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Zahid Shahab Ahmed, University of New England (Australia) and Stuti
Bhatnagar, Jawaharlal Nehru University (New Delhi, India)
be resolved in accordance with the United Nations Security
Council resolutions”. 1
Shifting focus from political relations, one news item is worth
mentioning here, which is with regard to the imbalance of
trade between India and Pakistan in the fiscal year of 2007-
08. The report mentioned that “Pakistan’s trade imbalance
with India was at $894 million in first 10 months” 2 . Bilateral
trade between the two countries has reduced in comparison
to previous years as investors in both countries are unhappy
with the instability in contemporary bilateral relations and
security ties. However, it is important to highlight that the
unofficial India-Pakistan trade through third countries,
mostly through the Gulf countries, is estimated at $10
billion. Considering this fact, it is important to realize that
the Gulf countries can act as a buffer for India-Pakistan
economic development and the peace process can be
sustained by encouraging expansion of bilateral trade
(official and unofficial) and composite dialogue process. In
times of insecurity or instability between India and Pakistan,
there is a disruption in direct communication at the state
and civil society levels. With the Gulf countries opening the
doors for indirect Indo-Pak cooperation, at least the process
of economic development through bilateral trade and peace
process at the civil society level (track II) will remain intact.
There is another issue with regard to trade between India
and Pakistan, which is Pakistan’s refusal to give the Most
Favoured Nation (MFN) status to India, even after signing the
South Asian Free Trade Agreement (SAFTA). Pakistan’s
refusal is a blow to India which had assumed that
ratification of SAFTA would automatically lead to the
extension of MFN as the agreement envisages a duty-free
trading area with SAARC countries (Afghanistan,
Bangladesh, Nepal, Maldives, Sri Lanka, India, Pakistan and
1 “Pakistan and GCC hope new agreement will boost trade”, Daily Times
(Islamabad), August 28, 2008
2 “Pakistan’s trade deficit with India at $894 mn”, The Economic Times
(New Delhi) June 18, 2008.
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