Pakistan-India Trade:

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Additional Trade Challenges: Transport, Transit, and Non-Tariff Barriers Administering the positive list created several unnecessary hassles for traders in both countries. The classification codes provided by Pakistan for the positive list did not match with the Indian classifications. Due to the mismatch in classification, customs officials very often classified items under the positive list at their own discretion. Additionally, in some cases the descriptions of items provided in the positive list did not match with the Indian classifications, and for some of these a corresponding description did not even exist. Frequent changes in the positive list created uncertainty for traders. Permitting imports of certain items from India for only limited periods further created ambiguities in the trading environment (Taneja 2007). The positive list approach lacked transparency, created uncertainties for traders, and led to high transaction costs. Perhaps a major problem associated with the positive list is that a separate list has been maintained for the road route between the two countries at the Wagah border crossing. Along this trade route, only 14 of the 1,934 items on the overall positive list are allowed to be traded. In accordance with the sequencing and timelines for the move toward full normalization of trade laid down by the two countries in the joint statement of November 2011, Pakistan made a transition from the positive list approach to a small negative list of 1,209 banned items. In the next stage (and as of this writing), the negative list was to be phased out by the end of 2012. Until the negative list is abandoned completely, the positive list will continue to be in operation, though in a much more reduced form. The ChallenGes of TransPorT and TransiT The movement of goods between and through the two countries has long been undercut by inadequate logistical support required for trade. The road route was closed for several years; rail and air links have been cut off several times; and the sea trade has operated under a very restrictive agreement. These impediments have led to high transaction costs of trading. Since 2005, several measures have been undertaken to improve infrastructure and to remove restrictions on the movement of goods by road, rail, sea and air. These policies are likely to bring about a reduction in the costs of trading. However, for further reductions in these costs, several new steps need to be taken to achieve the goal of seamless transportation | 83 |
Nisha Taneja Table 3: distribution of Pakistan’s Positive list section section description Positive list (2000) Positive list (2009) number of items | 84 | % of Total number of items % of Total I Live animals 10 1 31 2 II Vegetable products 68 8 156 8 III Animal/vegetable fats/oils 20 2 22 1 IV Prepared foodstuffs 5 1 11 1 V Mineral products 37 4 74 4 VI Chemical/allied industries 260 30 568 29 VII Plastics and rubber articles Raw hides and 30 3 91 5 skins, leather, fur 9 1 45 2 VIII skins IX Wood products 61 7 52 3 X Paper products 23 3 37 2 XI Textile products 34 4 103 5 XII Footwear, headgear, etc. Articles of stone, 1 0 2 0 plaster, cement, 5 1 27 1 XIII etc. Precious or semiprecious stones, precious metals, 2 0 5 0 XIV imitation jewelry
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