Finance Minister’s Address at Aman Ki Asha :Trade Meet
Following is the text of Finance Minister, Shri Pranab Mukherjee’s address at the ‘Trade Meet’ organised as a part of the Aman Ki Asha campaign, being run by the Times of India Group and the Jang Group to energize the process of mutual cooperation between India and Pakistan:
“I am extremely pleased to be with you in this Trade Meet organised as a part of the Aman Ki Asha campaign being run by the Times of India Group and the Jang Group to energize the process of mutual cooperation between India and Pakistan. I understand that the agenda of the campaign includes issues of trade and commerce, and of economic cooperation apart from other issues like cultural exchanges, religious and medical tourism, free movement of ideas and sporting ties.
India and Pakistan are not only neighbours. They share a common historical past and socioeconomic affinity. Development of trade and other economic relations between them is natural and necessary to maintain peace, and stability, as also for fostering development in South Asia. Expansion of these relations can help significantly in reducing regional tensions and mutual mistrust.
South Asia is the least integrated region compared to regions comprising developing countries such as in East Asia, Latin America, Europe and Central Asia, Middle East and North Africa or sub-Saharan Africa. Other successful regional cooperation and integration initiatives have demonstrated that regional cooperation is a win-win and positive-sum situation that is beneficial to the entire region. Regional groups are formed to pursue closer economic integration at the regional level and the objectives of the groups are to increase market access, expand exports and strengthen mutual understanding at the political level among the members. There is no reason why SAARC nations cannot replicate such a model.
There are several advantages of normalizing trade between the two countries. Due to geographical proximity, there is tremendous scope for using the advantages of cheaper transportation costs and trade complementarity in goods in which either country has a comparative advantage. The shorter distances will render it unnecessary for industry to carry high levels of inventories of raw material, intermediate goods and parts, thereby reducing cost of operations while also improving allocation of scarce resources. In the absence of effective economic cooperation, both countries pursue their own industrial development program, with each country developing redundant industrial units. With effective economic cooperation, we can avoid a duplication of inefficient facilities and market structures. This will generate sustainable industrial activity and employment for both countries.
As you would know, bilateral trade between India and Pakistan benefited from the Composite Dialogue process which began in 2004. It grew by 550% between the years 2003-04 and 2007-08 going up to $2,238.5 million in the year 2007-08. But in the year 2008-09, the bilateral trade decreased by 19.1% and was about $ 1,810 million. Indian exports to Pakistan declined by 26.18% over previous year to $ 1, 439.88 million and Indian Imports from Pakistan increased by 28.54 % over previous year to $ 362.07 million.
Being neighbours, India and Pakistan have significant potential for trade, within bilateral and regional contexts. Though India and Pakistan have no formal trade agreement, India has accorded Most Favoured Nation (MFN) status to Pakistan. Pakistan maintains a Positive List of importable items from India, which now consists of 1934 items. The South Asian Free Trade Agreement (SAFTA) came into effect on 1st January 2006. Notwithstanding its ratification of SAFTA, Pakistan has not implemented the provision of maintaining a negative list of imports beyond which it would permit imports from India. However, the list of positive items has been increased during last few years from 773 in July 2006 to 1934 in September 2009.
Bilateral trade between the two countries can be improved only through concerted efforts by the governments as well as the business communities of the two countries. The most important factors in improvement in economic cooperation between neighbouring states are:
1) Improvement in communication,
2) liberalisation of trade regimes,
3) Ensuring complementarity of export surpluses ,
4) Creation of transit facilities,
5) Unfettered and free movement of goods,
6) Transit trade to Afghanistan and Central Asia;
7) Replacement of the existing positive list by negative list of goods beyond which it would permit imports from India, and
8) Improvement in infrastructure for trade and transport.
You are aware that the Government of India is setting up a modern Integrated Check Post (ICP) at the India-Pak border at Attari, Amritsar. The experience that we can draw from around the world would show that a more economically integrated and rapidly developing region would generate a peace dividend. Extended trade relationships would reduce potential for conflict by creating strong constituencies for peace which could be a major additional benefit for the countries in South Asia. Peace and stability in the region would contribute to a perception of South Asia as a stable region for investment and lead to increased FDI into the region.
The need of our times is for our region to develop in a climate of peace and stability. The desire for peace and harmony between all countries in our region permeates the minds of our people. This is not a distant dream but a vision that is within our grasp. Let us achieve it, together.”
CAclubindia
