When it was announced that Pakistan had given India the status of Most Favoured Nation (MFN), some people nearly had a heart attack. Why, this is downright treachery, they thundered, while India goes about committing genocide in Kashmir, here we are, awarding it MFN status! Can you blame this response?
No, you can’t. Anti-India passion is in our blood. The arch enemy has helped dismember Pakistan. It is killing, raping and maiming Muslims every day. And it remains the big bully on the block. Every evening, at 9 pm sharp, the tragedy of Kashmir is relived in all its gory detail on Khabarnama. And at every conference across the globe, we tell the world again and again that we will not have peace with India until the core issue of Kashmir is resolved to our satisfaction. Why, then, has the government suddenly warmed to the idea of favourable reciprocal trading relations with India when it is still not in favour of according better visa and travel facilities between the two countries ?
If no nation is an island, then we should know that the economy is the engine of every nation’s growth. This is the raison d’etre of capitalism. If an extension of the home market is an important factor in the industrial development of modern nations, the integration of the home market with the world economy is the flip side of the coin. International commerce, comparative advantage, trade and aid make the capitalist world tick. And however much certain interests in Pakistan despise the pressures of the World Trade Organisation to lower tariff barriers, we are obliged to do unto the exports of others what we would like them to do unto our exports to them.
The South Asian Preferential Trading Arrangement (SAPTA) under which we have conceded MFN status to India is an offshoot of the South Asian Association for Regional Cooperation (SAARC). SAARC, in turn, follows the path treaded by other mutually beneficial trade associations like the Asian Pacific Economic Cooperation (APEC), the North American Free Trade Area (NAFTA), the European Economic Union (ECU), etc etc. Clearly, every region is cobbling together preferential trade blocs because that is the best way to negotiate economic terms with the World Trade Organisation which is pushing for a rapid globalisation of the national economy.
If the economic compulsion for SAPTA cannot be resisted any more, whatever our political restraints, we should know what we are getting into. For years Pakistan has dragged its feet and refused to ratify SAPTA. Last may, however, we gave in at the SAARC Summit in New Delhi, and early this month we ratified an agreement within SAARC to swap tariff concessions. Pakistan has now allowed duty relief on 38 imported goods including essentials like spices, fibres, lentils, medicinal herbs, leathers, chemicals, etc from SAARC countries. Duty on such imports from Bhutan, Nepal, Maldives and Bangladesh will be charged at 85 per cent of the prevailing rate from other countries of the world (15 per cent concessional reduction) while duty on imports of such items from India and Sri Lanka will be charged at 90 per cent of prevailing rates (10 per cent concession). But India has gone a step further than Pakistan. It has granted such concessions to Pakistan on 106 items and thereby made us a more Favoured Nation than we have made New Delhi. How will this arrangement affect us?
Pakistan’s imports from SAARC countries, including India, amounted to a mere US$ 138 million in 1994. Thus it would seem that for the time being the new concessions will only have symbolic value. At any rate, official trade with India is only a fraction of the US $ 1 billion in smuggled goods on which there is no accretion to the national exchequers of both countries. Since we tend to condone smuggling, why can’t we welcome formal trade?
In contrast to the die-hard ideologues, the business community has accorded a cautious welcome to the new agreement. This is not because the business community is any less patriotic than the ideologues. Nor because it feels the pain and anguish of India’s bullying tactics in the region any less. But businessmen always have a more realistic approach to life and that is the way it should be.
If the government is at fault, the error lies not in ratifying SAPTA but in Islamabad’s inability to explain the longer term economic compulsions and scope of the agreement. Certainly, the feeble and often defensive arguments offered by officials have made a mountain out of a molehill. The press has made matters worse by its poor understanding and articulation of economic and financial issues. Imagined fears have therefore arisen about the negative impact this slight trade liberalisation may have on our economy.
Let us not be paranoid. There is no danger that India will swamp Pakistan. The bureaucrats in Islamabad are trying to negotiate better trading terms for Pakistan. And the government is not about to abandon our national security interests.