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January 2, 2015

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‘India imposes nontrade barriers against partners’

LAHORE: All four major trade disruptions between the two countries were caused by the Indians, which is also the leading imposer of nontrade barriers against trading partners.
Lahore Chamber of Commerce and Industry former president Mian Muzaffar Ali said all global experts, Indian leaders and many so-called enlightened intellectuals in Pakistan advocate the issue of trade between the two neighbouring countries should not be linked with the political disputes.
He said history denies this assertion as trade had always been disrupted on slightest hint of hostilities between India and Pakistan.
Several examples can be cited in this regard, he said, adding, trade was first disrupted in 1949-50 when India imposed a trade block on Pakistan because of differences in exchange rate policy.
The second disruption occurred in 1965 when India confiscated even the goods that foreign ships were carrying to Pakistan.
India, he said, again suspended all trade activities with Pakistan during 1965-71 periods when two wars were fought between the two countries.
Another trade disruption occurred in the wake of Kargil conflict when Indian exporters refused to honour confirmed orders against letter of credits where the global rates of these goods would be exported increased.
“The Indian companies, including well-known Reliance Group; however, cited hostilities between the two countries as the reason of cancelling orders,” he said.
They had tacit support of the Indian government that did not assist Pakistani importers to press Indians to honour their firm commitments.
Ali said exports of other items where global prices were stable were honoured. The fourth disruption again came from the Indians immediately after the Mumbai attacks. “And border skirmishes in September last year resulted in decelerating of trade between the two countries,” he said.
LPG Producers Association Chairman Farooq Iftikhar said every sane person favours regional trade.

However, that regional trade cannot be conducted on the whims of one trading partner that disrupts smooth trade flows.
The Indians should practice what they preach and should refrain from citing nontrade events for suspension of trade, he said, adding, the global economists and proponents of unconditional trade with India should realise that Pakistani businessmen eye raw material imports from India to run their industries.
He said if the trade is stopped on slightest hint of hostilities it would hinder smooth production in Pakistan.
The Pakistani businesses do not feel secure, while importing important inputs from India. This is the reason that they keep importing some quantities of the same inputs from other countries, as well.
He said for the raw materials that they import from China or East Asian economies they stick to their source as such disruptions are not thought of in these countries.
Iftikhar said Pakistan is accused of not granting most favoured nation (MFN) status to India although most of the trade lines have been provided MFN trade access.
The Indians have erected nontariff barriers much higher than any country in the world that impede exports from not only Pakistan, but almost all the countries.
He said besides India, Pakistan also have NTBs that restrict trade between the two countries; however, he said the NTBs in India consist of sanitary and phytosanitary (SPS) measures applied to food imports.
It has instituted complex import licensing and permit schemes, he added. Besides sampling, testing and labeling requirements, quarantine of animals and plants, specification of ports and import agencies, preshipment inspection of metal scrap and textiles are other NTBs in vogue in India.
He said India also uses antidumping and countervailing duties. Pakistan, in contrast relies mainly on tariffs to regulate trade.
Engineering entrepreneur Syed Mansoor Abbas said the barometer of the intensity of the trade restrictiveness through NTBs and other measures is the overall trade restrictiveness index (OTRI) prepared by the World Bank.
This index is based on tariffs and NTBs. Its ORTI is 46.7, which is highest in South Asia. He said NTBs in this ORTI accounts for 24.5 percent of the index value. The OTRI for Pakistan is 22.2, which is less than half of India.
Abbas said the NTBs accounts for only 5.1 percent of the index value, which is almost four times less than India, adding, travel bans and suspension of trade routes discourage Pakistani firms to develop supply lines in India.

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