Trade Consignment Mapping for Better Regional Connectivity in South Asia

Partners: CUTS International & The Asia Foundation (india)

Duration: May to August 2014

Locale: Faisalabad & Lahore

Team Members: Dr. Vaqar Ahmed, Muhammad Hamza abbas

Background and Rationale

Trade facilitation requirements of intra-regional trade in South Asia have not been given adequate attention in the past. Trade through land route (road and rail transport) still faces several infrastructural and procedural impediments, despite being the most appropriate and cheapest mode for trade transport in mainland South Asia (excluding island nations).

South Asia is missing out on development of regional supply chains that relies much on lead time taken from placing an order to receipt of final goods.

Shortcomings in trade corridors connecting major commercial centres, especially in Bangladesh, India, Nepal and Pakistan, have undermined other regional trade liberalization policies such as tariff reduction. Higher regional trade volumes cannot be achieved unless adequate physical infrastructure, appropriate customs clearance procedures and other facilitation measures, including multi-modal transport operations and integrated trade services, are in place. South Asia is also missing out on development of regional supply chains that relies much on lead time taken from placing an order to receipt of final goods. Meeting the order cycles as per agreed delivery schedules between a range of intermediate suppliers and buyers in potential regional supply chains such as in textiles and clothing sector depends hugely on the quality of regional transport connectivity.

As far as trade corridor development is concerned the following key points are to be kept in mind:

Partial and non-coordinated reforms to upgrade part(s) of trade corridors will generate sub-optimal results as unattended issues will continue to affect the overall efficiency of trade corridors.
Since even the most important trade routes are still facing serious trade facilitation issues, understanding them and finding solutions to make these heavily used trade corridors efficient must precede other trade facilitation projects. This will generate important learning and good practices for new projects along other emerging corridors.

Goal

The Goal of the project is to contribute to the enhancement of intra-regional trade in South Asia through the achievement of the objectives of better trade facilitation measures, by finding answers to important questions vis-à-vis trade facilitation in South Asia and using those answers to influence future policy-making on trade facilitation.

Approach

This study is being conducted in collaboration with CUTS Centre for International Trade, Economics and Environment. This study will cover three important trade corridors pertaining to India-Pakistan, Nepal-India and Nepal-Bangladesh cross-border and transit trade as follows:

Islamabad-Lahore-Attari/Wagha Land Customs Station (LCS) – Ludhiana – Dehli
Kathmundu-Hetadua-Birganj/Raxual LCS – Kolkata
Kathmundu-Kakarvitta/Panitanki LCS – Phulbari/Banglabandha LCS – Hatikumtul-Dhaka

In this study more specifically SDPI will cover the Islamabad-Lahore-Attari corridor for trade with India and arrange a dissemination meeting in Islamabad in August, 2014.

Activities:

Key Informant Interviews conducted in Lahore, Faisalabad, Gujranwala, Islamabad/Rawalpindi.

Findings:

Although both India and Pakistan are aware of advantages the route holds, trust deficit and political disruptions on the Pakistan side have stalled any improvement on traffic flow between the two countries.
Even though there is a transit agreement between Afghanistan and Pakistan, frequent disruptions arising due to tension between Washington and Islamabad have blocked smooth flow of goods from Afghanistan to India.
An elevated highway has been constructed connecting Islamabad to Lahore, which is 22 km from Wagah. Motorway-2 which connects these two important cities in Pakistan covers a distance of 367 km and has six lanes.
Pakistani exporters face delays at the border because some products need additional certificates from Indian laboratories before entering the country.