Pakistan Grants Trade Concessions to India, Boosting Peace
November 03, 2011, 11:48 PM EDTBy Farhan Sharif and Haris Anwar
Nov. 3 (Bloomberg) -- Pakistan granted India trade concessions, removing a major hurdle to improving relations between the two nuclear-armed nations.
Under the so-called most-favored nation status, Pakistan will give its South Asian neighbor equal standing in international trade by removing non-tariff barriers, lowering customs duties and raising import quotas.
Yesterday’s decision, announced by Pakistan’s Information Minister Firdous Ashiq Awan after cabinet approval, is the biggest step by Islamabad to facilitate trade with its neighbor since peace talks restarted in February. India granted most- favored nation status to Pakistan in 1996.
“This marks a major shift in Pakistan’s strategy for negotiating peace with India,” said Shaheen Akhter, an analyst at the Institute of Regional Studies in Islamabad. ”Pakistan has agreed to the Indian demand that trade shouldn’t remain hostage to political disputes.”
Improved relations between India and Pakistan are crucial for stability in South Asia and for U.S. hopes of resolving the decade-old war in nearby Afghanistan, the U.S. State Department has said. The two South Asian neighbors agreed in February to resume a five-year peace process that stalled after a 2008 raid by Pakistani guerrillas in Mumbai, India’s financial capital.
Deteriorating Relations
Deteriorating relations between Pakistan and India risk prompting Pakistan’s armed forces to shift troops from the fight against militants to reinforce the border with India, Imtiaz Gul, chairman of the Islamabad-based Center for Research and Security Studies said in July.
Pakistan’s decision “opens up new pathways of elevating our economic engagement to a much higher level,” Indian Commerce Minister Anand Sharma said in a statement in New Dehli yesterday. The concessions influence the peace process in a “positive manner”, he said.
Total trade was valued at $2.7 billion between the two countries in India’s fiscal year ended March 31, according to its commerce ministry. The two sides aim to double trade to almost $6 billion by 2015.
Pakistan’s industrialists are divided over the benefits of opening trade with a neighbor whose economy is almost 10 times the size of Pakistan’s and growing at a faster pace.
‘Great Opportunity’
“This can be a great opportunity for Pakistani industry with the opening of a big market next door,” said Khalid Tawab, vice president of the Federation of Pakistan Chambers of Commerce and Industry. “But while finalizing the parameters, the interests of industries must be safeguarded.”
Pakistan’s pharmaceutical and automakers may be hurt by the opening of trade, while cement and textile companies may gain, he said.
India and Pakistan agreed in July to expand trade and travel across their border in divided Kashmir and step up counter-terrorism cooperation. The neighbors will double the number of days goods can be traded across their border in the Himalayan region to four a week, increase the frequency of bus services and ease restrictions on travel permits, according to a joint statement issued after their foreign ministers met in New Delhi the same month.
--With assistance from Kartikay Mehrotra in New Delhi and Khurrum Anis in Karachi. Editors: Naween A. Mangi, Abhay Singh
To contact the reporters on this story: Farhan Sharif in Karachi at fsharif2@bloomberg.net Haris Anwar in Islamabad at hanwar2@bloomberg.net
To contact the editors responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
