Pakistan's opportunity: a free-trade deal with rival India

Trade is not a cure-all for grinding poverty, but a free-trade deal between Pakistan and India would help foster economic growth and regional peace. And the political timing has never been better. Pakistan's new prime minister, Nawaz Sharif, should seize the moment.

K.M. Chaudary/AP/file
Pakistan laborers unload sacks of onion imported from neighboring India May 14 at the Pakistani border crossing of Wagah. Op-ed contributor Jesse Kaplan writes: 'The Pakistan-India border is 1,800 miles long, but trade flows only through one official crossing.'

Pakistan's new prime minister, Nawaz Sharif, confronts no shortage of challenges: an economy at risk of collapse, a woefully inadequate electrical supply that causes rolling blackouts across the country, rising ethnic and sectarian tensions, and the threat of internal terrorism.

Yet Mr. Sharif also has a significant economic and political opportunity, and he should seize it. Pakistan is due to normalize trade relations with India this year by granting its neighbor and strategic rival most-favored-nation trade status. Sharif should go further and pursue a full-blown India-Pakistan free-trade agreement, much like the North American Free Trade Agreement.

The longstanding animosity in India-Pakistan relations has left South Asia as one of the world's least-integrated regions. Since the two countries were created in the 1947 partition of British India, they have fought four wars.

As a result, intraregional trade in South Asia accounts for only 5 percent of the region's total trade, a proportion dwarfed even by Africa's 10 percent of intraregional trade (not to mention East Asia's 53 percent). Existing organizations such as the South Asian Association for Regional Cooperation have been unable to promote anything more than cosmetic integration.

The Pakistan-India border is 1,800 miles long, but trade flows only through one official crossing. Elaborate customs procedures, difficult visa regimes, and restrictions on foreign investment make trade between the neighbors difficult at best. Clearing away these obstacles could boost trade to $40 billion a year, analysts estimate, compared with less than $3 billion last year.

Trade is not a cure-all for stunted development and grinding poverty, but it would help foster growth in two countries whose lack of openness to each other hinders their economic advancement. A free-trade agreement would lead to increased investment and tourism for both countries, reduced prices for consumers, greater revenues for businesses, and a newly diverse and more innovative group of suppliers for both countries' people.

And, as the US National Intelligence Council has warned, improved trade may be the only way to keep South Asia peaceful – no small concern considering the countries' nuclear arsenals.

For Pakistan and India, moreover, the timing may never be better. Sharif has nearly unprecedented support for a Pakistani civilian leader. He has no viable rivals. As a result of his party's strong election performance in May, he does not even require a coalition to govern.

Sharif also draws the bulk of his support from the Punjab Province, the most economically prosperous and industrialized region, and thus the one best-positioned to benefit from a deal.

Sharif's Indian counterpart, Manmohan Singh, has seen his long premiership weakened by scandals and unruly coalition partners. His Congress Party desperately needs a win to increase voter enthusiasm ahead of next year's general election. The Indian public is disenchanted with internal security problems, anemic economic growth, and the bland performance of Mr. Singh's heir apparent, Rahul Gandhi.

For Singh, like Sharif, a trade deal could provide an economic and political boost. The influential Indian business community would reap major benefits from a trade deal with the 180 million consumers next door. And Singh, who was born in what is now Pakistan, originally made his name as an economic reformer, launching India's economic liberalization as finance minister in 1991.

To be sure, securing a trade agreement would not be easy. The Pakistani military is reflexively suspicious of India and scuttled an attempted opening of relations in 1999 during Sharif's prior premiership. Singh's coalition partners remain troublesome. Both groups would have to be appeased to allow a trade deal to go forward. And both countries will need to keep their territorial dispute over Kashmir as a separate issue.

Still, nothing is ever easy in South Asia, and this opportunity is better than most. Nawaz Sharif should take it.

Jesse Kaplan, a former Babar Ali fellow at Lahore University of Management Sciences, is a student at Yale Law School.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Pakistan's opportunity: a free-trade deal with rival India
Read this article in
https://www.csmonitor.com/Commentary/Opinion/2013/0708/Pakistan-s-opportunity-a-free-trade-deal-with-rival-India
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe