Friday, March 2, 2012

Trading in positive List - Another spring in Indo-Pak relations?

Wagah [International Border] Flag Lowering Ceremony
What comes first to your mind when thinking about India and Pakistan? Whatever it may be, friendship holds the least probability. It is difficult to envisage alliance between two nations shaped by one of the bloodiest partition in human history and fought a number of wars in between.

Yamuna never stopped flowing, so as the case with both countries. The relationship saw its ebbs and flows over last 65 years of post independent history. The antagonism may not go soon, but it doesn’t imply that it will never change. If France and Germany can live together and trade with each other after fighting a number of wars, including the two World Wars, the same may not be impractical for these two South Asian countries.

Scope for Trade

There is an enormous potential for expanding economic activities between India and Pakistan. For this to materialize absence of any more deadly terrorist attacks originated from Pakistani soil is indispensable and Pakistan should actively participate and cooperate in anti-terrorist investigations and operations.

Increasing the economic activates are beneficial for both countries. For e.g. If Pakistan is ready to import generic medicines directly from her eastern neighbour, instead of importing pricey medicines from other countries or Indian medicines itself through middle east countries, it will not only save prized and rapidly depleting foreign exchange reserve of Pakistan but also enable the state to provide much better medical service to her people at affordable rates. In the same way Pakistan can find a big market for her major export goods like Textiles, Cement, Chemical products etc in India.

Petroleum and Petroleum products are another area to focus on. Rather than importing Petrol and Diesel at Karachi port and transporting it to the northern areas through rail-road, Pakistan can easily import petroleum products from Indian refineries situated close to the border for her North-Eastern areas including Punjab (Don’t confuse with Indian state Punjab) province.

Switching to Positive trading list 

In such a situation, the pronouncement of Pakistan Government to switch from a Positive List system to a small Negative List for trade with India is a welcome step. In short, trading in positive list means, we can trade only the items mentioned in the list – this will limit the number of items that can be traded. In the case of a negative list, we can trade all items except the ones specifically blocked by the list – this will dramatically increase the scope. It is expected that this negative list will be phased out by this year end.

The immediate gain of switching to negative list is the expansion of trade to almost 90% items, instead of a dismal 17% we maintained till now. This will open a big market for manufactures and traders from both countries.


We can hope that cross border trade and associated Confidence Building Measures (CBM) will trim down the conflicts between the nations and make good the current trust deficit.

This is one of the important steps in creating a fitting South Asian Free Trade Area (SAFTA). If we really work hard and don’t allow the terrorists to hijack the progress we can make the South Asian area a vibrant market economy and there by lifting millions from poverty and malnutrition.


Photo courtesy: Wikipedia

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