Foreign Policy Watch: India-Pakistan

Explaining Pakistan’s flip-flop on trade with India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Resuming India-Pakistan trade ties

The article highlights the key takeaways from Pakistan’s vacillations on resuming the trade ties even in the face of impending economic crisis.

U-turn on resuming trade

  • On March 31, Pakistan announced the decision to import cotton, yarn, and sugar from India.
  • However, it took a U-turn on that announcement about resuming trade ties.
  • This highlights the internal differences and the emphasis on politics over economy and trade.
  • It also signifies Pakistan cabinet’s grandstanding, linking the normalisation of ties with India to Jammu and Kashmir.

3 takeaways from the decision

1) Immediate economic needs

  • Pakistan’s decision was to import only three items from India, namely cotton, yarn and sugar.
  • It was based on Pakistan’s immediate economic needs and not designed as a political confidence-building measure to normalise relations with India.
  • For the textile and sugar industries in Pakistan, importing from India is imperative, practical and is the most economic.
  • This is because cotton and sugarcane production declined there by 6.9% and 0.4%, respectively.
  •  By early 2019, the sugar prices started increasing, and in 2020, there was a crisis due to shortage and cost.
  • Importing sugar from India would be cheaper for the consumer market in Pakistan.

2) Politics first

  • The second takeaway is the supremacy of politics over trade and economy, even if the latter is beneficial to the importing country.
  • The interests of its own business community and its export potential have become secondary.
  • However, Pakistan need not be singled out; this is a curse in South Asia, where politics play supreme over trade and economy.
  • The meagre percentage of intra-South Asian Association for Regional Cooperation (SAARC) trade and the failure of SAARC engaging in bilateral or regional trade would underline the above.

3) Emphasis on Jammu and Kashmir issue

  • The third takeaway is the emphasis on Jammu and Kashmir by Pakistan to make any meaningful start in bilateral relations.
  • This goes against what it has been telling the rest of the world that India should begin a dialogue with Pakistan.
  • There were also reports that Pakistan agreeing to re-establish the ceasefire along the Line of Control (LoC) was a part of this new strategy.

Consider the question: “Trade is unlikely to triumph over politics in South Asia; especially in India-Pakistan relations. This is a curse in South Asia, where politics play supreme over trade and economy.” Critically Examine.

Conclusion

Pakistan has been saying that the onus is on India to normalise the process. Perhaps, it is India’s turn to tell Islamabad that it is willing, but without any preconditions, and start with trade.

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