The business route to South Asian
integration
Thursday December 13, 2012 05:46:06 PM,
Saroj Mohanty,
IANS
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In line with Prime Minister Manmohan
Singh's vision of a transformed and prosperous South Asia, India
and Pakistan take another incremental step towards normalisation
of relations, operationalising a liberal visa regime this week
that would pave the way for greater people-to-people contact and
deepening of two-way trade and investment.
Visas are a viable policy instrument used by states in
international diplomacy, and as globalisation entails greater
importance on the so-called "low politics" of trade, tourism and
movement of skilled manpower, countries are resorting to such an
option for furthering their national interests.
The implementation of the visa agreement during Pakistan Interior
Minister Rehman Malik's three-day visit from Dec 14 and India's
unilateral decision to grant six-month multi-city visas to
Bangladeshi businessmen are seen to further integrate the regional
economies of the subcontinent.
The visa agreement, signed by the foreign ministers of the two
countries in Islamabad in September, seeks to ease decades-old
stringent travel restrictions on cross-border movement. It allows
issuing visas to eight categories of people, including the
elderly, tourists and pilgrims.
The regime mandates a time-frame for issuing visas. From the
indefinite time taken to issue a visa earlier, it has been fixed
to a 45-day period. Also, under the new regime, one can visit five
places, instead of three at present and those above 65 years of
age and children below 12 years and eminent businessmen are
exempted from reporting to the police.
Observers say that a liberal visa regime, besides helping divided
families across the border, would lead to better understanding of
the two societies. But what is more significant is the
facilitation of business visas of one-year multiple city and
multiple visits.
At a time of growing uncertainties in world economies, the
people-friendly move in a way stresses the need for increasing
intra-regional trade. While the SAARC countries have been
integrating with the global economy, they remain far less
integrated among themselves.
Data shows that South Asia is the least integrated region in the
world with a very low trade volume of about five percent.
By contrast, the percentage is much higher in other regional
groupings such as the Association of Southeast Asian nations
(ASEAN), North American Free Trade Agreement (NAFTA) and European
Union (EU) where it is 22, 52 and 65 percent respectively. Trade
there has grown faster within the region than with the rest of the
world.
Another awaited decision that would significantly facilitate the
integration process is Pakistan carrying out its commitment to
phase out the negative list governing trade with India by the end
of this month. This implies conferring the Most Favoured Nation (MFN)
status on India.
Pakistan has committed to remove 1,209 items from the "negative
list" by the year-end, which itself means the grant of MFN status
to India.
In March, Pakistan replaced its 'positive list' comprising 1,974
items that could be exported by India to the neighbouring country
with a 'negative list' of 1,209 products. This means that India
can export all other except the 1,209 items.
India had bestowed MFN status on Pakistan in 1996.
Meanwhile, India has told Pakistan it wants more land trade
routes. Land routes are needed to facilitate trade connectivity to
Central Asia and the Middle East.
As many as 800 trucks pass through the Attari-Wagha border daily,
reflecting the sharp growth in commercial activities between the
two countries. The two countries have now agreed to keep open the
trade point for seven days a week instead of six.
"When goods move and investments move, that develops a large
constituency for peace and greater integration," said an Indian
official.
For India, the decisions to go in for a liberal visa regime and
allowing investment from Pakistan are important parts in the
"configuration" of a grand strategy. The people-centric measures
incentivise bilateral cooperation, raising the costs of a conflict
or war, and open up space for regional diplomacy.
Business experts say once the MFN agreement takes effect, existing
trade arrangements between the two countries would improve and new
opportunities like export of petroleum products and trading in
electricity would emerge.
A great deal of bilateral trade that now takes place via Dubai and
Singapore would come down, and official annual trade would rise to
$10 billion from a little over $2 billion at present.
Intra-industry trade would also increase and multinational
corporations could set up facilities to serve both the markets.
As the biggest and the fastest growing economy in South Asia,
India offers opportunities of an expanding market, investments,
technology and entrepreneurial resources for its neighbours.
In fact, a report of a panel of economists appointed by the
Pakistan Planning Commission talks of several advantages of
normalising trade with India.
The panel said the fear of the Pakistani manufacturing sector
being rendered uncompetitive by Indian goods was highly
exaggerated. Import tariffs have been substantially lowered and
the Pakistani industry is already standing up to the competition
of cheap imports from China.
(Saroj Mohanty is a senior business journalist. He can be
contacted to saroj.m@ians.in)
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