Free market

Pakistan's cabinet delivers on trade. Both Delhi and Islamabad must build on this bold move

Islamabad has taken the historic decision to liberalise trade with India by opening its market to all exports from India except for a short negative list of 1,200 items that will now replace the positive list of 1,963 items, allowing Indian traders to export more than 6,800 items to Pakistan. This is also, reportedly, a major step preceding Pakistan's grant of most-favoured-nation (MFN) status to India in the near future. The negative list, too, comprising mostly textiles, pharmaceuticals and automobiles, is supposed to be phased out by the end of this year. If India had reason to be disappointed with Islamabad for failing to make the same announcement during Union Commerce Minister Anand Sharma's recent visit, the Pakistani cabinet has now delivered.

However, as our columnist today says, the irony lies in the fact that a weak government in Islamabad, battling severe odds the army, the courts, extremism, deteriorating relations with the US, etc has had the vision and courage to push this radical reform through. For, India-Pakistan trade had been hostage to the decades-old ideology in Pakistan that there could be no bilateral trade till the issue of Kashmir was settled. Nevertheless, this likely paradigm shift is not an overnight surprise. The two sides had been working on trade normalisation since April last year. New Delhi, too, must be congratulated not merely for the necessary patience it has shown but also for its active pursuit of the negotiations, in which Pakistan's civilian government had been an enthusiastic partner.

Having said that, it must be remembered that subcontinental foreign policy especially in Pakistan, and with regard to India is prone to sudden domestic reversals which can unravel deals already secured. Indo-Pak trade is currently at $2.7 billion, with Indian exports to Pakistan itself at $2.33 billion in 2010-11. Extremist groups had unsurprisingly been campaigning against trade with India. However, opposition also came from sections of Pakistani business afraid of an Indian flood. So, even as India multiplies its goods flow to the Pakistani market, Delhi must do more to address the trade imbalance which will grow bigger in India's favour now through lifting all non-tariff barriers and facilitating more imports from Pakistan. Trade is the best friend of peace. For the moment, the Pakistani army is on board, and Delhi must help Islamabad give its decision the momentum it deserves to more intricately integrate the two economies.

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