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07 November, 2011

Good turn in India-Pakistan ties

BRP Bhaskar
Gulf Today

Three years after sea-borne terrorists created mayhem in Mumbai, relations between India and Pakistan are still far from normal but there have been some developments which augur well for the future.

An Indian army helicopter, which took off from Kargil in Jammu and Kashmir and strayed across the line of control in bad weather, was forced by the Pakistani military to land but it was returned within hours. This followed immediate hotline contacts between army officials of the two countries.

A retired Indian major general, in a letter to a newspaper, said the incident vindicated his “long-held view that the Pakistan army is a professional institution, not a rogue army as some sections of the media, service colleagues, and politicians would like to suggest.” The Associated Press of Pakistan quoted the Indian general’s remarks in a report circulated to domestic subscribers.

Kuldip Nayar, veteran journalist and campaigner for India-Pakistan amity, saw the speedy and happy resolution of the helicopter incident as a sign of lessening of cussedness in the relations between the two countries. He went on to ask why the two governments were postponing an overdue meeting of Home Secretaries which would accelerate the process of normalisation of relations thrown off the rails by the Mumbai terror attack.

India recently backed Pakistan’s candidature for a non-permanent seat in the United Nations Security Council, and Pakistan supported India’s bid to secure a second term for Commonwealth Secretary General Kamlesh Sharma. By far the most significant development with a bearing on the troubled ties between the two countries is the Pakistan government’s decision to accord India most favoured nation (MFN) status. India granted Pakistan MFN status way back in 1996. However, India was not among nearly 100 countries which were given MFN status by Pakistan.

When a country grants MFN status to another it undertakes to treat it on an equal footing with other countries with which it trades in keeping with the provisions of the World Trade Organisation agreement on non-discrimination. As a signatory to the South Asian Free Trade Agreement, Pakistan had an obligation to grant India MFN status but it declined to do so, linking improvement of trade relations to resolution of the Kashmir issue.

Pakistan allowed trade with India only in fewer than 2,000 items. India was resentful of Islamabad’s restrictive attitude which limited its access to the Pakistani market, South Asia’s second largest. The fact is that this attitude hurt Pakistan too.

India-Pakistan trade in the last financial year stood at $ 2.6 billion. At least thrice as much trade between the two countries is believed to have taken place through the United Arab Emirates and Singapore. In an article published in the journal of the Institute of Peace and Conflict Studies, New Delhi, two years ago, Nabiha Gul of Karachi University said it was possible to achieve a tenfold increase in bilateral trade.

Pakistan’s export trade is worth $ 21 billion and import trade is worth $ 32 billion. Its top partners in export trade are the US (16%), Afghanistan and the UAE (8% each), China (7%) and the UK (4%) and in import trade China (18%), Saudi Arabia and the UAE (11% each), Kuwait (6%) and the US (5%).

Pakistan’s belated decision to grant India MFN status is unlikely to lead to dramatic increases in trade. Pakistan could not increase its exports to India significantly during the last five years in spite of the MFN status that it enjoyed. India was able to double its exports to Pakistan during the same period without MFN status.

The decision to grant MFN status to India was taken at a meeting of the Pakistan Cabinet and announced by the Information Minister. However, an official release issued later made no mention of MFN status. It merely said the Cabinet had approved measures for normalisation of trade. An official spokesman explained later that grant of MFN status was part of the normalisation process.

The flipflop suggests some forces within the Pakistani establishment are not keen on progress on this front. Pakistani businessmen are also wary of liberalisation of trade as they feel they cannot compete with their Indian counterparts on an equal footing. The Indian authorities are endeavouring to allay their fears.

The Pakistan Peace Coalition, a civil society group, and the Pakistan Institute for Labour Education and Research supported the Cabinet decision. In a joint statement they described it as a major breakthrough towards trade liberalisation and a step towards increased prosperity in South Asia, which has a population of 1.8 billion.-- Gulf Today, Sharjah, November 7, 2011

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