Economic network

Reviving trade across the Wagah border

February 22, 2022

ISLAMABAD — THAT Razzak Dawood, Pakistan’s top trade official, who supports the resumption of trade with India, backs speculation that the two neighbors may be engaged in behind-the-scenes talks to improve bilateral relations. He is of the view that the two countries should revive trade relations, which ended following India’s annulment of the autonomy of occupied Kashmir in 2019, as it is beneficial for all, especially the Pakistan. Earlier this month, businessman Mian Mohammad Mansha also expressed similar views, saying the ongoing talks between the two states could yield positive results. It is heartening to see both government officials and business people supporting improved bilateral relations and regional trade in South Asia, one of the least economically integrated regions in the world. It is an established fact that regional trade is one of the most crucial tools for economic progress and increasing the competitiveness of countries in various regions. According to a 2018 World Bank report on trade between the Saarc nations, Pakistan and India “collectively accounted for 88% of regional GDP, but trade between them was valued at just over $2 billion.” That could be as high as $37 billion, he added.

The fact that intra-regional trade in South Asia is among the lowest, at around 5% of total trade, compared to 50% for East Asia and the Pacific regions, means that it may take a some time before the impoverished Saar could reap the benefits of shared land borders. Multiple factors, including tariffs and para-tariffs, real or perceived non-tariff barriers, a wider trust deficit, political and territorial disputes, terrorism and higher connectivity costs have prevented Saarc nations from trading between them. But the long-running Kashmir dispute between Islamabad and New Delhi is the most important reason for negligible regional economic connectivity. This forced Pakistan and other Saarland countries to look to the West and elsewhere for trade prospects. There is a growing realization in the region that stronger trade ties and mutual economic dependence can, over time, create an environment of mutual trust and help neighbors settle political and territorial disputes amicably. . Europe understood this after fighting two world wars and eventually coalesced into a large, strong economic bloc with a single, common currency. Why can’t South Asian states learn from his example and work collectively for the future of their two billion citizens? It won’t happen overnight, but reviving trade through Wagah could be a first step.