Promote trade with India to cut inflation: Pakistani editorialJuly 22nd, 2008 - 3:10 pm ICT by IANS
Islamabad, July 22 (IANS) Increased imports from India will help Pakistan reduce manufacturing costs and the level of inflation, an English newspaper said Tuesday, warning against an ostrich-like attitude over sub-continental commerce. “Imports of Indian raw materials and some other items are attractive because transport costs are relatively low across the border,” Daily Times said in an editorial headlined “Misplaced fear over Pak-India trade”.
If the increase in Indian imports is expected to be 30 percent in Pakistan’s trade policy for 2008-09, “it will displace the import of the same volume of more expensive imports from elsewhere”.
“This will help Pakistan cut its manufacturing costs and reduce the level of inflation. In fact, the whole theory of trade is built on the notion of comparative advantage and there is much advantage to Pakistan in trading with India,” the editorial said.
It also noted that “some misguided people” had dubbed the trade policy as “India specific”, giving rise to “some one-sided articles in the national press”.
“Conservative opinion wishes to retain the hostile status-quo even though a majority of Pakistanis clearly think otherwise and support the peace process,” the editorial pointed out.
Indian exports to Pakistan currently total $1.8 billion while Pakistani exports to India are worth $350 million. Their unofficial trade, particularly via the Gulf countries, is estimated at $10 billion. Pakistan’s new trade policy, which enlarges the list of importable items, would see the value of this rising to $4 billion.
“After decades of subordinating economics to politics, we are now at a crossroads,” the Daily Times noted.
“The primary crisis in Pakistan is economic despite the fact that we keep distracting ourselves with other less relevant issues” like India’s assistance in rebuilding war-ravaged Afghanistan and its alleged support to militants in Balochistan.
“The politics that has constantly overridden economics has not succeeded but it persists in our mental attitude,” the editorial said.
“The theory of not relying on Indian imports has been disproved over time, to the disappointment of the intelligence agencies,” it added, noting that from the 40 items imported during military dictator Zia-ul-Haq’s time, the number had risen to 1,500, “most of them strategic raw materials”.
“And we have not been ‘let down’ or become ‘dependent’ on India in any negative way. On the basis of this experience, in fact, we would be well advised to create an ‘interest group’ in India comprising exporters to Pakistan,” the editorial said.
“The intermeshing of economic interests is always more reliable compared to political compacts made when there is little mutual trust. On the other hand, the ‘profit motive’ is blind to politics and endures beyond the alarms of war and finally compels states to allow peace to prevail ‘for profit’,” the Daily Times added.
It also noted that Pakistan had signed free trade agreements with Iran, China, Sri Lanka and Malaysia, “but no increase in Pakistani exports to these countries has occurred because of the unstable situation in Pakistan.
“Therefore, it is hardly valid, on the basis of the ‘trade imbalance theory’, to block trade with India.”
Tags: afghanistan, attitude, comparative advantage, crossroads, decades, fear, gulf countries, india trade, indian exports, indian imports, inflation, notion, ostrich, pakistan, pakistanis, peace process, raw materials, relevant issues, status quo, transport costs