Regional trade

That there are few limits to Pakistan’s capacity to act as a regional trade hub is not something that is in doubt. It has always been a question of whether the will was there at the top of the government to push this vision into reality. So it should come as no surprise that Pakistan is central to the Asian Development Bank’s (ADB) Central Asia Regional Economic Cooperation (Carec) Strategy 2030. The reality, though, is that none of these visions has ever become reality. Pakistan remains highly reliant on trade outwards to Europe and the US while the immediate region’s potential has never been tapped. According to the ADB, Pakistan could become a centre of trade and commerce. But all that is dependent on one condition: Pakistan must remove barriers on its international borders to benefit from the growth of Asia and Europe as economic powers. The condition is significant enough to put the entire prediction to question. There is no direct reason why opening borders would be advantageous to the Pakistani economy. If anything, at the low level of competitiveness most of its export industry has been operating this could lead to a greater flight of industrial production from the country.

The classic economic problem of competitive advantage needs to be sorted before opening borders, but this is not the reason why Pakistan does not have more trade flowing through it. The fundamental problem is our relations with most of our neighbours; where there is some friendship, the infrastructure simply does not exist. The China-Pakistan Economic Corridor could break the trend, but it remains to be seen whether it will be built and to whose advantage it will be. The ADB has been pitching greater connectivity between the Central Asian states and Pakistan for the past two decades. Road and pipeline projects have been championed but none of them have come to any fruition. It is also easy to place Pakistan as a global trade hub – situated between Russia, India, China and Europe – but the reality is that Pakistan’s trade with central Asian countries remains very low. It could create a much larger regional market but the question is: which goods will it export and import? With the Carec project itself being in line with the CPEC developments, there is no reason for Pakistan not to participate. The major question for Pakistan remains the Afghan one. Afghanistan has been asking Pakistan for access to India in return for us gaining access to Central Asia. With the ADB footing much of the bill, there is reason for the Carec initiative to be explored in a serious way but without jumping out of our chairs.