Regional Trade

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Regional trade

THAT Razzak Dawood, Pakistan’s top commerce official, favours the resumption of trade
with India supports speculation that the two neighbours might be engaged in behind-the-
scenes talks to improve bilateral ties. He is of the view that both countries should revive
trade ties, which were terminated in the wake of India’s cancellation of autonomy for
occupied Kashmir in 2019, since it is advantageous for all, especially Pakistan. Earlier this
month, top businessman Mian Mohammad Mansha had also expressed similar views,
saying that ongoing backchannel talks between the two states could yield positive results. It
is encouraging to see both government officials and businessmen supporting improvement
in bilateral relations and regional trade in South Asia, one of the least economically
integrated regions in the world. It is an established fact that regional trade is one of the
most crucial tools for economic progress and increased competitiveness of countries in
various parts. According to a 2018 World Bank report on trade among the Saarc nations,
Pakistan and India “collectively represented 88pc of the regional GDP, but the trade
between them was valued at a little over $2bn”. This could be as high as $37bn, it added.
That intraregional trade in South Asia is among the lowest at about 5pc of the total trade
compared with 50pc for East Asia and the Pacific regions means that it could be a while before
impoverished Saarc can reap the benefits of shared land borders. Multiple factors including
tariffs and para tariffs, real or perceived non-tariff barriers, broader trust deficit, political and
territorial disputes, terrorism and higher connectivity costs have prevented Saarc nations from
trading with one another. But the long-standing Kashmir dispute between Islamabad and New
Delhi is the single-most important reason for the negligible regional economic connectivity. This
has forced Pakistan and other Saarc countries to look towards the West and elsewhere for trade
prospects. There’s growing realisation across the region that stronger trade ties and mutual
economic dependence can over time build an environment of mutual trust, and help neighbours
settle their political and territorial disputes in an amicable manner. Europe understood this after
fighting two world wars and eventually coalesced into a large, strong economic bloc with a
single, common currency. Why can’t South Asian states learn from its example and collectively
work for the future of their two billion citizens? This will not happen overnight but the revival of
trade across Wagah could be a first step.
Published in Dawn, February 22nd, 2022

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