Onions did get traded in 2010. But not sugar, since ‘sweetening’ of ties is a no-no. At the root are mistrust and hostility since the two separated in 1947. A perennially uncertain situation does not allow ties to stabilise even during peaceful times.
The trend across South Asia has not been too encouraging either, and is changing only now. Trade within the region is minimal, around 1 per cent of the total, impeded by political and mental barriers. Smaller economies fear being swamped by the bigger ones. Everyone looks to trade with the rich and the far-flung.
India’s ties with Pakistan are more acute: sections of the political class and the hard line Muslim ulama consider India as ‘Enemy No. 1’. This was reiterated at a Karachi rally immediately after Commerce Minister Anand Sharma ended a very positive visit. Indian security analysts say the powerful Pakistan army, too, is opposed to improving ties.
Sharma’s visit followed one by his counterpart, Makhdoom Ameen Faheem, last September. After decades of hesitation because of domestic opposition, Islamabad has agreed in principle to reciprocate India, granting it most favoured nation (MFN) status. Pakistan has pruned its list of ‘negative’ items to 1300. India will open a second gate across the border at Attari to ease the movement of waiting trucks.
The late Indian premier P. V. Narasimha Rao’s (1991 to 1996) idea was to promote bilateral trade with Pakistan — and all neighbours, involving at least a hundred families on each side. They would prosper and, in turn, leverage on their respective governments to keep ties peaceful. But this has not happened. Save for Nawaz Sharif, himself a businessman, no Pakistani prime minister has understood Rao’s logic. Most others have been happy indulging in political and military rhetoric, said Manish Mohan of the Federation of Indian Chambers of Commerce and Industry (FICCI).
Pakistan has in the past been wary of peace-making, fearing India would ‘normalise’ ties while maintaining the status quo on contested Kashmir. Having to deal with hawks back home, Pakistani officials talking trade in Delhi also stressed that the ‘core issue’ would not be jettisoned. The Indian side conveyed that it is ready to discuss all issues, including Kashmir.
Past talks leading to agreements have been largely aspirational in nature. Working groups were set up to look at everything from tariff barriers to India selling electricity to Pakistan, to visas for businessmen.
An optimistic view is that this aspiration in itself represents a dramatic shift in relations between India and Pakistan. In the current phase, they have embarked on what may turn out to be their most organised, if slow, attempt at peace-making in their history.
India imports cotton, yarn, leather items, fresh fruits and vegetables, and surgical instruments. Around 1700 items are being traded freely with Pakistan. Even though Pakistan imports practically everything, imports from India constitute just 1 per cent of Pakistan’s total imports.
Besides direct trade, another US$1.5 billion (RM4.5 billion) are traded indirectly. Both India and Pakistan lose revenue because most trade between them is routed through a third country such as the United Arab Emirates.
The consignment goes first from Delhi to Dubai, Dubai to Karachi and from Karachi to different cities of Pakistan. So, it adds a lot of cost. Ultimately, the consumers pay for the cost.
There are other areas where trade has direct cultural and social implications. After the 1965 conflict, for decades Pakistan banned Indian films.
The result was thriving piracy. Both lost money in the bargain.
Despite sections of politicians and ulama opposing in the name of patriotism and religion respectively, the clandestine viewing of Indian films could not be prevented.
Once allowed in under Pervez Musharraf, Indian films rescued Pakistan’s cinemas from near-bankruptcy and provided the Pakistani populace with entertainment in a language they can understand and a culture they can relate to.
Two Pakistani movies have done exceedingly well in India.
It is noteworthy to compare Indo–Pakistan trade with trade between India and China. India–China trade hit US$60 billion in 2010–2011. Their leaders have set a target of US$100 billion by 2015. Bilateral trade between China and Pakistan has increased from US$3 billion in 2005 to US$8.7 billion in 2010 under their free trade agreement and other favourable policies. Prime Minister Yousuf Raza Gilani proposed last May that it should go up to US$15 billion in the next two years.
A study by the FICCI indicated that India and Pakistan have a long way to go even on the basics of bilateral trade. India has no investment promotion and protection treaty with Pakistan. Unless these protocols are in place, doing business with Pakistan on a long-term basis is not possible.
The bottom line is that the businessmen have to be enthused.
As noted by Manish Mohan, FICCI: ‘When we are talking long-term investments, businessmen have to have some kind of comfort, and that will only come when there is peace, when there are no acts of terrorism and when both the governments are talking’.
Mahendra Ved is a New Delhi-based writer and columnist.
An earlier version of this article was originally published here in the New Straits Times.