Pakistan-India Trade:

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Additional Trade Challenges: Transport, Transit, and Non-Tariff Barriers granting visas are some of the restrictions that have limited market access for aspiring traders (Taneja 2011). Consulates in both countries have exercised tremendous discretionary powers in granting visas and waiving visa requirements. Consulates have allowed some traders to be exempted from scrutiny by the Ministry of Home Affairs in India and Ministry of Interior in Pakistan. They have also extended the length of stay; exempted traders from police reporting; and removed restrictions on the number of cities to be visited. Selected traders who are beneficiaries of such largesse make repeated visits and have access to trade-related information. On the other hand, lack of transparency, market imperfections, and information asymmetries raise transaction costs and restrict market access for several other aspiring traders. Indian officials argue that, for the sake of security, rigorous screening of visas is essential. While it is true that no compromise can be made on national security issues, it needs to be recognized that genuine traders often become victims of a strict visa regime. In October 2011, India and Pakistan finalized the draft text of an agreement for streamlining visa procedures between the two countries, and was submitted to the respective governments. Nearly a year later, in September 2012, the two capitals concluded an agreement that loosens visa requirements in both countries. There is no doubt that a more liberal visa regime can provide an effective channel for information exchange on trade-related matters between the two countries. reCoMMendaTions The trade normalization process is expected to unleash huge trade opportunities for India and Pakistan. However, for this trade to be realized, several measures need to be undertaken by both countries. Two concrete steps that have been taken since the commerce secretary-level talks are the phasing in of MFN and the setting up of modern infrastructure facilities at the Attari/Wagah border on the Indian side. If infrastructure is not upgraded on the Pakistani side, the full benefits of improved infrastructure cannot be reaped. Doing away with the positive list on the road route will bring about a quantum jump in trade at considerably lower costs. Other measures that need to be taken to increase trade on the road route include | 95 |
Nisha Taneja removing restrictions on truck type, and permitting Indian and Pakistani trucks to move freely on each other’s territory so that there is no need for transhipment at the border. Similarly, permitting containerized rail cargo will facilitate trade immensely. These changes should be supplemented with the two countries granting transit rights to each other. Finally, India and Pakistan are trying to address the non-tariff barriers faced by Pakistani businesses in entering the Indian market. Some of the measures that can be taken include improving infrastructure for testing facilities, simplifying procedures, and entering into equivalence agreements and mutual recognition agreements. However, very often non-tariff barriers are perceived to exist where they actually do not, due to a lack of information about each other’s regulatory regimes. Creating multilevel channels of communication can reduce misconceptions, bridge the information gap, and generate a significant change in the business environment of the two countries. These channels can be effective only if the visa regime is also liberalized. referenCes Taneja, Nisha. 2011. “Come Together, Right Now—Over Trade.” Foreign Policy (AfPak Channel), November 17. http://afpak.foreignpolicy.com/posts/2011/11/17/ come_together_right_now_over_trade. ----. .2007. “Trade Possibilities and Non-Tariff Barriers to Indo-Pak Trade.” Working Paper No. 200, Indian Council for Research on International Economic Relations, New Delhi. http://www.icrier.org/pdf/Working%20Paper%20200.pdf. ----. 2006. “India Pakistan Trade.” Working Paper No. 182, Indian Council for Research on International Economic Relations, New Delhi. http://www.icrier.org/pdf/wp182.pdf. ----. 2005. “Informal Trade in South Asia: How to Channelize to a Formal Route?” Briefing Paper No. 5, CUTS Center for International Trade, Economics & Environment, Jaipur (India). http://www.cuts-citee.org/pdf/BP05-REC-2.pdf. Taneja, Nisha and Pallavi Kalita. 2011. “Most Favored Nation: New Trade Opportunities for India and Pakistan.” Economic and Political Weekly 46 (49). http://www.epw.in/ commentary/most-favoured-nation-new-trade-opportunities-india-and-pakistan.html. Taneja, Nisha, Shravani Prakash, and Pallavi Kalita. 2011. “Issues in India-Pakistan Trade Negotiations.” Economic and Political Weekly 46 (30). http://www.epw.in/commentary/ issues-india-pakistan-trade-negotiations.html. Taneja, Nisha, Rashmi Rastogi, and Sanjeet Rai. 2008. “Examining NTMs/PTMs by India in the Context of SAFTA.” Prepared for the Ministry of Commerce, government of India. | 96 |
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