A suitable trade-off?

A suitable trade-off?

In a surprising development, India has agreed to support EU’s trade concession package for Pakistan, something it had vetoed previously. They have termed it as one of the “big-ticket concessions”, in return of efforts for enhancement of bilateral trade between the two countries.

A statement issued by the commerce ministry in Islamabad said that Pakistan and India had agreed to work jointly to double their bilateral trade from the current $2.7 billion to around $6 billion per annum within three years.

The WTO waiver was originally sought by the EU for unilateral trade concessions for Pakistan to provide relief after last year’s devastating floods. The selected 75 products represent almost 900 million euros worth of Pakistani exports to the EU, accounting for about 27 per cent of the EU imports from Pakistan, which last year totalled €3.3 billion. The selected products range from certain food items, along with cotton, leather, apparel and other textile products. The boost from the trade package to our exports is estimated to be in the region of €900 million (~$1.2 Billion).

Currently, Pakistan is the net importer in overall bilateral trade between Pakistan and India. Pakistan’s exports to India currently stand at $286 Million for FY2011, while the latter’s amount to $1.445 Billion. That being said, the removal of many non-trade barriers and embargoes of various items will help swell Pakistan’s export figure, and while we are an importing nation, regional proximity could reduce cost of many major import items.

Is India’s “big ticket concession” in return for bilateral trade enhancement a suitable trade-off?

Would Pakistan’s local industries be negatively affected by the flood of cheaper goods from India, or will it stimulate competitiveness?

Lastly, can this development in trade be sustained and passed over in the political arena?

Dawn.com invites its readers to give their views and suggestions.


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36 Responses to “A suitable trade-off?”

  1. Nasir Sayani says:

    I am just happy with the outcome, even if India comes out ahead in terms of gain, Pakistan has still lot to gain, most of all friendship and brotherhood with long lost sibling and that my friends is worth more than any financial gain.

  2. irshad says:

    This is good for future relation of both countries.

  3. Arjun K says:

    Bilateral trade is always good! No doubt about it. Only when trade/industry is heavily controlled/regulated does it turn out bad.

  4. Balan says:

    Both Indians and Pakistanis should learn from what Abraham Lincoln said – you can destroy an enemy by making him your friend

  5. The step must be welcomed by everyone, no doubt, but, at the same time we must also look at the fact that Pakistan has been troubling India since 62 years and India has always held a helping hand to it. It is high time that people of Pakistan should consider this fact and pressurize their political parties to have good relations with India.

  6. Chacha says:

    There should be a free trade zone between India, Pakistan, China, Afghanistan, Bangladesh and Nepal. just imagine the prosperity that will bring to the region.

  7. janbaz says:

    Well; its really a terrific development. I think the next steps we need to address is the transfer of social services like education, health, entertainment, tourism etc. People of both sides should be provided with opportunities accordingly. If our childs can get admission in a high seat of learning (universities, colleges, institutes etc) in each other’s country, then why should we spent huge sum of moneys to arrange for them in Europe, USA or China?
    Same can be repeated in other social sectors as well.
    In fact nations trades not only of goods but of services, in parallel.

  8. V says:

    @mohammad Rafey

    >> – Why did India have the right to veto this in the first place?

    As per WTO, countries can offer trade concessions to any other partner country, only if there is unanimous agreement. India, Pakistan, and Bangladesh etc are all major exporters of some of the products on the exemption list. If any one country gets concessions – says duty waivers, or guarantees against anti dumping measures, it makes it difficult for other countries to compete, and hence the requirement for unanimous agreement by the WTO. Actually it may not be that much of an edge, but given the sweet little history between India and Pakistan, I would say yes, India pretty much had every right for a veto.

    Btw Pakistan has the most preferred nation status from India for business purposes, but it is not the other way round. I guess this carrot is to get that so that there is more trade between 2 countries. When India and China can have bilateral trade of more than $100 billion every year (despite of certain degree of enmity), there is no reason why India and Pakistan cannot have the same. I mean finally distance between Lahore and Amritsar by road is 100 times lesser than Europe and India.

  9. M. Tariq says:

    Pakistan should focus on
    Agriculture, Agrobased Industries and service sector
    Leave rest of economy to India. Like movies and manufacturing
    They can do it better and cheaper

  10. Devendra says:

    The things Pakistan needs to learn the most is – Gratefulness and Appreciation. These two go a long way to make friends.
    The other thing Pakistan must ask it self – What has it done for India or for that matter, for any other country in the world? The resounding and deafning answer is – NOTHING.
    I know Indians are happy to see Pakistan in travails of it’s own making (Pak does not need any help from India or any one else in that departmeent); that said most Indians would like to see Pakistan proseperous, at peace with it’s neighbors and democratic and not a fanatic country whose only contribution to the world is terrorism….so far.
    Hope it changes. I wish Pakistan well.

  11. nsaqib says:

    Opening the door for trade will open all doors. The impact of trade will be tremendous and the people of both countries need it.

  12. Mohammad Rafey says:

    Good step and I second the comment made above that politics should be separate from trade. My old question to fellow readers and the writer is this:

    – Why did India have the right to veto this in the first place?

    I understand that this is a naive question but unfortunately I dont know the answer so can someone please explain that.


    • Jack says:

      Hi M. Rafey – fair question. Any preferential trade agreement needs to have consensus from other EU trading partners who also export a similar set of products to a similar set of markets. Thus not only India, but Bangladesh and Sri Lanka also need to agree, and India’s acceptance should help to convince them as well. I do not see this as a huge gesture given the size of the prize against India’s overall Euro 46 bn trade with the EU, but is definitely a CBM that could have been avoided under the argument that India still houses 50% of the world’s poor, and Pakistan’s virulent anti-India stance. I am happy that they did not pander to narrow nationalistic feeling in this case, and chose to help a neighbor in distress.

    • Sushobhan says:

      I am not an expert but my understanding about the India veto is thus.

      Strictly speaking the EU package is against some WTO stipulations. However considering the devastating floods in Pakistan last year, EU was trying to get an exception from the WTO. Being once of the signatories, India had a right to object to these concessions and since the law is on India’s side the objection would essentially became a veto.

    • Sunil says:

      India does NOT have a veto. All countries (including Pakistan, Sri Lanka, Bangaldesh, India etc.)- while signing trade-treaties with EU- undertake certain obligations. EU can not change rule without mutual consent with other trading partners. For example, EU can not grant special concessions to India for importing garments in lieu of, say India choosing to import fighter planes, from EU! For any such concession (what so ever be the reason), EU has to take a waiver from other countries (Sri Lanka, Pakistan, etc.). That is the essence of FTA- fair opportunities for all partners. This holds true for all articles (not just the garments) under the trade agreements.

    • Raj says:

      The answer to your question is in this article: “Pakistan is the net importer in overall bilateral trade between Pakistan and India”. The indians always wanted Pakistan to import the goods from India. Well obove all this will be good for both countries.

    • Vijay says:

      Dear Rafey,

      Though I am not an expert, I will explain what I know. Though its a one country one vote system in WTO, the relative size of economy determines the bargaining power of the country. Since india is curently 7th or 8th largest economy in the world, its vote has a greater value and has enogh bargaining power to veto a decision. Having said that, I would advice not just to you but all pakistanis, to never compare with other countries. Their situation is different from yours. “Development” is a much bigger protection than any number of Nukes. For all of us, both ind and pakistani, food, clothing and a good life is much more important than Kashmir ar whatever other conflicts that we have.

    • ayesha says:

      India did ot have a veto. Per WTO, all countries are required to provide identical trade terms to each other unless there is a separate bilateral FTA which overrides it. When Europe was trying to give Pakistan favorable terms for textiles and of the signatories of the WTO could have objected to that since that was a vilation of the WTO terms. The countries that DID object were the ones who would be adversely impacted by that decision i.e. Bangladesh, India, Vietnam who export goods similar to Pakistan. Thus Pakistan’s increased exports would come at the cost of exporters in these countries – not from Europe per se.

      So india’s stand was that Europe cuold provide whatever aid it wanted o give Pakistan, india would have no say on that. But if it diverted trade from India/Bangladesh to Pakistan – that was not fair to them and a violation of the WTO agreement.

      I hope that provides you an explanation.

    • tarun says:

      ” Why did India have the right to veto this in the first place?”

      it is because India carries a lot of political and economic weight in many international forums and organisations like WTO, IMF, EU, G20 etc and has the political, financial and industrial muscle to influence the outcome of any major policy decision.

  13. Lakhkar Khan says:

    Aho ji, this is a good news for both countries. I hope these ties grow further and bring us two neighbors closer.

  14. Roy says:

    Come on guys!!
    Everybody in Pakistan is a strategic analyst:-)
    Learn to appreciate for what India is doing for Pakistan. Pakistan will gain from this a lot but even if Pakistan gains 1% from this you should appreciate. Last year India donated $5 Millions+ for floods, I have never seen any Pakistani appreciating that. Whats wrong with you guys. Why are you guys so demanding. You act like spoilt kids. You always want big deals and huge benefits but you forget that will only begin from small. And why others should do anything to benefit you, because Pakistan is exporting terrorism to the entire planet earth?

    • Khurram says:

      What on earth are you talking about?

      Read the article again and try to stick to ‘its’ answer!

    • Tanveer Khan says:

      We truly appreciate it.. Really, we do.

    • Farhan says:

      Great Roy!! we are actually born Strategic Analyst and it is such a difficult and demanding job we never get a chance to look beyond that to help our fellow countrymen !! We never appreciate even someone from Pakistan how can you even think of any one in pakistan appreciating what India has done!
      We live on Aid scounge on others in the world and as a Pakistani this is our born right and it the duty of the world to feed Pakistan and its people. By the way what does the word Appreciation actually means! is there such a word in Urdu or any other regional language? I do not think so!

    • Seedoo says:

      Mr Roy,

      You are forgetting that when India has earth quake during Vajpayee’s time, Pakistan had donated millions of dollars worth of goods to the affected people in India. Good friends are supposed to help each other in need. Don’t help if you have expectations and feel the need to constantly remind the other side of help you had extended, and rub his nose in the dirt. Shame on your arrogance!

  15. STRIVER says:

    The concession is not that meaningless though small. India stands to gain a greater share of the EU market but the quality of its food products is not that good. Already Pakistani food products are being packaged as Indian, allowing such products into EU with Pakistani labels will increase Pakistan’s market share.

    • Ileana D'cruz says:

      Who on earth told you that quality of Indian food products is not good. India produces some of world’s finest and exclusive food products, and most food products in huge numbers. Organic farming here has grown big and growing fast to become one of the world’s largest. Im from Goa and here we have one of the finest cashew’s, alfonso mangoes, processed sea foods, etc. Darjeeling, Assam, and Dehradun produces finest quality tea in the world….and the list never ends. India has diverse soil and climatic zones, and its huge geographical size and arable land make it one of the most suitable and richest places for agricultural activity in the world.

  16. Nitin sachdeva says:

    This is really good news for both nations. This step surely increase mutual understanding and will reduce misunderstanding and conflicts. Trade between both countries will be surely profitable for both countries.
    As a Indian i am really happy with this step and we should support governments of both nation for such a constructive steps which reduce heat in both nations.Because heat and stress between both nations impact really bad on our nations. I really wish both countries goes long hand in hand towards Sucess, Growth and peace.This is not a hidden fact that if India Pakistan corporate and cordinate each other,there will be no limit of our growth.We can surpass many developed nation together.

  17. Deepu, New Delhi says:

    The fear mentioned in the article “Would Pakistan’s local industries be negatively affected by the flood of cheaper goods from India?’ is quite exaggerated and unfounded. Pakistan is already importing much cheaper chinese goods yet it doesn’t made any difference for pakistani industries. India had the same fear in the past and it only hurt Indian prospet viz-a-viz international competitivness. As an Indian, I heartly welcome the new developments and wish pakistanis to draw maximum benefits out of it.

    • shokat zaman says:

      I agree with DEEPU.
      However I would like to assess the details of subsidy given by India for its producers. and production costs because these make a huge difference to any products economic viability.

  18. Muhammad says:

    Thats very good news. Trade should be separate from politics. If truffles are needed bu EU then we can start producing them :-)

  19. hukam singh says:

    India has a big heart. Pakistan must reciprocate. The people of both countries have blood relations. Keep it up.

  20. Shaffiq says:

    The EU concession is small, meaningless and includes items Pakistan hardly produces – like truffles. The concession has been tabled from last years floods and Pakistan is still waiting.

    • putar says:

      Dear Shaffiq

      It also includes items like cotton,textiles,leather products and garments etc which are also sold in the same market by India. Moreover the objections to this has been raised by SriLanka and Bangladesh also.The major problem in Pakistan is that many people like to speak only half of truth or no truth when it comes to India because if truth is spoken than the persons who are enjoying life in Pakistan will not be able to do so.

      I think that a positive step is being taken in the form of enhanced trade which should be welcomed by all as it has the potential to spread prosperity among our countrymen. We should all encouraging such steps as it will reduce the chances of conflict and increase the number of stakeholders who want to have a durable peace between the two countries and banish the warmongers.

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