Singh's visit to Pak could herald a new beginning: Zafar Mahmood

Interview with Former commerce secretary of Pakistan

Zafar Mahmood, the former commerce secretary of Pakistan, believes that the composite dialogue between India and Pakistan should restart encompassing all pending issues such as Siachen and Kashmir. Mahmood tells Nayanima Basu in an interview on the sidelines of an ICRIER event how he thinks the new nomenclature "Non-Discriminatory Market Access" (NDMA) in lieu of "Most Favoured Nation" (MFN) may accelerate trade talks. Edited excerpts:

It is now official that India and Pakistan will trade with each other based on NDMA and not MFN. Will it make any difference in sentiments and expedite the process of giving the status to India?
 
Probably, this terminology is more accurate to keep trade in perspective. Because the other terminology of MFN does not even mention trade. The new terminology is more specific, straight and puts things in better understanding. As far as perceptions are concerned, this should make a difference. I do not think there is much opposition to granting NDMA status to India because had that been the case, all political parties would not have put this in their political manifestos. We have seen that happening during the elections last year. Politically, there is a general consensus that normalising trade and business relations with India has to be achieved. The parties are very conscious of what they put in their manifestos, and this is something we have never seen before; that establishing trading relations with India is one of the priority areas.

Then where is it stuck? Why even after more than a year, is Pakistan not able to give the status to us officially, which will essentially open that market for Indian traders? Is it not a part of your economic reform agenda?

There are certain segments of the economy having their own particular vested interests which are not letting this happen. There is no doubt that this has delayed the process but otherwise, we have always remained on course to normalise the trading relationship. Well, the basic idea is to get more market access in each other's countries, and as long as that happens there is nothing to really get worried about.

There were reports emanating from Pakistan that it could eventually phase out the negative list.

I have nothing to do with the commerce ministry now but we are getting a sense of Prime Minister Manmohan Singh visiting Pakistan. Maybe, that could be a very good occasion to announce far-reaching announcements and integrate the relationship. So, maybe before your elections are held, there could be a prime ministerial visit taking place.

But we have not heard anything of that sort from Manmohan Singh, though in his last press interaction he indicated he wanted to visit Pakistan.

It is our wish and hope that the visit takes place. We have been wanting it to happen. Prime Minister Manmohan Singh hails from a village in Pakistan, and the residents of that village are seeking his visit. And it seems he would not run for the prime ministership again, so he should visit the village as prime minister. This could herald a new beginning in the relationship in all aspects.

Are you pointing towards the resumption of the composite dialogue, which is still in suspension?

Yes. You see, trade is one of the tracks. It is part of the composite dialogue. This includes issues such as Siachen, Sir Creek and Kashmir that have been problem areas for both the countries. And we would like to see some kind of progress in all these areas because that would help cement the progress made vis-à-vis a commercial relationship. This will then make the relationship sustainable and strong over a period of time, resulting in economic integration. We need to make efforts to normalise our relationship in all the aspects.

We have seen that the Indian government has, of late, started talking on the lines that trade cannot take place if there is terrorism. We heard the foreign secretary saying that trade has to take place in a conducive environment.

Yes, this sentiment is growing. See, if I can quote a French economist: if goods do not cross borders, soldiers will. Thus, strengthening economic relations with a country lowers the chance of a political or military conflict. Because you do not really go to war with those whom you do business with. This is a basic principle. So, through trade, we both should try to normalise the relationship in other areas.

How was it when you and our former commerce secretary Rahul Khullar initiated the trade normalisation process again?

When we tried to restart the process, we were both conscious of the fact that this would be beneficial not on its own right but would have multifarious impacts on dispute resolution and other areas. We hope that both sides want progress in trade normalisation would start to generate positive energy in resolving disputed issues.

There are certain industry lobbies like automobiles, textiles and agriculture that are opposing this process of normalisation. They are very persistent.

See, whenever you open the market, there is always a set of winners and losers. This is true when two countries enter into a trade agreement. Opposition will always be there to bilateral trading arrangements. So, opening up of the markets generates fear. But these are unfounded.

But the point is you have a free trade agreement (FTA) with China. If you can survive the Chinese, then why fear Indians of flooding your markets?

When we signed a FTA with China, there was less opposition. Firstly, because the trade with them takes place mostly through the sea route. With India it is through the land route. So, the apprehensions were less. With India, there is, of course, the political and historical baggage, so the appetite was less at one time. There was also a history of having trade disputes when India did away its positive list with Pakistan in 1995, and Pakistan did not reciprocate. Thus, our attempts to export to India were less successful. There was less information about your regulatory regime. It created a negative impression of non-tariff barriers in Pakistan that persisted for a long time. When I was in the ministry of commerce, it took us numerous sessions of interactions with the business chambers to remove that mindset. As a result, now they are slowly coming on board. Anyhow, the recent meeting between both the commerce ministries has kick-started the process again. Let's see how far we can take this forward.