For the first time in 60 years, 30 trucks rolled across the Line of Control in Kashmir on Tuesday, carrying mostly fruit and vegetables. It is a small beginning but a very significant one. More trucks will run regularly on routes between Srinagar and Muzafarrabad and between Poonch and Rawalakote.
The Kashmir initiative should be extended to Bangladesh and Pakistan. The countries in the sub-continent have not exploited their full potential for trade with each other due to unnecessary obstacles to movement of cargo. Our exports to Pakistan are barely 1.19 per cent of our total exports and imports barely 0.11 per cent of total imports.
Our exports to Bangladesh is barely 1.79 per cent of our total exports and imports barely 0.10 per cent of our total imports. No doubt, the SAFTA (South Asian Free Trade Agreement) paves way for the eventual abolition of import duty on most items. Yet, that is not enough. Logistics and ease of doing business are very important.
Currently, the Indian cargo bound for Bangladesh is unloaded at the border and then re-loaded on to trucks of Bangladesh. Why can arrangements not be worked out for trucks carrying cargo from India to go to various destinations in Bangladesh straightaway, with reciprocal facility extended to trucks from Bangladesh? A simple workable arrangement to let the trucks have free passage will help the transporters get cargo both ways and eliminate unnecessary transaction costs.
SAFTA focuses on phasing out tariffs among South Asian countries by 2015. But, preferences will erode with general lowering of tariffs either through multilateral trade agreements or unilateral measures. The time to let businesses in India, Pakistan and Bangladesh establish their products in neighbouring markets is before the preferences get eroded. For that, the logistics barriers also must be dismantled.
| THE TRADE DATA Trade with Pakistan (in $ million) | |||||
| Year | Exports | (% growth) | Imports | (% growth) | Total Trade |
| 2003-04 | 286.94 | 57.65 | 344.59 | ||
| 2004-05 | 521.05 | 81.59 | 94.97 | 64.75 | 616.03 |
| 2005-06 | 689.23 | 32.28 | 179.56 | 89.06 | 868.79 |
| 2006-07 | 1348.55 | 95.66 | 323.01 | 79.89 | 1671.55 |
| 2007-08 | 1944.17 | 44.17 | 287.80 | -10.90 | 2231.79 |
If sufficient number of people in India and Pakistan trust and trade with each other, it will be difficult for the rulers on either side to pursue policies based on distrust. Towards that end, even unilateral concessions are worthwhile. India can allow trucks from Pakistan and Bangladesh to carry cargo to various destinations in India and pick up return cargo, even on a non-reciprocal basis.
After the second World War, the new age of co-operation and trust started in Europe with Coal Producers and Steel Producers in Germany, France and Italy persuading their governments to open the borders for freer trade. Soon, the European Common Market came into being . With liberalisation of capital flows and movement of natural persons, ECM became the European Economic Community and then the EU.
Similar developments can happen in the Indian sub-continent. More trade between India and Pakistan will mean more people whose incomes depend on peace. Their stakes can strengthen the constituency for resolution of disputes between the countries through dialogue.
