LAST week, a routine affair made the headlines. The government has approved the appointment of trade ministers in several Pakistani embassies, including our High Commission in New Delhi. Suddenly, several circles started speculating that Pakistan was about to open trade with India. Sensing the uproar, the government clarified that there was no change in Islamabad’s trade policy with India.
The incident raised a wider question about how Pakistan should pursue geoeconomics if it chooses not to trade with its neighbors. Geoeconomics is essentially about leveraging geography to improve the socioeconomic well-being of people. For Pakistan, the geo-economy calls for strengthening trade with its four neighbors – Afghanistan, China, India and Iran.
Read more: Trade with India needs time, says Razak Dawood
Trade relations are a formidable relay of peace. The most instructive is the example of the European Union. Other regions, such as those that make up ASEAN, have also discovered the enormous benefits of regional trade for their people. South Asia, however, remains the least integrated region in the world. Undoubtedly, much of the blame can be placed on India, which failed to promote regional integration, allowed conflicts to fester and kept the Saarc marginalized.
Yet, in the end, it is the countries of South Asia that suffer more from intraregional conflicts than India. One of the main reasons is that India, due to its economic size and military strength, has become relevant to the United States’ Indo-Pacific strategy to contain China. The tilt of the United States towards India encouraged Indian leaders to pursue aggressive Hindutva-inspired policies, destabilizing the region and even Indian politics, undermining the promise of regional trade.
What Pakistan needs is a change of mentality.
So what should Pakistan do in these circumstances? Should trade with neighbors be hostage to disputes or disputes? Or should we start to see trade relations with our neighbors through the prism of geo-economics and the socio-economic well-being of the Pakistani people? Our trade with Afghanistan had reached over $3 billion, but has since declined despite Afghanistan’s heavy reliance on trade with and through Pakistan. With Iran, US sanctions have kept us away from important bilateral trade. We did not use the innovative solutions that were available, such as border markets. The result is that Pakistan’s border regions continue to receive smuggled goods from Iran with no net gain to Pakistan’s treasury.
With China, bilateral trade has been stimulated after the 2006 free trade agreement, but the trade balance is largely in favor of China. With India, during the peace process (2004-2008), bilateral trade had jumped to more than 3.6 billion dollars. But since August 2019, all commercial links remain suspended.
Similarly, transit trade, if well managed, can bring enormous benefits to transit countries. However, the transit trade between Pakistan and Afghanistan has often been misused, which has flooded Pakistani markets with contraband goods. India has often requested the transit of its goods to Afghanistan and Central Asia, but the strains this could place on our road and customs infrastructure have hampered progress.
Does this mean that Pakistan should continue to lose the huge benefits it can derive from establishing trade and investment relations with its neighbours? The obvious answer is that we shouldn’t. Look at India and China, which despite their border and other disputes, have a thriving two-way trade that has now hit the $125 billion figure. Similarly, China and the United States enjoy a strong trade and investment relationship despite the onset of strategic competition between them.
What Pakistan needs is a change of mentality. Nothing should matter more to our decision-makers than the socio-economic well-being of our people, which in turn would strengthen our national security. The world is changing rapidly. Nations have learned that cooperation and competition can coexist as long as there are mutual benefits.
No confidence-building measure is more powerful than bilateral trade because it can help reduce mutual mistrust and position countries to tackle the tougher issues on the bilateral agenda. Economically, too, low transport costs, availability of road and rail connections, and socially identical consumer bases provide a clear advantage to trade with neighbours. The economic activity thus generated allows our traders to access vast regional markets. We need a whole new approach to engaging positively with all of our neighbors to ensure our traders have more opportunities for balanced and mutually beneficial trade and investment, in the broader interest of people’s economic security. Pakistani. In due time, trade and investment ties can become a building block for lasting peace in South Asia.
The writer, former Minister of Foreign Affairs, is Director General of the Institute of Strategic Studies in Islamabad and author of Diplomatic Footprints.
Posted in Dawn, May 18, 2022