 "India-Pakistan, India-Pakistan flag")
Pakistani Finance Minister Ishaq Dar has expressed willingness to resume trade ties with India, given the high cost of these imports via alternate trade routes and resultant adverse impact on the economy of his country. This move would represent a significant reversal for Pakistan, which severed economic ties with India after the abrogation of Article 370 in Jammu and Kashmir in 2019. Principally, the onus for resumption of trade ties lies with Pakistan as it stopped trade and given the present state of its economy, we must ask for certain prerequisites for creating an enabling environment for trade, peace and prosperity of the region.
Our negotiating stance should be for sustainable long-term trade instead of mere resumption. Pakistan indeed finds itself in a disadvantaged negotiating position. On the one hand, it is compelled to prioritise domestic reforms as economic instability continues and alternatively it has growing international pressures amid demand for newer loans and reworking payment terms of old loans. The country's urgent need for financial assistance, evident in its pursuit of loans from institutions such as the International Monetary Fund and World Bank, underscores its vulnerability on the negotiating table.
Prerequisites for trade ties
Resuming trade ties with Pakistan is a complex endeavour that requires addressing a multitude of political, economic and security concerns. The first and foremost is the need for Pakistan to offer most favored nation (MFN) status to India. This status would signify a commitment to fair and equal trade practices, essential for fostering a conducive environment for economic cooperation between the two nations. Additionally, granting transit access for Indian trade to landlocked Central Asian countries and Afghanistan would not only expand market opportunities for Indian businesses but also contribute to regional economic integration and development.
Moreover, ceasing anti-India rhetoric and propaganda is paramount for building trust and confidence between the two nations. Such rhetoric only serves to perpetuate animosity and hinder India’s pious, sincere, and just efforts towards reconciliation and cooperation on all pending issues. Given the fragile state of Pakistan’s political structures, it is highly important these declarations are duly endorsed by parliamentary resolutions and have the concurrence of its political and military leadership.
Also Read
As Pakistan is about to blink in the near future, we must caveat a prerequisite for resumption of trade ties. It must accept Kashmir is an integral, inseparable, and inalienable part of India. Additionally, it must publicly speak and illustrate respect for India's sovereignty and territorial integrity, laying the groundwork for constructive dialogue and engagement for economic and trade matters. It should also completely shun its covert and overt terror funding, sponsoring, execution and take concrete steps to dismantle terrorist networks operating within its borders. This requires a firm commitment to combating terrorism in all its forms and manifestations including preventing terrorist attacks and drug trafficking on India’s soil. It should accept that any pending issues with India will be resolved peacefully and amicably in adherence to established principles of law, mutual respect, fairness, and transparency.
India’s negotiating stance should be aimed at ensuring bilateral and regional peace which is the basis for enduring trade and economic cooperation. Correspondingly, Pakistan must demonstrate a commitment to promoting stability and security in the region and work towards building bridges of understanding and cooperation among all South Asian nations.
Further, India should also ask for protection of Indian investments in Pakistan, and it must create a conducive environment for business and investment, free from discrimination and arbitrary measures that could deter investors in the future. Finally, committing to non-discriminatory treatment of Indian goods and businesses in Pakistan is essential for promoting fair and equitable trade relations. Pakistan must ensure that Indian products are not subjected to unfair tariffs or trade barriers and Indian businesses are able to operate on a level playing field in the Pakistani market in the long term.
Offer reciprocity
If Pakistan offers such commitment and demonstrates its willingness and enthusiasm for long-term, enduring, equitable and sustainable trade relationship, we can offer them unrestricted market access across the sectors as ‘trade benefits all’. India, as an emerging economic power, needs stable and peaceful Pakistan. We can offer them opportunities across sectors, even those sensitive to India’s business enterprises, as international trade is based on principles of reciprocity, fairness, non-discrimination, openness, collaboration, and compliance. An integrated South Asia is good for world peace and prosperity.
Beyond achieving primary objectives, attention to establishing joint trade promotion councils, cooperation on trade facilitation, reducing non-tariff barriers, enhancing border infrastructure, encouraging cultural exchanges, collaborating on effective management of common public goods (water, air, food), promoting renewable energy initiatives, and strengthening logistics connectivity is paramount for sustainable cooperation between India and Pakistan. An open visa regime can remain restrictive in the initial years of resumption of economic cooperation. Ultimately, by offering reciprocity to Pakistan in trade negotiations, India can not only advance its own economic interests but also contribute to the economic development and stability of the region. However, it is important for India to maintain a strategic approach, ensuring that any concessions offered are in line with India’s long-term objectives as an emerging economic power in the evolving global landscape.
Lastly, the main goal in restarting trade between India and Pakistan is to make sure both countries and their people benefit as the region is still home to the largest number of world’s poor and malnourished people. Our negotiating outreach should be aimed at reminding the leaders of Pakistan to act responsibly to serve mankind, and resuming trade ties is one such channel in the global chessboard. It is indeed very tough but let us not forget “in negotiations, we don’t get what we deserve, we get what we negotiate”.
The writer is a professor and head of IIFT New Delhi
These are the personal opinions of the writer. They do not necessarily reflect the views of www.business-standard.com or the ‘Business Standard’ newspaper
