Trade eases India-Pakistan tension
Trade eases India-Pakistan tension
Tired of waiting for their politicians to get along, South Asian countries are forging ahead with trade links. Kunda Dixit of Inter Press Service reports.
NEW DELHI (IPS): Among the cricket balls being used by players from 12 participating teams during the World Cup Cricket Tournament in South Asia will be ones made in Pakistan by Grays of Cambridge.
The balls are regarded as the best in the world, but are not officially exported to India. Even after the South Asian Preferential Trade Agreement (SAPTA) went into effect on Dec. 7, the Pakistan-made balls will not be competitive because sports goods are not on the list of items for which tariffs have been reduced.
South Asian countries are trying to use SAPTA to overcome years of protectionism -- and in the case of India and Pakistan outright hostility -- to forge closer regional trade ties. But as with the cricket balls, there is long way to go.
"Our cricket balls are the best in the world, and if everything was normal, it should have been selling in India," said Mohammad Aslam Manda, chairman of the Pakistan Sports Goods Manufacturers and Exporters Association.
Manda was among hundreds of businessmen from Pakistan and other South Asian countries who came to India to take part in the first ever trade fair of South Asian Association for Regional Cooperation (SAARC) this month.
SAARC groups Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, Together, the South Asian countries have a population of 1.4 billion -- one-fifth of the world total. But they make up only 1.3 percent of global output and less than one percent of international merchandise trade.
Increasingly worried by the globalization of the world economy and the marginalization of their region by trading blocs in their neighborhood, SAARC countries have been trying to get over political problems to streamline intra-regional trade.
Commerce ministers from the seven member countries agreed in New Delhi this month to bring forward the timetable for trade liberalization to establish a South Asian Free Trade Area by the year 2000.
The newly-formed SAARC Chamber of Commerce and Industry organized the trade fair so that countries in the region can start taking advantage of the new SAPTA rules.
But critics point out the list of tariff-free items announced by SAARC countries show even more glaringly that they are trying to protect domestic industries from competition. Between them, SAARC countries have announced tariff cuts on less than 230 items -- mostly low-volume goods from smaller SAARC countries.
For instance, Bangladesh will reduce by 10 percent duty concession on items like dental cement, glands for organotherapy and fresh grapes. Pakistan will cut import duties on ornamental fish, bamboo and lamb skin. Nepal will reduce duty on only 14 items including chewing gum, fruits and canned fish.
Many of these cuts do not apply to Indian exports, only to products from smaller SAARC countries. But befitting its size, India's concessions are the largest with tariff cuts in 106 items like paper and fertilizer.
Says SAARC Chamber vice-president from Nepal, Padma Jyoti: "We have to start somewhere and I think the trade fair is a start. It was not just a symbolic exercise, it opened up channels for trade by building contacts."
Most regional experts agree that intra-regional SAARC trade will not get anywhere unless the two South Asian heavyweights, India and Pakistan, patch up their political differences. And there is now a growing realization in the bureaucracies of both Islamabad and New Delhi that freer trade will be mutually beneficial. In fact, trade could be the balm that may ultimately soothe political tensions.
"Politics used to come first and trade followed. But with India and Pakistan, if trade leads politics will follow," Pakistan's commerce minister Ahmad Mukhtar said at a conference that coincided with the SAARC Trade Fair.
Proof of this was the fact that Pakistani products destined for the trade fair -- including a gleaming metallic green Honda Civic assembled in Pakistan -- traveled overland from Pakistan to India across the tense frontier. And Indian officials went out of their way to allow Pakistani businessmen to visit the Taj Mahal even though their visas were valid only for New Delhi.
Still politics gets tangled up with sports and trade. An Indian hockey team could not get visas in time for a tournament in Pakistan. And sometimes it is the sheer weight of bureaucracy that prevents links: some Bangladeshi exhibits never made it to the SAARC Trade Fair because they were held up by customs at the Indian border.
Under new World Trade Organization (WTO) rules, India automatically granted Pakistan most-favored nation (MFN) status on Jan. 1. As WTO member, Pakistan is supposed to do the same but sensitivity to domestic opinion has made Islamabad cautious.
Still, Pakistan's Friday Times newspaper said: "Let us not be paranoid. There is no danger that India will swamp Pakistan. The bureaucrats in Islamabad trying to negotiate better terms are not about to abandon our national security interests."
On this side, The Times of India was equally accommodating: "Political and military tensions have been allowed to cast an unhealthy shadow over economic relations right from 1947. The people of the subcontinent have been the main losers ... it is tragic that greater economic cohesiveness in South Asia has been stymied by political grandstanding on all sides."
Two-way trade between the two countries is officially only worth US$100 million annually. But estimates show smuggling and indirect trade through third countries amounts to US$ 2 billion a year.
Indian and Pakistani businessmen say regularization of this trade would benefit both governments, help normalize political ties and spread the free trade mantra in the rest of South Asia.