Let trade be truthful

Courtesy:- Beelam Ramzan

Pakistan and India are working towards normalisation of relations through trade, but any such effort warrants extreme transparency.

The fifth and sixth rounds of the commerce secretary trade talks, held last year, were crucial in formulating certain policy objectives for normalisation of bilateral trade. February 2012 was fixed as a dead line for the achievement of these goals, before the next round of talks in April this year. Notwithstanding the obstacles, there was a significant effort towards positive engagement amidst a host of difficult-to-achieve policy agendas.

A major achievement of the on-going trade talks was the finalisation of a roadmap for granting the MFN status to India. The announcement came in February by the ministry of commerce which proposed a small negative list (non-tradable goods) that would replace current positive list (tradable goods) by the end of December 2012. This negative list would eventually be abolished in three phases; ending on June 30, September 30 and December 31 respectively. The move would complete the transition towards liberalisation of trade, and eliminate all form of discrimination in trade with India, existing at present.

It is pertinent to mention that abolishing the negative list, gradually, would raise the number of items that can be imported from India to almost 5,600 from the present figure of 1,946, thus registering an increase of almost 90 percent from the current 17 percent by the year’s end. The main purpose of maintaining a negative list for the next ten months is to afford protection to our domestic industries from the onslaught of more competitive Indian exports and allowing them to re-engineer their business plans, especially in vulnerable sectors like food and agriculture, minerals, chemicals, pharmaceutical, plastics, rubber, paper textiles and clothing, ceramics, iron and steel and the auto sector.

Trade liberalisation efforts were complemented by the signing of three major pacts; a customs cooperation agreement, mutual recognition agreement and redressal of trade grievances agreement. These agreements are aimed at simplifying and harmonising customs’ procedures across the borders by reducing irritants to trade in the form of non-tariff barriers facing Pakistani exports in India. The impact of these agreements benefitting the Pakistani side is yet to be seen.

Some important policy objectives of recently concluded trade talks, however, could not be achieved as per expectations. For example, no concrete steps could be taken for liberalising of the visa regime for businessmen. Moreover, physical infrastructure for expanding trade at the Attari-Wagah was not operational in time. The sector specific non-tariff barriers hindering our exports to India have still not been identified to the relief of our specific export oriented-industries.

However, conspicuous by its absence was the lack of harmony and transparency in determining the dynamics of liberalisation of trade; deciding the items on the negative list; and the time frame of its eventual phasing out, hence stirring a great sense of dissatisfaction in the concerned quarters. As widely reported in the media, a great anomaly was the inability of the ministry of commerce to take key-stakeholders on board including textile, ready-made garments and auto parts manufacturers. This was the cardinal reason behind the federal cabinet’s rejection of the proposed plan on February 14 and very rightly directing the ministry to fully engage all the stakeholders in the process.

It was, however, surprising that cabinet approved of the plan just within fifteen days of its rejection. One wonders how it could be possible for the ministry concerned to take into confidence such a group of diverse interests, in a meagre span of fifteen days. When the major industries were not included in the process of identifying items on the negative list and the process of phasing it out on quarterly basis; how could they repose their confidence in this scheme and start planning and evolving a strategy to stay competitive after ten months – the cut off date?

Equally surprising were the reports that the ministries of industries and textile were not consulted in the finalisation of the crucial policy agenda. The textile industry not only constitutes 60 percent of export led industries but also hold significant economic stakes. Reportedly, both these ministries wanted a larger negative list than the one proposed by the ministry of commerce in order to provide protection to a greater number of items within an extended time frame of five years before granting a MFN status to India. In an air of discord, it would have been better to thrash out these modalities through meaningful consultation, and enable all three federal ministries to develop a collaborative proposal on the items of the negative list and their phasing out within an agreeable time frame.

Unlike India, that has an advantage of entailing three ministries; commerce, industries and textile in one person, Mr Anand Sharma, we have three separate ministries. However through better coordination, diverse opinions could have been accommodated on one platform. Engaging all stakeholders would have given a wider ownership to the policy and plan of trade-liberalisation with India.

It will not be out of place to suggest that even those political and religious shades of opinion should have been engaged who are opposing this process on political/ideological basis. The media and the army is another leg of the process of engagement. Without their active support who is going to be the part of outcome and process, initiated by these liberalisation talks, it will be difficult to expect maximum benefits for the country and economy, in the long run.

In the absence of a higher level of transparency and an all-inclusive consultative process, resultant distrust amidst key players, coupled with politically-driven opposition by some shades of opinion, may derail the whole process, before it could take roots.