Peace And Trade – OpEd


Economic relations are important for neighborhood, regional connectivity, and for sates such as Pakistan and India where there is no social indicator which they should be proud. Both countries have failed materializing trade opportunities owing to stubbornness and lack of farsightedness and due to their failure of resolving bilateral issues such as Kashmir and have been alleging each other of cross border terrorism.

The impediments in trade include, strict visa policy, staying of goods trucks on borders for weeks, Kashmir issue, violation of human rights in Kashmir, Indian allegations against Pakistan of cross border terrorism, and fear of political leadership of losing mass support in both states if trade is initiated.

It has been 75 years when their bilateral relations including trade between Pakistan and India have not been warm. Both states see trade relations in security paradigm and political parties in both states are reluctant to start bilateral trade relations owing to the fear of losing their vote bank — the enmity which has been pumped into the minds of the common citizens of both nations.

There are two views in both states with respect to enhancing and preferring trade relations. One school of though articulates that when economic relations are cemented it will help in peace and the other bilateral issues will also be resolved. This group says that trade will increase confidence building measures between both countries and when interdependence increases, tentions would reduced. They give example of European Union which collaborated in trade and regional corporation by liberalizing trade that further stabilized mutual relations. This group justifies the opinion of Frederick Bastiat a French economist who opines that when goods do not cross the border, soldiers will.

Many neighbors have handled their disputes through trade or even have freezed the disputes or despite their disputes they have continued their bilateral trade. Many have relationships despite oppugns such as trade activities between China and India, China and Taiwan, Malaysia and Singapore are not banned — where their mutual trade is in billion of dollars. For instance, the bilateral trade between India and China was 135.98 billion USD in 2022, trade between Singapore and Malaysia was RM 480 billion in 2022 while in 2021 China was the largest trading partner of Taiwan by exporting 25.2 percent of its total exports, meanwhile, 21.2 percent of Taiwan’s exports went to China.

The second group in Pakistan views that until and unless India stops human rights violations in Kashmir and solves the issue, any trade engagement could not work. At the same time, trade opponent groups in India are further blaming Pakistan of cross border terrorism and are against resuming trade relations on this pretext. These both groups look the matters in dark perspective as  Stephen Cohen who has a pessimist view of the Kashmir conflict and observes that the conflict between both countries (Pakistan and India) is one of the five conflicts of the world that could not be resolved.

Consequently, trade between both states have seen rise and falls and both sides have failed to get advantages of trade opportunities which according to observation of the World Bank in 2019 that Pakistan and India have trade potential of 37 billion USD regrettably, it is 2 billion USD. In 1995, India provided Pakistan the most favored nations (MFN) status which was withdrew in 2019 after the Pulwama attack and imposed 200 percent tariff on Pakistani goods. Meanwhile, on August 9, 2019, Pakistan bannd trade with India after the aftermath of abrogating article 370 by Indian government when it changed the status of the AJ&K which Pakistan termed as a violation of the Simla accord.

However, after a month of that decision the government of Pakistan allowed importing pharmaceutical products from India and soon after the outbreak of Corona Pandemic in May 2020, Pakistan further allowed drugs and pharmaceutical products. Last year the ECC suggested to import Sugar, Cotton, and Cotton Yarn from India which was rejected by the cabinet.

With trade liberalization both countries can benefit in numerous fields. Pakistan can take expertise from India in Jewelry and gamesstone. While, India that generates 70 percent of electricity from Coal can import Coal from Pakistan at cheaper cost. More, Pakistan could get Iron ore, tea, and cofee in cheaper prices from India. Meanwhile, India can help in Oil and Gas exploration and drilling  in Pakistan. In addition, India that is an emerging economy can benefit from regional connectivity for which Pakistan is the shortest route to Cetral Asian countries that could be a source of energy for India to meet its needs in the future.

Notwithstanding, Pakistan can import automobile parts from India on cheaper prices than the rest of the world. Trade ban affects Pakistan textile industry as Pakistan imports most dyes from India. Pakistan exports estimatedly 31 percent of Pakistani Cement to India, that are stopped owning to ban on bilateral trade. For Pakistan, after the flood or shortage of food, the only viable solution for imports vegetables and Cereals remain India and Iran. In addition, for Pakistan geoeconomics means enhancing trade with its immediate neighbors__ India, China, Afghanistan, and Iran who have geoghraphical proximity that affects the commodities price and Pakistan can get at low prices as compare to imports from far flung countries. Trade liberalization can further dent hoarding mafia in the country who during the crises quench their thirst of money by sucking people,s blood.

An economically stronger Pakistan would be in position to protect its security interests. A poor and debt dependent Pakistan could never be in a position to do so. This has also been mentioned in the national security policy (NSP) that Pakistan will prefer geoeconomics over geopolitics. 

For India, who is the fifth biggest economy of the world, regional connectivity is vital and that Pakistan can provide suitable land route to India for Afghanistan, Iran, and Central Asian countries. A state with war with its neighbors can never fulfill its dream of economic independence. The more urgently India resolves impediments in bilateral trade including the issue of Kashmir the better it would be for its economic strength. Unfortunately, The BJP led government currently is in no mood to discuss and solve these issues.

Initiating robust trade relations will be a win win situation for both that could further provide a wheel for peace process. Diversion of billions of dollar annually from defence will help in education, healthcare facilities, improving housing sector,  creating jobs, reducing poverty, diminishing unemployment, enhancing economic growth, decreasing malnutrition, improving the HDI, focussing and diverting funds for climate change, curbing water scarcity, and fulfilling food needs through agricultural development (in the presence of Population bomb where India is becoming 1 while Pakistan is number 5). It must be in concern that socioeconomic well_being of the people should be prioritized. While, the bilateral trade between Pakistan and India trade is already taking place through informal ways from Afghanistan, Iran, the UAE, or through illegal means, why should not it be started by legal process?

During the past 75 years hatred and security perspective have penetrated bilateral relations between Pakistan and India that have hampered trade activities. We witnessed that those policies have not worked yet, consequently, peopel of both sides have been lagging behind every sphere. Will a chance for peace through trade be given? Will Indian politicians prefer socioeconomic developments of Indian people over their egos? Will Pakistan materialize its National Security Policy (NSP) which envisages geoeconomic importance first than geopolitical?

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