"More pernicious nonsense was never devised by man than treaties of commerce."
– Disraeli
The Indian Prime Minister, Dr Manmohan Singh, is a very cautious person and man of few words. But when he called his Pakistani counterpart, Yousuf Raza Gilani, a ‘man of peace’, Dr Singh drew flak from many in India, including the Bhartiya Janata Party (BJP). Perhaps, he got a little carried away because Pakistan granted the Most Favoured Nation (MFN) status to India that would lead to increased trade and easy access of Indian products to Pakistani market. How this is going to work is yet to be seen, but one thing is clear: Several Pakistani industrial units will be under increased pressure after the market is flooded with cheap Indian products. Anyway, this does not mean that Pakistan will be unable to protect itself, if the balance of payment equilibrium is disturbed to dangerous levels.
Also, Pakistani Foreign Minister Hina Rabbani Khar was optimistic about the emerging scenario and stated that “ties between Pakistan and India had entered a positive zone.” She maintained that Pakistan will not hesitate to invest in India or Afghanistan, as it had a vital interest in maintaining regional peace. But while she predicted that the two countries were moving towards an environment that may lead to a result-oriented dialogue, the Minister forgot to mention how it would happen without resolving the Kashmir issue. Further, some economic wizards in Pakistan have not only questioned the MFN status, but also termed it as a premature move by the federal government.
Although granting MFN does not mean any out of the ordinary trading facilities, yet it signifies that the same importance is given to the products imported from India as is provided to other countries. The World Trade Organisation (WTO) bounds its members not to use discriminatory methods against other member countries for both tariff and non-tariff regulations. Therefore, Pakistani businessmen will be allowed to import nearly 2,000 out of 10,000 plus products, which are registered on the positive list by the Government of Pakistan. Consequently, this would ease restrictions on Indian products.
Against this backdrop, the supporters of MFN here argue that after economically benefiting from Pakistan, New Delhi may decide to settle the outstanding political issues that will help to normalise relations between the two countries. While others believe, rightly, that liberalising trade will price out several Pakistani goods and increase the existing trade imbalance. Since the basic condition for trade remains competition, the Indian administration is most likely to maintain high tariffs on goods of export interest to Pakistan.
Nevertheless, this does not mean that trade with India will only have a negative fallout; it has some advantages too. With this, Pakistani consumers will be able to get cheap goods specifically medicines, automobiles and, to a certain extent, raw materials for the industries. Likewise, the government will be able to earn revenue in the form of import duties, since many Indian products currently available in the markets were smuggled. However, a serious setback can occur in case the benefits of liberal trade are not evenly distributed leading to more tensions between the two countries. It would, therefore, be in the fitness of things that the governments in New Delhi and Islamabad move cautiously.
However, India may secretly subsidise some of the exports to Pakistan, specifically to compete with the Chinese products that are cheaper and easily available. To stop this, the Pakistani government as well as officials, who are assigned to monitor Indian imports, will have to remain vigilant against any unscrupulous trading practice by New Delhi.
Pakistan should also try to move swiftly on all outstanding issues, most notably the Kashmir dispute, to see the sincerity of the Indians as to whether they honestly want a change for the better. In case they continue to stall on issues, like the distribution of water and deny the right of self-determination to the Kashmiris, this euphoria will not last long. Therefore, while increased trade and easing of restrictions on travel would be a sign of improvement in ties, it should not mean that those who advocate the rubbing off the scars of partition be allowed to dominate Islamabad’s policy. It must be understood that the line dividing India and Pakistan is a permanent feature and the talk of ‘one culture’ and ‘one people’ holds no water, since it is not the truth - a phenomenon that must be respected, if the neighbouring States want to move forward and live in peace!
The writer has been associated with various newspapers as editor and columnist. At present, he hosts a political programme on Pakistan Television.
Email: zarnatta@hotmail.com