Published Date: Nov 15, 2011
INDO-PAK TIES: TALKS ON PREFERENTIAL TRADE LAUDED
India’s move to negotiate a preferential trade agreement with Pakistan could be an important confidence-building measure that can catalyse peace-building efforts in other areas.
This was stated by Consumer Unity and Trust Society (CUTS) Secretary General Pradeep Mehta on the initiation of secretary-level talk between the two countries, said a statement issued by Sustainable Development Policy Institute (SDPI) here on Monday. Mehta said, “Prime ministers of both countries should be congratulated for taking bold initiatives to facilitate trade relations.”
The commerce secretary-level talk is expected to clarify Pakistan’s move to grant most-favoured-nation (MFN) status to India. Also, India is expected to consider a more liberal visa regime for Pakistani businessmen, the statement read.
Mehta said there are many misplaced fear in both countries about the likely impact of Pakistan granting MFN status to India. He said some sceptics point out the threat of competition from across border to Pakistani manufacturing and agrarian sectors, as well as the likelihood of price rise in India as lucrative export opportunities may lead to supply shortage in the domestic markets.
The secretary general said that currently, Indo-Pak trade is only $2.65 billion a year. It is ridden with hurdles, forcing both countries to source over-priced import from other countries while cheaper alternatives are available next door.
Mehta noted that this “positive move” by Pakistan should be leveraged to lower preferential tariff rates under the South Asian Free Trade Agreement (SAFTA) which would further trigger greater trade volume, attract the attention of policy makers and private investors toward procedural reforms and infrastructure development to address a host of non-tariff barriers facing each other’s exports.
An on-going Study by CUTS International shows that India and Pakistan together can cut 55 per cent of their import bills on about 200 products, reducing the expenditure of both the countries by more than $800 million per year. Currently these products are included in the sensitive list of items to which preferential tariff rates prescribed under SAFTA are not applied.
The CUTS study entitled “Cost of Economic Non-Cooperation to Consumers in South Asia” and supported by The Asia Foundation took into account the impact of tariff liberalisation under SAFTA on consumption expenditure of five of the largest countries of South Asia and found that trade between India and Pakistan has the highest growth prospect.
While a large share of gains to Indian consumers will be through Pakistani exports in plastic based articles, minerals and mineral fuels, Indian exports in pharmaceutical ingredients and electrical equipment will significantly reduce the burden of Pakistani consumers.