'Safta meaningless if Pak fails to abolish restrictions'

Describing Pakistan's positive list approach to Indian imports as "the biggest obstacle" to normal bilateral trade, India today said the South Asian Free Trade Area (Safta) would become meaningless if Pakistan fails to abolish such restrictions.

"The biggest obstacle to normal direct trade between our two countries is Pakistan's positive list approach to imports from India, when India gives Pakistan Most Favoured Nation (MFN) access to the Indian market," India's High Commissioner to Pakistan Shivshankar Menon said.

"Even if Pakistan finds it difficult to give India MFN status, I fail to understand why Pakistan does not place on the positive list goods that she presently imports from other countries, thus introducing an element of fair competition that will benefit the Pakistani consumer and importer," he told the Sarhad Chamber of Commerce in Peshawar in an address on "India-Pakistan Trade and Economic Relations."

Recalling comments made by Pakistani ministers that Safta would entail "MFN-plus", Menon said "If Safta is implemented as it was intended to be, then it would allow us to begin realising the potential of direct trade between the two countries."

"We hope that beginning of July 1, 2006, all of us in Saarc will have only negative lists and that movement restrictions, which go against the very essence of Safta, are abolished," he said, according to a transcript of the speech released by the High Commission.

"If these two conditions are not met then Safta has little operational meaning," he said, adding that if the conditions are met, the two sides could bring back the goods being traded through third countries into the bilateral trade basket.

Menon said informal trade is estimated at over $ 2.5 billion, more than three times the value of Indo-Pak trade, while noting that despite the restrictions, direct trade has also increased from $ 344.68 million in 2004 to $ 800 million last year due to improvement of relations.

He cited a State Bank of Pakistan survey that argued that Pakistan has the potential to export $ 1.8 billion worth of goods to India in an open trading regime. Cotton, yarn and textile fabrics, leather products, surgical instruments, sports goods, gems and jewellery, vegetables and fruit as also sugar are items that can be imported to India, he added.

Menon also argued for Pakistan opening the land route for transit trade between India and Afghanistan, that could result in development of Pakistani cities like Peshawar.

The "logistic limitations" at Attari-Wagah border and Pakistan's stand to permit only goods from Afghanistan to India and not vice-versa prevents the Grand Trunk road from fulfilling its historic role, he said. India, Pakistan and Afghanistan should address issues like improving logistics, infrastructure for direct transit trade and connectivity between the three countries.

Menon also pointed out Pakistan's role as a transit route to India for gas pipelines from Iran and Central Asia, saying it benefited the two countries.

"We have agreed and are about to sign a revised shipping agreement that will permit the carriage of cargo between Mumbai and Karachi by sea by Indian, Pakistani and third country vessels," he said. He added that this is besides two rail links and plans to increase air links.