The Federal Cabinet took a difficult but right step towards trade liberalisation with India on Wednesday, deciding to raise the number of importable items from 1,946 to 5,600. As many as 1,209 items, still on the negative list, are to be phased out by the end of the current year, completing the trade normalisation process and grant of MFN status to India.
Some of the government's critics have been taking issue with the expected move to accord the Most Favoured Nation (MFN) status to India, arguing that doing so would be a travesty because Pakistan has serious issues of conflict with that country. The term actually is a misnomer; all it means is normal trade, not preferential treatment of any sort.
No doubt, India is a bad neighbour not only to Pakistan but almost all countries around it. Which is why regional trading opportunities within the Saarc framework remain largely unutilised. The hope now is that where wars and diplomacy failed, economic interest will push India towards a peaceful resolution of all contentious issues, including the core issue of Kashmir. Pakistan's decision has come after nearly year-long extensive consultations between the Commerce Ministry and various stakeholders, including chambers of commerce and industry and trade associations.
It was not easy to make. Some sections of the business community, especially in the textile sector, had wanted continuation of restricted trade for another five years. They need not fear. This country is already glutted with low-cost Chinese products. If the local businesses can compete with Chinese manufacturing industries, there is no reason why the same should not apply to India.
This side must shun pessimism and get ready to take advantage of the fact that trade liberalisation with India will open up $369.769 billion market to anyone ready to grab the opportunity. There is an urgent need though to put in place a proper mechanism to remove non-tariff barriers and create a level-playing field. Conscious of its responsibilities the government is already working in that direction.
According to a report, the Ministry of Commerce has sought conditional permission on the negative list, and is to go back to the Cabinet for a go-ahead on complete trade liberalisation after further negotiations with India. These deliberations need to give special attention to help Pakistan's textile and agricultural products specially fruits to India.
Two countries' bureaus of standards must work out an agreement for proper handling of each other's imports. In the past, Pakistani exporters, especially in the cement sector, have had frustrating experiences vis-a-vis Indian quality standards system. Wahga must not remain the only land route for trading. During Indian Commerce Minister Anand Sharma's visit to Pakistan last month, the likelihood of opening up the Khokhrapar-Monabao route was mentioned.
That needs to be done sooner rather than later. Let there be a trade through Sialkot and Jammu as well. There are several other such prospects that must also be pursued actively. First and foremost, the visa regime requires major review. A move is already underway to ease up visa problems. Any new relaxation measure must aim at facilitating those engaged in medium and small businesses since they have a big role to play in trade expansion. Restriction of three cities and police reporting for business visa needs to be done away with.
Multiple entry visa of three to five years be given to members of trade bodies. Pakistan needs to keep on pressing for removal of non-trade barriers in India for trade within Saarc. Let both countries authorities give licence to each others banks to open branches. Connectivity through land, sea and air be encouraged with fiscal incentives. Let us allow each others' designers of clothes and jewellery in each others territories.
Why should India and Pakistan trade via Dubai or Colombo. Now that Pakistan has just about crossed the Rubicon, India is expected to respond with measures that make the present decision worth its while. Let us tango.