Non-tariff barriers

We have been talking about non-tariff barriers (NTB) imposed by India on Pakistan. Here is a nice explanation of what these NTBs are:

http://www.brecorder.com/market-data/stocks-a-bonds/single/636/0/1246856/

Amin Fahim is likely to visit India on September 26-30

Read the full story here.

http://wap.business-standard.com/storypage.php?id=5&autono=448005

India-Pakistan Trade – Part II

Here is the second part of the Dr. Ishrat’s article published by The News.

http://thenews.com.pk/TodaysPrintDetail.aspx?ID=38028&Cat=9&dt=3/25/2011

Pakistan will most likely grant MFN status to India

India and Pakistan Commerce Ministers are meeting next month and analysts hope that the long awaited issues of lifting non-tariff barriers (NTB) demanded by Pakistan and Most Favourite Nation (MFN) title demanded by India, will be resolved. Find below the detailed analysis posted in The Frontier Post on August 7, 2011.

Commerce ministers of Pakistan and India meet at New Delhi next month for the first time since Mumbai attacks in 2008 with a heavy agenda that seeks among other issues expansion of bilateral trade, giving India the status of the most favoured nation and removal of non-tariff barriers (NTBs) which hinder smooth trade between the two countries. The meeting has been convened after Indian commerce and industry minister Anand Sharma extended a formal invitation to his Pakistani counterpart Makhdoom Amin Fahim to discuss several issues, reviving hopes that the two countries would fully exploit the potential of bilateral trade. The volume of formal trade is less than $2 billion whereas it can go beyond $6 billion a year. The minister level moot comes after commerce secretaries of the two countries met in Islamabad in April this year expressing keenness to expand trade relations in an environment of good neighbourly relations. Indian side appeared agreeable on removing non-tariff barriers and ending its opposition to the European Union preferential trade package offered to Pakistan in the wake of last year’s devastating floods. In the April meeting, India agreed to remove Pakistan-specific non-tariff barriers to facilitate Pakistani businessmen who want access to Indian markets. The issue regarding improving trade facilitation measures at the Wagha border would also be discussed at the ministerial meeting. In turn Pakistan has offered to grant the MFN status to India by October this year on the condition of removing NTBs. Several studies on India-Pakistan trade have observed that relaxation of constraints in the way of bilateral trade would benefit both the countries who may achieve a size of not less than $10 billion to 11 billion a year. It should, however, be kept in mind that bilateral trade balance with any particular country does not have to be positive. Pakistan would run a trade deficit with India just as it does with China and surpluses with other countries. India is a larger, more diversified economy and also produces goods that Pakistan exports. The determining factor is whether the cost of imports from India is less than comparable quality imports from other sources. In that case both our local industry and consumers would gain. Trade will lead to some limited specialization and trade in intermediate inputs for use in exports to high income countries. Granting MFN treatment to India would bring gains to Pakistan and a preferential trade agreement would yield larger benefits in provided they ease political tension and show a commitment to regional economic integration. This political will would help the two countries promote trade within a regional preferential trading framework even in face of bilateral political disputes. The ministerial meeting, therefore, has a challenge to take confidence building measures to achieve a specific target without compromising on the two countries’ state political positions on issues and the world in privy to several such global scenarios. The only thing has to be kept in mind is that businessmen in both the countries are keen to promote their relations and their will cannot be ignored in view of the hard fact that this bilateral trade will serve the economic interests of both the countries and benefit the people of Pakistan and India and in the region, the home of one-fifth of humanity mostly suffering from abject poverty.