Pride and Potatoes: Trade with India

When I read this article, for some odd reasons I felt the author is under too much influence of media and especially Indian media, I am sorry to state that as I have thus far not very good experiences with them!

I would request the readers of any media to please do your own research before getting programmed by the media as it is. Few days back I was reading an article in Australia on the same topic by an Indian author. He made a point that it is lack of proper word translation of MFN in Pakistani language Urdu, which has created problem of not granting MFN status to India by Pakistan...it was amazing how this type of logic is accepted by media and allowed to get printed.

Having said that, let me come to the topic of discussion. I was part of the International group and Pakistan Ministry of Trade and Industry`s representative body that conducted the research as to why not to give India MFN status? The research was funded internationally. I do not wish to go into much details, for specific reasons, however would like to mention few things for the readers on the both sides based on which it was decided not to grant India MFN status as ``there did not existed level playing field``; it strongly disappointed the funding agency of the research but had to accept the ground realities:

1. MFN implies that you extend the same operational mechanism to the new trading country, which you are extending to your existing trading partner countries. Problem was that Pakistani economy was a very open economy as compared to the Indian economy. Thus what import restrictions had been placed by the Indians to other countries for items such as automobiles and air-conditioning, those restriction would be applicable to Pakistan as well; and that was the reason why India took initiative to give Pakistan MFN status. On the contrary Pakistan being an open economy had no such restrictions, thus leaving its market open for Indian manufacturers to export to Pakistan whatever they were manufacturing. Being an open economy Pakistani products even though were superior as they had to compete with international products, the restriction on Indian side on specific products had prevented them to export to India. Rather we were informed that once Late Indra Ghandi had told to the Indian car manufacturers that she would prefer to see the industry closed in India that need even a nut bolt from Pakistan, in response to their request to import some parts from Pakistan, also asse3mbling the same car as was India, being cheaper than Japan.

2. Indian government was heavily subsidizing its industrial electricity as compared to Pakistan that was competitive like Western countries. The average per unit comparative cost of electricity unit in India at the time of study was less than a rupee, whereas in Pakistan it was close to six rupees!

...I think I should stop here with the message that yes any thing whether its trade, sports, negotiation - all is nice if it is fair

Trade GOOD

War BAD

4 legs GOOD

2 legs BAD

baaaaa !

1-``But may I ask what happened to the two-nation theory in 1971?``

Sir, what I refuse to do is to repeat mistakes. What happenned in 1971 was a mistake, but if you feel that the validity of the two nation theory has somehow been drained down the tubes because of what happenned in 1971 then I beg to differ.

What happenned in 1971 is not the brightest part of our already gloomy history but it does not mean that we can use that conflict as an arguement for reconsidering our stance on Kashmir. Mistakes are made to learn from and what we ought to derive out of 1971 is very simple. Pakistan is one nation that stands to loose a lot if we clamber around as somethings other than a Pakistani. That is all that was proven in 1971. The two nation theory is still alive and kicking. Rest assured.

A solution, through a supervising UN body that can mediate in talks between India and Pakistan, should be welcomed by both countries. People who oppose negotiations of such nature on either sides are the individuals who have agendas that pose the real threat. Here is an interesting question though,

Is anyone familiar with the Shimla agreement language. Does it rule out a mediated solution by a third party at all? Even if the third party is granted commission by the UN or is composed of the parts of UN itself.

I would really appreciate some feedback on that.

2- ``imported Hindustani potatoes wounded our national pride``

Now that really sounds like a moron yapping. Sounds like Qazi sahib talking. Sorry about the redundancy there.

However, do you have any references. Who said this and when. What was the context, etc.

3- ``US lobbed one at the Japanese city at the peak of World War II``

If I recall correctly the bomb was dropped in August 1945. Germany had already surrendered by then. It was not the peak but the last days of the conflict. Do correct me if I am wrong.

Let me remind you that for history 1/2 a century is nothing. It does not mean anything that it has been 50 years since the nuclear holocaust of Hiroshima and Nagasaki. Nuclear bomb can and will be dropped whenever it becomes inevitable for the powers that have it, to do so.

4- ``None of the military aggressors of this age have gained from their actions (remember

Saddam?)``

:) Saddam got exactly what he wanted. He is still where he was. Nothing has changed. Everything else you see, my friend, is good American television.

5- ``war is increasingly becoming outdated, as slavery and duelling have become.``

All I have to say to that is that you are increasingly naive. No offense intended.

6- ``Once India and Pakistan are locked into a stable pattern of trade, peace is inevitable

and mutual security will be ensured. Both countries will have too much to lose from

armed confrontation and will prefer peace vastly to any hostility something like the US and Canada.``

Was it Kennedy who said that Others question what is and wonder why; I dream about what isn`t, ...and ask why not.

Your optimism surely is a bright spot in your article. Keep reality abreast and keep heading out to new possibilities. May hope be with you all the way.

Humble grains of opinion by someone equally concerned with events unfolding half way across the world. Hope you did not mind the sometime pointed nature of my reply.

Faraz

But is that not what is happening to us versus the developing countries in the area of labour intensive goods.

Again just because the cost of the product is less the need would be to identify why the cost is less. USA penalized China for using labour in its prisons to produce goods. That is not to say that India uses such labour but then there is the cost of inputs, eg. labour.

All I want people to be aware of is that there are no simple answers to complex problems and laize faire policies need not always be appropriate.

I can certainly understand the need for properly regulating agricultural produce. My only concern was that we should be very careful about giving some politician power to restrict other goods. For example if an MNA`s son owns a rubber tire factory and that very same product can be produced for half the cost across the border, chances are that it will be difficult for someone to import that product.

Faraz

While consumers may dictate what may be good for them or not, it should be the governments duty to ensure that agricultural products do not play havoc with our produce.

This system is in place in all developing countries and you, as a consumer, are not allowed to import agricultural produce before they are vetted (by the govt) for disease strains that might be incompatible with local conditions.

even though i agree with your overall thesis that better relations with inda, including economic relations is more constructive and beneficial than the status quo -- your economic analysis is extremely superficial and flawed.

to point out just one problem:
you say that even if we become depenedent on indian imports, they will become dependent on exports from us so its okay because we are co-dependent. first of all, import dependency and export dependency are two different things. import dependency means that we are dependent on another economy for our *consumption needs * -- that is our domestic economy does not have the productive capacity to meet its own needs for goods/services. long-term, persistent import dependency implies a structural economic problem.
india, on the other hand is so much larger than us that it can never truly become dependent on anyone, leave alone pakistan. i dont have the numbers handy, but comparing the GDP and GNP`s of the two countries and comparing the proportion of international trade as the GDP of the two countrie s would be a good place to start. these comparisons will highlight the relative size of the economies and their relative `dependency` on external trade.

economic relationships, just like any other, are within the context of imbalances of power (determined by size and wealth, among other things). if there exists an imbalance in political, military and/or economic power between the two countries, those imbalances will inevitably play out in trade relations. so, a wholesale acceptance of free trade with any nation is problematic. but to regard only india with suspicion (given the military or the govt.`s agendas) is also problematic.

anyway, my response is getting too long...

The author of the article makes excellent observations on the role of trade. I have always believed that direct trade, between nations, is the best means to over come common misunderstandings. Trade, in the case of India and Pakistan, will not only increase daily contact between the two peoples, but it will also circumvent the bureaucracy and the marginalize the role of the politicans. Two of the biggest hurdles to improved relations between the two countries. The third hurdle is the military.

The key to a successful India-Pak trade relations is the role of the general public and its attitudes towards each other. If the people really want to trade, they should despite all the political rhetoric on either side of the partition line. It is up to the businessmen women in both India and Pakistan to lead the way and not wait for the politicans. The politcal leaders, In Pakistan and India, tend to operate on a basis of instilling fear and xenophobia in their populaces. Anything that will lessen their personal powers will be resisted. Therefore, the foundation of a sucessful Indo-Pak rapproachément lies in the ablity of the peoples to ignore the political constraints imposed on them and seek commonalities between them. Trade is one of the ways to do it.

As to the mantra of pride; I am pretty confident that given the choice between stravation, malnourishment and a hurt national pride, a rational person would opt for the obvivious. We, in the sub-continent, have not reached that famine state yet, but when we do, a parent faced with the choice of feeding their straving children or let them die in the name of national pride, will prefer the former option. To deny that choice is to risk a revolution and the leaders of Pakistan better be aware that their tsarists days are numbered.

If France and Germany, once bitter enemies, can forge trade relations and thus, improve their bi-lateral relations to the benefit of the rest of the continent, so can India and Pakistan.

You have rightly pointed out the Army`s role in trade relations. To a lesser extent same goes for Indian Army. And don`t forget the other vested interests bent upon destroying the country, at the expense of mutually beneficial relations.

Incidentally, did this response ever made it in the Dawn?

regards

Good article. Trade is always good for both parties involved.

re: Karakoram

Regarding sub-standard goods; that is best left to the Pakistani consumer. If they want to buy an Indian good, I am sure they can judge the quality themselves. I don`t think we want to give some ministry or other power over deciding what is `worth` importing and what isn`t.

The author makes a valid point that trade with India if beneficial to Pakistan should not be shunned. Pakistan should however be wary of sub-standard goods. A recent news report being that low quality seeds with poor yield were imported from India. Quality is a big factor, which should not be ignored. Cheap may translate to poor quality and bad yield, which defeats the purpose of buying at a cheap rate.

Peace.