Pakistan-India Trade:

The Pakistan-India Trade Relationship: Prospects, Profits, and Pitfalls
concern about non-tariff barriers to trade on the Subcontinent. These
include oppressive licensing and customs requirements, draconian visa
policies, long waiting periods at borders, and poor road conditions.
Nisha Taneja, a professor at New Delhi’s Indian Council for
Research on International Economic Relations, addresses these challenges
in her essay, with particular emphasis on transport and transit
obstacles. Presently, Pakistan-India trade is permitted on only one land
route (via the Attari-Wagah border crossing). Road border infrastructure—warehousing,
parking facilities, testing laboratories—is poor, and
extensive security checks cause major congestion. Meanwhile, rail routes
for trade can carry goods across an expanse of only 30 kilometers. Train
cars are in scarce supply, and only certain types are permitted for trade.
These problems on direct trade routes have been so widespread, according
to Taneja’s research, that a few years ago several circuitous indirect
routes were found to be twice as trade-efficient (as measured by transaction
costs incurred per container per kilometer).
Many Pakistanis argue that non-tariff barriers in India are particularly
damaging; in Husain’s focus group discussions, Pakistani businesspeople
identified 17 such obstacles. According to Husain, they fear that,
barring Indian corrective actions, such obstacles will undermine “the
smooth flow and desired level of exports” from Pakistan. Taneja, however,
believes that some of this criticism is misguided. She contends that
some measures described by Pakistan as discriminatory are in fact permitted
by the WTO on safety and health grounds. Other measures cited
by Islamabad, according to Taneja, represent what were once legitimate
grievances, yet, perhaps unbeknownst to Pakistan, have since been addressed
by New Delhi.
Nonetheless, Taneja concedes that non-tariff barriers are a major concern,
and must be addressed if deeper bilateral trade is to materialize. She
is echoed by Kalpana Kochhar and Ejaz Ghani, both of the World
Bank. Their essay argues that for India and Pakistan to enjoy the “greatest
gains” from MFN and liberalized trade, “accompanying reforms of trade
facilitation and connectivity”—especially infrastructural and institutional
improvements—are essential. The authors undertake an exercise that simulates
two different scenarios. In the first one, Pakistan simply extends
MFN to India. In the second, Pakistan extends MFN to India, but at the
same time an element of trade facilitation is introduced—transportation
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