Pakistan-India Trade:

Michael Kugelman
its positive list of 2,000 goods that could be imported from India, and
replaced it with a negative list of about 1,200 items that could not be
imported (more than 500 of these untradeable items belonged to the
automobile, iron, and steel sectors). Islamabad pledged to eliminate this
negative list entirely by the end of 2012, thereby bringing the two countries
closer to a fully operational MFN regime.
In April, the two capitals launched a new integrated checkpoint at
the Attari-Wagah land border crossing, generating promises from both
countries that trade through this sector would increase tenfold. On the
same day, India announced that it would permit foreign direct investment
(FDI) from Pakistan. Over the summer, New Delhi removed a ban
on Pakistani businesses setting up operations inside India. In September,
the two sides concluded a landmark visa agreement that loosens travel
restrictions. Later in the year, Islamabad announced new measures to
boost capacity on its side of the Attari-Wagah border, including the installation
of additional scanners and weighbridges, and the deployment
of more customs officials to the site.
Many observers believe increased trade will benefit each country’s
economy, but also build constituencies for more cooperative bilateral
relations—in effect opening the door to progress on core political and
security issues.
This is certainly an argument endorsed by Islamabad. Several
months after Pakistan’s MFN announcement, Pakistani Foreign
Minister Hina Rabbani Khar stated in a speech at the Lahore
University of Management Sciences (LUMS) that more trade with
India would enhance Pakistan’s prospects for peace and prosperity,
and “put in place the conditions that will enable Pakistan to better
pursue its principled positions” on territorial issues. 3
In 2012, recognizing the significance of trade in the Pakistan-India
relationship, the Asia Program of the Washington, DC-based Woodrow
Wilson Center, with co-sponsorship from the Wilson Center’s Program
on America and the Global Economy, and with generous support from
the Karachi-based Fellowship Fund for Pakistan, hosted a conference on
Pakistan-India trade. The contributions in this volume were originally
presented at this conference.
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