ISLAMABAD, 12 May 2003 — Are trade winds about to start blowing in South Asia — once again? These are the signals from Islamabad and New Delhi.
These signals appear strong — after 17 months of complete trade ban — since Jan. 1, 2002, first imposed by New Delhi, and quickly reciprocated by Islamabad.
The first signs of an India-Pakistan thaw popped up April 28 when Prime Minister Atal Behari Vajpayee offered his Pakistani counterpart Mir Zafarullah Jamali to discuss “all outstanding issues” including Kashmir. Jamali accepted, and in turn invited Vajpayee to be his guest in Islamabad. Vajpayee responded the same day — by fax — something of a record for these two nations.
While outlining his six steps to normalization, Jamali said: “There is no precondition from our side, and I sincerely hope that this time, both the countries will hold positive talks to resolve all outstanding issues, including that of Jammu and Kashmir, peacefully. In order to give impetus to SAARC (South Asian Alliance for Regional Cooperation) to make it a more effective regional body, I have decided to place additional 78 items on the positive list. It is my hope, it will clear the way for a more meaningful SAARC role for promotion of regional trade.” Top businessmen and captains of industry in India and Pakistan went to work, sure that the two-way trade will start moving by air, sea, railroad, and overland, as soon as travel links — also severed since January 2002 — are reactivated.
Satellite phones got abuzz between the top brass of Federation of Pakistan Chambers of Commerce & Industry (FPCC&I), and their Indian counterparts got ready to do business.
They decided to reactivate the India-Pakistan Joint Chamber of Commerce & Industry, established in January 1999 but has remained inactive as political feuding among the neighbors continued.
Vajpayee-Jamali initiative, other economic benefits apart, should start moving trade immediately not only between India and Pakistan, but also in the entire SAARC region.
Jamali offered to put an additional 78 items importable from India, adding to more 1700 items that were already tradable before the January 2002 ban. The additional items are part of Jamali’s six new, unconditional “confidence building measures” (CBMs) to normalize ties with India.
The others range from resumption of air, railroad and busline travel to restoration of full diplomatic relations.
“When elephants clash, the frogs get crushed,” is a popular Pakistani saying. When India and Pakistan clash — no offense intended — their small SAARC partners — Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives — get at least smothered. When New Delhi-Islamabad ties improve the whole region gains. That should happen now, too. In fact, bad relations between feuding India and Pakistan have and stunted any cooperation among the SAARC partners ever since it was forged in mid-1980s.
Intra-SAARC trade is merely 5.0 percent of their entire exports, and 1.3 percent of their imports. Isn’t it trivial in the context of $6.0 trillion global export market? Inspite of this large size of the market, SAARC has been losing — not gaining — FDI, because “it is one of the least integrated regions in terms of cooperation,” says an economic expert. “Larger intra-regional capital flows, full operationalization of South Asia Preferential Trade Agreement (SAPTA), faster movement toward South Asia Free Trade Area (SAFTA) for eventually forming a customs union to be followed by an Economic Union,” say SAARC finance ministers.