• Home
• Video
• Books by Ikram Sehgal
• About

Tripartite Trade Talks

The three nation South Asia tripartite talks in Dhaka on January 15 will be long on rhetoric but terribly short on substance. More than Pakistan and Bangladesh, it is India that needs to augment her trade within the sub-continent to give a choice of economic amelioration to her teeming millions. Pakistan and Bangladesh do get residual benefits but not on the same scale as our large neighbour. While Prime Minister Hasina Wajed’s excellent initiative to get us talking on such lines must be appreciated it must also be clearly understood by all concerned that there are two major inhibiting factors that will govern the future of trade and commerce in the South Asian sub-continent, viz (1) the core problem of Kashmir and (2) the fear that India’s industry may overwhelm that of its neighbours because sustained protection over the years and economy of scale because of numbers makes its products much more competitive.

History is witness to the fact that not only was the South Asian sub-continent the crossroads of commerce but its raw material and products provided for the shifting of the focus of industry to the western world. Strange as it may seem now, Bengal, which encompasses modern Bangladesh and India’s west Bengal, was once the granary of the sub-continent and for many East Asian countries. The Sultan of Istanbul would get the hull of his warships made in the islands of Hatiya and Sandwip. The commerce was so frequent that piracy flourished in the Bay of Bengal as Dutch and Portuguese pirates joined in with locals to make the islands of the coast as safe havens from where to operate. Piracy was only less frequent in the Arabian Sea, off the coast of what is now Pakistan and that only because of the strength of the Arab naval forces in the area. To the exclusion of the rest of South Asia, the historical silk-route passed through territories now comprising Pakistan. As everyone knows crime only flourishes off lucrative targets and there was no more lucrative target than the trade and commerce off the coast of the South Asian sub-continent and in the mountainous areas of the North. This situation has now been totally reversed, from a net outflow of goods and produce there is almost a one-way inflow of goods and produce. Because we were mercilessly exploited by the British, who denuded us systematically of our resources (and our skills), for the past fifty years after independence the countries of South Asia have been playing catch-up with the rest of the world. Because of a myriad number of reasons we got left behind in the throes of the Asian miracle. Now with the Tiger economics becoming pussycat, it may not have been a bad thing after all. The unfortunate fact remains that the peoples of South Asia need to cooperate to better their economic conditions very much as other regions have done or else we will be left so far behind the civilized countries might as well put a “CHINA WALL” around us to contain the anarchy that will ensue and become the order of the day. Already we are showing signs of that savagery in refusing to live as amiable communities.

As a businessman and now a political leader of some note, Mian Nawaz Sharif is one of the strongest advocates of South Asian Cooperation to ever appear at the helm of affairs in Pakistan but here he runs against India’s intransigence over Kashmir. While it is inconceivable that short of a war India would hand over Kashmir to Pakistan, unless India allows major meaningful concessions to Pakistan, it is also inconceivable that any government in Pakistan would survive full-fledged trade with India. While Pakistan speaks of full sovereignty for the disputed territory, one believes that initiatives that will give freedom short of full independence that would include free access to Pakistan and India equitably would be reluctantly acceptable to the people of Pakistan. Both sides have their reasons but Pakistan has historical and traditional affinities other than religion that far surpass India’s claims. Indian counterpart businessmen who meet me frequently at World Economic Forum’s organised meetings at Davos and other locations, have emphasized repeatedly their interest in Pakistan as a market and their need for a direct access through Pakistan to the Central Asian markets in exclusion of the problem of Kashmir. I have repeatedly explained to Rahul Bajaj, Jamshed Godrej, Rajiv Kaul, etc that neither will take place as long as the Kashmir situation remains alive, that unless they can convince their government (of the day) to settle this issue, the aspirations of the peoples of South Asia to have that land access will be frustrated. To that end the best hope that the Indians have at this time is in the form of our present PM, indeed he is visibly keen to solve the problems but he knows that if he gives away our only bargaining chip without reciprocity, he will not last long as PM, mandate or no mandate.

On the other hand South Asians, India much more than others, must understand that Pakistan is today the crossroads of the region. The unofficial trade passing through Pakistan is almost double of the official trade, 90% of Dubai’s transit trade transits through Pakistan to destinations in Iran (part of the Middle East), Central Asia (including Afghanistan) and India (representing South Asia). By reducing customs duty to 15% for finished products and to zero for raw material, parts and spares, the unofficial trade will become official when transitting through Pakistan and will force-multiply to the exclusion of the rest of South Asia. While Pakistan will certainly benefit from mutual trade because of the decreased freight charges and direct access to South Asia, particularly India, Pakistan does not need South Asia as much as South Asia needs Pakistan to fulfill their long-denied land access to Central Asia and parts of the Middle East. Frankly Pakistan would be foolish to bargain away its position of logistical strength without definite solution of the Kashmir problem. As such one does not expect much in Dhaka but a reiteration of the hope that goes with mutual cooperation and a lot of rhetoric of the vision that evades us without that cooperation.

Even if we were to take the risk that our over-protected industries would not be overwhelmed by India as has happened in many sectors in Bangladesh because of the opening of limited free trade, the core issue of Kashmir will not go away and as long as that remains mutual trade in South Asia is going nowhere. The solution lies with the rulers of India, political and bureaucratic, in short the extremely nationalist establishment. When they are ready to come to terms with their rather hegemonic ambitions and make compromises for all the peoples of the South Asian sub-continent, then South Asia will begin to regain the commercial glory that we had five hundred years ago and earlier.

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.