Since cross-LoC trade began between Muzaffarabad-Uri and Poonch-Rawalakot, traders have found a way of insulating the process from outside influences with a fair amount of success.

“Both sides agreed to convene a meeting of the Working Group on cross-Line of Control (LoC) Confidence Building Measures (CBMs) to recommend measures for strengthening and streamlining the existing trade and travel arrangements across the LoC and propose modalities for introducing additional Cross-LoC CBMs. The Working Group will meet in July 2011.” (Para 7 of the joint statement issued on June 24 after the Indian and Pakistani Foreign Secretaries met in Islamabad.)

On July 18, the Joint Working Group met in New Delhi and this is what was offered to the public at the end of the day-long interaction: “The meeting was held in a cordial atmosphere. During the meeting, both sides reviewed the existing cross-LoC travel and trade arrangements to ensure their effective implementation and exchanged views on additional measures to facilitate cross-LoC travel and trade.”

Nothing much to write home about. The two governments have done so little to facilitate the Cross-LoC CBMs that the trading community sees only a sliver of hope in the tone and tenor of the two statements. In fact, its general refrain is that the two governments have only opened the links and literally left the traders to take on the risks and responsibilities. And, it has survived despite a strangulating red-tape, the diplomatic stand-off following the Mumbai 2008 terror attacks and the political unrest in the Kashmir Valley.

No doubt, there have been strikes and trade-related issues between traders on both sides, but in the two-and-a-half years since cross-LoC trade began between Muzaffarabad-Uri and Poonch-Rawalakot, the community of traders has found a way of insulating the process from outside influences with a fair amount of success. As one trader said in a recent report on trade across the LoC: “We are insulated by a shield of mutual trust. We have not allowed diplomatic acrobatics between New Delhi and Islamabad to affect us in any manner.”

Presently, trade takes place twice a week on a barter basis in the absence of banking facilities to transfer funds across the LoC, and is restricted to 21 items. Traders from the two sides cannot meet, making the prevalent regime a ‘blind trade' system in which the trader has no way of assessing the market.

Those on the Indian side have it even worse because of the 21-year-old ban on international direct dialling from within Jammu and Kashmir to any part of Pakistan. As a result, they use relatives in a third country to deal with traders across the LoC or exchange business cards through truck drivers to build a database of trading counterparts. Recently, this issue was partially addressed with the installation of a few telephone hotlines.

Because of the barter system, trade is essentially confined to the ‘divided families' for fear of their being duped if new business alliances are made. According to Zulfiqar Abbasi, president of the Jammu & Kashmir Joint Chamber of Commerce & Industry — representing businessmen on both sides of the LoC — even in barter trade, there is no guarantee of equal return and recovery of differential amounts from counterparts across the LoC.

Add to this the negligible facilities at the crossing points, further delaying the process and affecting the quality of products in transit. Agricultural products account for a bulk of the permissible trading items. Processing, loading and unloading — the trucks cannot cross over, so the goods are transferred to local carriers — are all done manually. Even security check is manual in the absence of X-ray machines. Still, a measure of the success of cross-LoC trade can be gauged from the volume of trade. One report quotes the J&K government as claiming that it had crossed Rs.272 crore (Indian rupee) as of last March. Another report states that in the third week of January this year, the two-day trade on one route touched nearly Rs.29 crore — a Rs.5 crore increase over the previous high of Rs.24 crore in December 2010. But, Mr. Abbasi pointed out, in the absence of banking facilities a properly calculated figure for the quantum of trade is unavailable.

Encouraged by the potential of this trade, the Joint Chamber, in a representation to the Foreign Office ahead of the Working Group meeting, said traders should be allowed to move across the LoC on a ‘trade pass' to facilitate smooth trade and recovery of sales proceeds from both sides. What the Joint Chamber has proposed is a multiple-entry pass valid for two years issued on its recommendation and that of other recognised chambers on both sides.

Other demands include banking facilities and expanding the trade list to cover all items manufactured or produced in the two parts of Kashmir, doubling the number of trading days, allowing trucks carrying cross-LoC trade goods to their final destinations, and opening additional routes of Chumb-Pallanwala on the Bhimer-Jammu side and Khoiratta-Noshehra on the Kotli-Rajauri side as these are the shortest and most viable routes for cross-LoC trade.

Some of these demands, like expanding the trade list, have India's support. But the support does not extend to all items. It also stipulates stringent checks to ensure that no product outside the two Kashmirs gets in and benefits from the duty-free trade. Another concern is the hijacking of trade by big businessmen outside J&K as mentioned by researcher Ershad Mahmud in his paper in a report brought out by the U.K.-based Conciliation Resources on LoC trade. According to him, big businessmen in Lahore and Sialkot are hijacking intra-Kashmir trade from local Kashmiris. The same could be true on the Indian side too.

India has also proposed increasing trading days and opening all five-foot crossing points on the LoC to trade. Presently, trade is allowed on two of these points. Three additional ones on which New Delhi is open to trade are Nauseri-Tithwal, Hajipur-Uri and Tattapani-Mendhar.

Earlier this year, India sent a proposal identifying the J&K Bank to provide banking services. But Pakistan did not inform New Delhi of its reciprocal arrangement till last month-end, although traders are hopeful that some reply would have been given at the Working Group's meeting. Similarly, a unilateral move by India in March to increase the stay period for persons visiting J&K from Pakistan-occupied Kashmir to six months with multiple entries, from four weeks with a maximum extension of a fortnight, is yet to be reciprocated.

Getting these permits, according to studies conducted into the working of the cross-LoC CBMs, is an uphill task. Valid only for three months, every application goes through eight different offices for clearance and takes weeks to acquire. The same routine has to be gone through each time though none of the studies undertaken has thrown up any serious violation of the trade and travel CBMs. This was seconded by the ‘Azad Jammu & Kashmir' (AJK) government at a recent briefing for visiting Indian journalists at Chakoti, last point on the LoC in Pakistan.

In fact, civilian and military officials present at the briefing conceded that the relative calm along the LoC ever since the CBMs kicked in had helped in the development of ‘AJK' as NGOs and development workers could now be encouraged to come in. And travel across the LoC, they said, had been affected only by bad weather and not due to the political climate between the two countries since the first bus service between Uri and Muzaffarabad was flagged off in April 2005.

Pakistan apparently wants to consolidate the existing trade and travel facilities by addressing the sore points first before extending them. While there is a view that some additional measures may be announced at the Foreign Minister-level engagement later this month, part of Islamabad's reluctance apparently stems from a fear of cross-LoC CBMs gaining momentum that may erode Pakistan's case on the Kashmir issue though increasingly it is being seen as the root cause of much of the problems facing the country today.

And, therein lies the power of this “bottom-up” approach to peace-building that both countries — despite the public posturing — have done little to facilitate. Traders on both sides of Kashmir — billed as a potential nuclear flashpoint — now have a stake in other's welfare. There are reports of at least 40 former militants helping to sustain the trade; thereby not only enlarging the constituency of peace but also developing stakes in the stability of the region and providing an alternative narrative on the vexed Kashmir issue.

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