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In judging Pak. reply, trade is the key

By C. Raja Mohan

NEW DELHI: In assessing the Pakistani response to the peace initiative of the Prime Minister, Atal Behari Vajpayee, the Government will put Islamabad's attitude towards trade liberalisation under the political scanner. If Pakistan comes up with genuine steps to promote trade contacts with India in the next few days, it could quicken the pace of improvement in bilateral relations.

A positive Pakistani trade policy could make it easier for Mr. Vajpayee to visit to Pakistan later this year to attend a long-delayed summit of South Asian leaders. That could also become an occasion for a bilateral engagement with the Pakistani leadership.

The Pakistan Prime Minister, Mir Zafarullah Khan Jamali's invitation today is certainly interesting. But Mr. Vajpayee is likely to pack his bags for Islamabad only if there is concrete progress in economic cooperation.

While it may take a while to measure the trend-lines on cross-border infiltration, Pakistan's attitude to the peace process can be immediately assessed by what it does in the next few days on economic cooperation.

In his prepared statement read out in both the Houses of Parliament on Friday, Mr. Vajpayee emphasised "the importance of substantive progress on the decisions for regional trade and economic cooperation" taken at the summit of the South Asian leaders in Nepal in January 2002.

The Kathmandu summit of the South Asian Association of Regional Cooperation (SAARC) had agreed that a South Asian Preferential Trade Agreement (SAPTA) would be concluded by the end of 2002. But progress on trade liberalisation has been stalled thanks to Pakistan's delaying tactics. In a series of meetings at the end of 2002 to finalise SAPTA, Islamabad did not display any positive inclination towards trade cooperation with India. It put on the table a few trade concessions with one hand and took them away with the other. In the SAPTA negotiations over the last few years, Pakistan has offered about 500 tariff lines for duty concessions to India but there are thousands of tariff lines in play in the subcontinent.

Even as it opened the trade door a wee bit, Pakistan put 219 of these 500 lines on a negative list of barred items for trade with India. As a result, trade talks at SAPTA have remained inconclusive.

It is entirely possible that Pakistan, as it unveils a set of confidence building measures in the next few days, would remove most of the these 219 items from the negative list and present it as a big step forward. But New Delhi will be looking for a basic change in the attitude towards commercial relations with India rather than counting the number of tariff lines being opened up.

Till now Pakistan has insisted that trade cooperation with India could take place only if there is a settlement of the Kashmir question. The next few days would show if it is serious about reversing that policy.

Trading with India would, in fact, be in Pakistan's own interest. There can be no sensible economic strategy for Islamabad that does not emphasise economic cooperation with its large neighbour. While official bilateral trade is minuscule, illegal and indirect trade takes a large volume of Indian goods to Pakistan with the latter paying a higher price for them and losing customs revenue.

But the ideological emphasis on the slogan "Kashmir first" has been so strong in Pakistan that Islamabad would rather lose a whole range of economic opportunities than trade with India.

Mr. Vajpayee assured Pakistan in his Friday speech that he was ready for a "final and decisive negotiation" on the vexed question of Jammu and Kashmir. This is the first time in almost three decades that an Indian Prime Minister has committed himself to such a position.

It remains to be seen if Islamabad merely pockets this huge political concession and refuses to move on issues of interest to India such as reducing cross-border violence and engaging in mutually beneficial trade cooperation.

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