Trade ties take a hit, Islamabad will suffer more

NEW DELHI: The first casualty of cancellation of foreign secretary-level dialogue between Indian and Pakistan is likely to be bilateral trade with any chance of normalization of trade ties now no more than a speck in the sky.
The least that was expected from the foreign secretary dialogue was that it would pave the way for resumption of talks between the commerce ministries of the two countries. Pakistan had said earlier this year that it would wait for the new government to be formed in India before bestowing it with non-discriminatory market access (NDMA), or what is known here as most favoured nation (MFN) status. Official sources here said India did not take it seriously in these circumstances and that, in any case, Pakistan always stood to gain more from any spurt in trade activities.

Pakistani high commissioner Abdul Basit recently again spoke about the need for India to address the issue of non-tariff barriers but, according to Indian officials, this was just an attempt to justify the flip-flops by Islamabad over the issue of NDMA. The complaints over the issue, according to Indian officials, vary from the lack of flights between Delhi and Lahore to the stringent visa regime that exists between the two countries.

According to Indian officials, Pakistan shared its list of 185 items, which are of interest to it for export, and the Indian commerce ministry agreed to provide Safta tariff concessions on these. India earlier accused the Nawaz Sharif government of acting under pressure from the Pakistan army in denying it NDMA but Pakistan responded by saying that trade was not the only agenda in the composite dialogue process and that other issues needed to be addressed simultaneously.

Even before the Narendra Modi government came to power, Indian interlocutors seemed to have lost faith in trade providing a lasting framework for friendly, or even peaceful, ties with Pakistan. They said the Sharif government gave in to Pakistan army diktats when it backtracked from its stated aim to implement the September 2012 roadmap for trade normalization. India believes that it was Pakistan's loss as the roadmap called for trade in electricity and gas, both of which would have helped Pakistan address its power woes.

According to Indian officials, preferential access to the Indian market would greatly ease Pakistan's severe foreign exchange constraint and also provide stimulus to its export industries. India, in fact, wanted Pakistan to look closely at Sri Lanka which signed FTA with India and went on to use it for its economic benefit, while pursuing political and security agendas separately. That, though, is not going to happen for a long time to come.