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The Hindu Business Line

Published Date: Jul 31, 2012

Remove non-tariff barriers for facilitating Indo-Pak trade: CUTS

India and Pakistan should work together in
eliminating barriers such as lack of transport infrastructure and procedural
problems to boost bilateral trade, economic think-tank CUTS International
(Consumer Utility and Trust Society) today said.

“While recent tariff liberalisation is
giving a boost to trade between India and Pakistan, non-tariff barriers,
especially deficiency in transport infrastructure and procedural opacity, are
contributing significantly to the cost of doing cross-border trade,” it said.

Pakistan is importing several items at high
prices from other countries, although India has the capacity to export them at
lower prices, it added.

“Aviation spirit, light petroleum
distillates, gold and silver jewellery and iron ores are some of the most
prominent potential export items from India which face significant non-tariff
barriers in Pakistan,” the CUTS said in a statement.

India could gain about $80 million if
non-trade barriers on the Indian side are removed for facilitating cheaper
imports from Pakistan in about 13 main product categories, it added.

Similarly, in about nine major product
categories, Pakistan stands to gain $1.4 billion if it reduces barriers for
imports from India.

The bilateral trade is currently at $2.6 billion.

“The current volume of trade between India
and Pakistan is found to be far below potential and both countries are
foregoing huge welfare gains by not acting proactively to facilitate growth in
bilateral trade,” it said.

Finding solutions for removing non-tariff
barriers is the most yielding area of policy reform for bilateral trade to grow
beyond status quo, CUTS mentioned.

“It is estimated that roughly $3 billion
worth of informal trade happens between the countries, which can be brought
into the mainstream through better trade facilitation measures,” it said.

CUTS even mentioned that most of the
informal exports from India to Pakistan constitutes mainly readymade garments,
jewellery and spices and are routed through major ports like Dubai and Singapore.

“One of the reasons often cited by Indian
exporters is the reluctance of Pakistani authorities to permit trade in a wider
range of commodities through land routes,” it explained.

CUTS International, in partnership with the
Islamabad-based Sustainable Development Policy Institute and the London-based
Market Access Portal Ltd, has initiated a project on potential benefits of
reduction in non-tariff barriers in Indo-Pak trade.