Given the political turbulence in Pakistan, it was entirely expected that Commerce Minister Anand Sharma's visit would yield no dramatic outcomes. Even so, it was evident from the visit that both sides have a clear-headed joint, if not common, vision about bilateral trade. Without doubt, Pakistan recognises that it can shut itself out from India's economy only to its own disadvantage; India realises that it needs to draw down some of its own barriers in the interests of trading with Pakistan. Mr. Sharma's visit was the first by an Indian Commerce Minister for bilateral meetings, by itself a sign of how far the two countries have travelled in improving trade relations, not to speak of breaking through the logjam of mutual hostility, mistrust and suspicion that had set in after the 2008 Mumbai attacks. Underlining the “historic moment”, the joint communiqué was unambiguous that “[the] political leadership and the business communities have extended unequivocal support for full normalization and preferential trading arrangements between the two countries”. The substance of the talks makes it clear that despite the continuing political pressures on the Pakistan government against normalisation of trade with India, there is going to be no U-turn. The two sides signed three MoUs, on customs procedures, harmonising standards, and grievance redress in case of disputes between traders. In further evidence that things are looking up, central bank representatives of both countries will meet next month to discuss opening bank branches.

The Pakistan cabinet's decision to grant Most Favoured Nation status to India has still not been notified due to the opposition stirred up against it — at this politically sensitive time for the Pakistan People's Party government — by extremist and militant groups including the Jamat-ud-Dawa, whose leader Hafiz Saeed is its most vocal opponent. But according to a schedule outlined in the joint communiqué, Islamabad seems determined to replace the current restrictive positive list with a negative list by the end of this month, which too is to be phased out by end-2012 when the transition to MFN is planned. It is disappointing, however, that the two sides have not yet been able to finalise a “liberal” visa regime, even for businessmen. The delay is incomprehensible; the project has been in the works for more than six years. It is futile to think of normalising trade, or of trade as a normaliser of relations, without first getting rid of the troglodytic visa system that governs travel between the two countries.


Understanding the thawJune 12, 2012

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