiously optimistic. Commerce is an excellent way to bring countries together,” Indian strategic analyst Uday Bhaskar told AFP.
“Once you institutionalise trade, it becomes hard to slow the momentum for cross-border exchanges. People say if there are onions or cement or sugar available next door, why can’t I have them? And why can’t I travel there too?”

Made in India’ Show in Pakistan as Both Talk to Boost Trade

By Surojit Gupta for The Times of India

Trade ties between India and Pakistan are expected to get a boost as New Delhi reaches out to the business community across the border, starting Monday to assure them about the positive impact of normal trade ties. Commerce minister Anand Sharma will undertake a rare journey to Pakistan, leading a large delegation of senior officials and top businessmen as the two hostile neighbours take baby steps to normalise trade and economic relations.

The private sector led by industry chambers has put up an “India show”, in Lahore and Karachi – the first ever trade exhibitions from India where over 100 exhibitors are participating. Firms representing pharmaceuticals, textile, gems and jewellery, chemicals and petro-chemicals are showcasing products.

The move is a follow up to the efforts to normalise trade ties. The Pakistan government announced granting of Most Favoured Nation (MFN) status to India in November last year. But, criticism from a section of industry in Pakistan has forced Islamabad to take measured steps on the issue. But, officials said they were optimistic that by the end of 2012, the transition to full MFN status would be complete.

Officials said they will launch outreach programme to assure businessmen in Pakistan that Indian goods will not swamp the Pakistan market if trade is normalised. “We will tell them that there are enough trade safeguards measures to ensure that Indian goods do not flood the Pakistani market. Let us first liberalise trade and see the impact,” said a senior government official.

Pakistan allows exports to India but has a positive list of 1,938 items which are officially allowed to be imported from India. Latest data shows that formal trade between India and Pakistan rose to $2.7 billion in 2010-11 from $144 million in 2001, while informal trade including third country trade is estimated at $10 billion, according to a Ficci status paper. “I have no doubt in my mind that bilateral trade, which currently stands at $3 billion, can be raised to $10 billion if trade through third countries (Dubai, Singapore and Central Asian countries) is channelised into direct exchange between the two countries,” said R V Kanoria, president, Ficci.

The government has undertaken a series of measures to increase bilateral trade. There is a move to open a second gate at the Attari-Wagah border, which is expected to increase the number of trucks crossing the border to 500-600 daily from 150-200 at present. Pakistan has agreed to remove restrictions on the number of commodities traded by the land route once the infrastructure in Wagah is ready, while both countries have agreed to avoid arbitrary stoppage of goods at ports. Suggestions have been made for opening up of an additional land route at Monabao-Khokhara Par on the Sindh border for faster movement of goods.

“We are taking significant steps to improve the border infrastructure. India has invested nearly Rs 150 crore to develop infrastructure at the Integrated Check post near Attari,” said a senior government official. He said the visa regime for business travel is also expected to be liberalised soon with multiple entry visas for 10 Indian cities, along with exemptions for police reporting. The formal announcement is expected to be made soon. Talks to expand trade in petroleum products are progressing, while efforts are also on to start negotiations for trade in electricity between the two nuclear-armed neighbours. Both sides have agreed on grid-connectivity between Amritsar and Lahore, which would pave the way for trade of up to 500 MW of power.

Trade experts said they were optimistic about the latest moves and said the effort will go a long way in helping faster regional integration. “The positive spin off for normalisation of trade is enormous. Pakistan has given signals and India now needs to take the initiative. Normalisation of bilateral trade relations will help in putting much of the political bickering on the backburner,” said Biswajit Dhar, director-general at Research and Information System for Developing Countries, an economic and trade thinktank. Experts said there was huge potential for forging joint ventures between Indian and Pakistani companies in sectors such as information technology, fish-processing, drugs and pharmaceuticals, agro chemicals, chemicals, automobile ancillary and light engineering.

Pakistanis for Peace Editor’s Note– The best chance of peace between India and Pakistan can only be achieved through trade and normalization of ties. The India Show at the Lahore International Expo Centre Feb 11-13 will go a long ways to bridging the gap and move us closer to achieving peace one day, which is the best scenario for both nations long term.


Pakistan Takes Giant Step With Trade Move

By James Lamont for The Financial Times

The move to grant Most Favoured Nation status to India by Pakistan marks a small step for the world trading system. But it is a giant step for Pakistan.

For decades, these two nuclear-armed rivals have strangled trade along what in centuries past was a commercial highway between the subcontinent and central Asia. Today bilateral trade totals a paltry $2.7bn – a fraction of its potential.

The obstacle is ideology. Pakistan’s leadership insisted that trade ties were conditional on progress in resolving a bitter dispute over the territory of Kashmir, a Muslim majority region claimed by both countries after the end of British rule in 1947.

India’s leadership was obligingly intransigent.

The “in principle” granting of MFN and easing of business visas, responding to Indian signals of goodwill, are courageous moves by Pakistan’s civilian and military leaders.

They have immediately attracted criticism from domestic industrial sectors which fear greater competition. Executives in Pakistan’s pharmaceuticals industry were quick to warn that their companies would be hurt by market access for India’s generic drugs companies.

Other sceptics hold up the example of India’s Bollywood film industry, already swamping the Pakistani entertainment market, as a sign of worse to come.

More menacingly, Kashmiri groups have condemned the decision as a betrayal. The United Jihad Council called trade liberalisation a “direct contravention” of Islamabad’s fight for Kashmir. It threatened “grave consequences” of going soft on Hindu-majority India.

Many fear that militant attacks on India will ensue in a bid to sap Delhi’s confidence in peace with Pakistan, and derail negotiations. Such attacks already rain down almost daily across Pakistan.

Most of all, the move reflects a mighty shift in opinion in Rawalpindi, the headquarters of the powerful Pakistani army, at a time when the local economy is weakening.

A section of the army’s leadership is deeply worried about a mismanaged economy and anxious to put Pakistan, growing at 3 per cent, on a higher trajectory similar to the economies of India and China. With good reason. Railway workers go unpaid, industrialists are starved of power for their factories, and foreign investors, alongside Pakistani talent, are being frightened away by security risks.

More long term, some generals view the hostile position against India as unsustainable, and see incentives to normalise ties. They also say that Pakistan’s long-term military expenditure, supported by assistance from the US, cannot be borne by a broken economy.

Many of Pakistan’s most powerful industrialists are encouraging this change of heart. They see opportunity for cement, agriculture, banking and engineering in more access to the Indian market. More broadly, they say that the benefits of opening up more to China will only bear fruit when India too can compete in the local market.

From their offices in Karachi and Lahore, they dream of Pakistan forming a regional trade grouping with fast-growing China and India akin to that formed between Canada, Mexico and the US by the North American Free Trade Agreement.

That is of course a long way off thanks to one of the most intractable of world conflicts.

Some diplomats in Islamabad are highly sceptical of regional integration so long as the disputes fester over Kashmir and a security menace pours out of the border regions with Afghanistan.

They say that security still dominates the strategic debate in Pakistan. Any bilateral relationship is hamstrung by failure to find agreement on Kashmir.

Earthmovers are already busy at the Wagha border, the principal land crossing between the two countries, preparing a new freight handling facility for rising commerce.

The current limitations are plain to see. A delegation of Pakistani traders crossed the post on Tuesday on their way to a fair in Chandigarh, the capital of India’s Punjab state. The existing facilities, usually catering to about 20 foot passengers a day, were entirely overwhelmed.

Both sides need to capitalise on what are baby steps towards more open markets. The first thing they can do is improve the infrastructure linking the two countries. The second is to ease other obstacles like quantitative restrictions, customs procedures and formidable non-tariff barriers.

The far bigger task is to resist efforts to blow up reconciliation through commercial ties, and to proceed equally purposefully on some of the thornier issues that make the region one of the world’s most dangerous.

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