Pakistan-India Trade:

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Pakistan’s Trade with India: Thinking Strategically accounts for 60 percent of global outsourcing in this sector (exports of computer and business services in 2008 were estimated at $52.3 billion). Indian manufacturing, though not nearly as competitive as China’s, is beginning to gain strength in the international market. This is seen in Figure 5 in terms of the share of high technology exports in total manufactures exports. Figure 6, capturing three dimensions of manufactures exports, shows India’s emerging competitiveness compared to Pakistan’s more clearly. India has three manufactures groups in the northeast quadrant (chemicals, iron and steel, and pharmaceuticals), while Pakistan has figure 6: recent Performance of india and Pakistan Manufacturers exports Annual growth of product's share in world's total exports in 2000–2007 Positioning of India's Major Manufactured Exports in 2007 10.0 8.0 6.0 Pharmaceuticals, 3.1% Iron and steel, 5.7% Annual growth of country's share in product's global exports in 2000–2007 Note: The northeast quadrant in Figure 6 measures a country’s share in the export of goods (horizontal axis) whose share in total world exports (vertical axis) is rising. The size of the circle measures the share of that export in a country’s total exports. Thus the larger the number of exports in the northeast quadrant and the larger the size of the circle representing each export, the more competitive is the country in the international market. Annual growth of product's share in world's total exports in 2000–2007 Positioning of Pakistan's Major Manufactured Exports in 2007 4.0 Chemicals, 11.4% 4.0 Chemicals, 2.6% 2.0 Automotive products, 2.4% 2.0 0.0 0.0 -5% 0% 5% 10% 15% 20% -20% -10% 0% 10% 20% 30% 40% 50% -2.0 -4.0 Clothing, 6.7% -2.0 Clothing, 21.4% -4.0 Machinery and transport Telecommunications equipment, 0.4% Machinery and Textiles, 41.4% equipment, 4.5% -6.0 -8.0 Textiles 6.6% transport equipment, 11.6% -6.0 -8.0 Office and telecom equipment, 0.5% | 43 | 10.0 8.0 6.0 Pharmaceuticals, 0.6% Annual growth of country's share in product's global exports in 2000–2007
Ijaz Nabi only one (chemicals), and that too is a much smaller share of Pakistan’s overall exports compared to the share of chemicals in India’s exports. Furthermore, India has an impressive network of agricultural research. A liberal trade and investment regime will allow Pakistan to tap into the pool of Indian skilled workers and technology to improve international competitiveness of Pakistani firms. Testimonials by industry specialists presented in the 2011 Pakistan Business Council report emphasize the spillover benefits of liberalizing trade and the broader economic relationship with India in a host of manufactures such as pharmaceuticals, automotive parts, textiles, and rubber, but also for agriculture. The spillovers manifest themselves in terms of access to raw materials, plants and equipment, India’s research networks, project management experience, and supervisory work forces. Non-Tariff Barriers There is a widespread perception in Pakistan that the Indian trade regime includes a long list of non-tariff barriers that adversely affect trade volumes despite a statutory liberal tariff regime. This is offered as the principal reason why India imports little from Pakistan despite having given Most Favored Nation status to Pakistan unilaterally. The biggest non-tariff barrier in trade flows, of course, is poor trade logistics and visa restrictions that hamper businessmen from travelling across the border to strike trade deals. These non-tariff barriers are the result of poor security relations between the two countries, and need to be revisited if trade is to take place on a meaningful scale. Non-tariff barriers are also justified for health and safety reasons, and there is evidence that the Indian trade regime includes such barriers in its protectionist arsenal. The extent to which these barriers are protectionist and harmful to regional trade needs to be investigated. Pakistan should use this opportunity also to examine its own trade regime for similar trade-retarding measures. Anti-dumping measures are another form of non-tariff barrier, especially when they are invoked by monopoly producers of intermediate materials. There is evidence that the Indian trade regime uses antidumping measures to protect large Indian manufacturers. However, this is not a Pakistan-specific tactic. Furthermore, the use of anti-dumping | 44 |
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