Inability to resolve their political disputes will once again thwart India and Pakistan from realizing their bilateral trade potential of $9 billion (Rs38,700 crore), nine times the actual trade turnover.
Significantly, the bulk of the existing bilateral trade is routed through Dubai and Singapore, instead of across the borders of the two countries.
Participating in the 14th summit of the eight-nation South Asian Association for Regional Cooperation (Saarc), Pakistan ignored the trade concessions India put on offer and instead emphasized the resolution of the long-standing Kashmir dispute as a precondition to kick-start regional trade.
Saarc was established in 1985, with seven members, including Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan too has been admitted into the fraternity, while representatives of China, Japan, Korea, the US and the EU are attending this year’s summit as observers.
At an interaction with senior editors, Pakistan Prime Minister Shaukat Aziz categorically said bilateral “trade is linked to progress on Kashmir.” He repeatedly described Kashmir as the “core” issue, which needed to be resolved as per the wishes and aspirations of people of the state, a position that India views as a challenge to its sovereignty.
Addressing the summit, Aziz said it was essential to build mutual trust and confidence to reduce the “trust deficit” which, he said, hampered the realization of full-growth potential.
Prime Minister Manmohan Singh, on his part, proposed linking all capital cities in the region through direct flights. Singh also announced a unilateral liberalization of visas for students, teachers, professors, journalists and patients from Saarc countries.
“India is ready to accept asymmetrical responsibilities, opening its markets to South Asian neighbours without insisting on reciprocity,” said Singh, playing the perfect host. He went on to announce duty-free access to the Indian market for the least developed countries in the region and a further reduction in the sensitive list in respect of these countries.
At present, trade within the Saarc region is languishing.
“Starting from such a low base, greater integration among South Asian countries could bring huge benefits to its people. Intra-regional trade in South Asia can increase to $20 billion by 2010 if trade barriers are lifted. Benefits from energy trade can also be huge,” said Washington-based Praful Patel, World Bank (WB) vice-president for the South Asia region at a media briefing ahead of the Saarc summit.
According to a WB report, intra-Saarc trade is merely 2% of the gross domestic product, compared with more than 20% for East Asia. Not surprisingly, the report categorizes Saarc as the least trade-friendly region in the world.
Former foreign secretary Shashank said Pakistan was yet to feel comfortable enough to move faster in promoting bilateral trade. “Indo-Pak trade is moving ahead, maybe not at a pace we would like, but the Pakistan government perhaps does not want to give the impression to its domestic constituents that it is yielding on trade without a resolution on Kashmir,” said Shashank.
B.G. Verghese, an analyst with the Centre for Policy Research, a think tank, said India could do with more such unilateral gestures, being the bigger partner in the region, but added that Pakistan had to rise above its usual “humbug”. “Pakistan is marching out of step. By not implementing the South Asia Free Trade Agreement, for example, which is not a bilateral treaty, Pakistan is only penalizing its own people, who could benefit with cheaper goods and services,” said Verghese.
(PTI also contributed to this story.)