TDAP calls for trade normalisation with India

KARACHI: The Trade Development Authority of Pakistan (TDAP) on Tuesday called for trade normalisation between Pakistan and India through assessing tariff and non-tariff barriers on both sides.

“For trade normalisation, the platform of SAARC and regional trade agreement SAFTA can be effectively utilised,” a report prepared by the authority noted.

Despite being the largest economies of South Asia, and members of regional cooperation, bilateral trade between Pakistan and India presents a dismal picture. Pakistan’s exports account only 0.08 percent of India’s total imports.

Bilateral trade was further constrained by adopting restrictive trade measures, including tariff and non-tariff barriers on both sides, in addition to trade relation’s sensitivity to security conditions across the border.

Such restrictions have

provided incentives for informal trade, which were many folds

of the formal trade between the two.

“Under current circumstances there exists substantial trade potential between Pakistan and India. Both countries can benefit from their competitive advantage through trade normalisation. Therefore, governments on both sides need to act proactively to normalise the trade relationships to benefit from each other in the long run,” the report noted.

An official said the government of Pakistan needed to include value-added products in its export basket to India, as the current export basket mainly consisted of raw materials for Indian industrial production.

Moreover, Pakistan needed to negotiate tariff rationalisation, as most the textiles products, and some of the identified potential export was in the Non-LDC sensitive list – facing high tariff rates.

“Both countries need to discuss non-tariff barriers to reach a mutually acceptable resolution. Such resolution should at least provide concession to Pakistan on its potential export items including textile items,” the official said.

According to traders, physical infrastructure needed to be upgraded for two-way trade facilitation.

The only border currently in use is the Wagah-Attari, which lacks adequate customs and warehousing facilities.

“Both countries should

collaborate to develop a mechanism to ensure rules of origin to reduce the volume of informal trade in addition to other steps for trade normalisation. There is a need to review current restrictive visa regime to facilitate travel, and arrangements are also needed to address the encumbered process of transactions across the borders,” the report added.

It may be mentioned here that trade with India came to a halt after India imposed 200 percent duty on all imports from Pakistan in February following border tension in Kashmir.