PAKISTAN’S commerce minister Khurram Dastgir Khan says that a trade
deal between Pakistan and India appears likely this year, even though
matters between prime ministers Nawaz Sharif and Narendra Modi do not
look so comfortable.
The planned trade deal continues to be
subjected to excuses and barriers, whereas the rest of the world has
created new ‘growth nodes’ through regional economic corridors, not to
mention the proposed Trans-Pacific Partnership (TPP) and the
Transatlantic Trade & Investment Partnership being crafted by the
Margaret Flowers of the Flush the TPP group calls the
upcoming agreement a “global corporate coup” that would encompass
two-thirds of world GDP and one-third of world imports. Where will India
and Pakistan, or the larger South Asian region for that matter, stand
in the wake of such deals?
As a result of strained India-Pakistan
ties, South Asia is the least connected of all regions in the world.
True, connectivity in this region would require a balancing act. Once
data and communication flows open up, risks to privacy and national
security will become more pronounced. And yet, this consideration should
not have halted the economic union for so many decades.
Modern ways of enhancing trade must be discussed by India and Pakistan.
A look at the archives of the trade negotiation process between India
and Pakistan shows that the last 30 years were committed to trade in
only a few areas such as textiles, agriculture, automotives etc. But the
truth is, no one promotes trade easily in these conventional
job-creating sectors. Far more homework is needed in these sectors,
while the current negotiations must be accompanied by some modern tools
The commerce ministries on both sides should revise the
current trade negotiation agenda. Firstly; this agenda was set prior to,
and, without full understanding and knowledge of, the impact of
technology flows, data communications or even of small and medium
enterprises (SMEs) and the services sector. Secondly; it has pulled
along without the active engagement of the private sector.
proactive approach in the targeted areas with a focus on ‘real’ mutual
advantages is needed. Mainstreaming modern trade tools such as a
facilitation mechanism for the SMEs, an information and communications
technology (ICT) agreement on the digitisation of information at the
Wagah border, an understanding on creative industries (film, music,
fashion), perhaps also a study group to explore the effect of
communications and data flows is important.
Mexico calls its SMEs
the ‘small giants’ of modern knowledge economies. SMEs on both sides of
the India-Pakistan border are also small giants of formal and informal
trade. The Sustainable Development Policy Institute says the informal
flow of goods from India into Pakistan in 2012 amounted to $4.2 billion.
Fabric imported from India informally was about $3.7bn and auto parts
$268 million. An SME facilitation mechanism with a view to digitising
the Wagah-Attari border should be a good start to encourage the
participation of SMEs in the formal economy.
ICT too can play a
key role. Perhaps an ICT cooperation agreement similar to the one
between Japan and the Philippines could be deliberated. If Pakistan was
to transform its logistics and manufacturing sectors by replacing some
physical flows with virtual flows, many players would be the
The Pakistani handloom fabric company Khaadi has
launched a platform where Indians can place their orders online. Ali
Zafar and Rahat Fateh Ali are exporting their services across the border
to the Indian film sector. In the same way, Pakistan is becoming one of
the larger markets for film promotion for Bollywood. In five to 10
years, Pakistan could be the largest Bollywood market after India.
is also necessary to safeguard the rights of the artists and craftsmen
on both sides from double taxation and strict visa regimes. Service
providers with a good track record can be given priority. A cooperation
framework agreement in mutually agreed creative sectors can pave the way
for shared commercial interests.
Another game-changer in the
negotiation process is the powerhouse called the private sector. It is
not governments, but the private sector that creates jobs in abundance.
It is the private sector that is the foot soldier in the battlefield of
trade and business, hence its engagement is essential in the ongoing
Connectivity is the new economic growth
model, generating welfare along with alternative trade tools. South
Asians deserve this unleashed welfare. For how long will South Asian
leaders continue to shut their eyes to these inescapable fundamentals?
Surely the inaction is not due to lack of vision; for Mr Modi put it
very well: “India and Pakistan can together write a new chapter in the
development of South Asia if the two countries were to concentrate on
fighting poverty and unemployment”.
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The opinions expressed in this article are the author's own and do not necessarily reflect the viewpoint or stance of SDPI.