PPP government has evolved an unprecedented protocol and framework for negotiation and discussions on important national issues. Instead of signing the agreements or memorandum of understanding in the capital Islamabad, accords are discussed and resolved in foreign capitals.  Transit Trade Agreement Afghanistan indirectly involving India too was signed in Washington on May 6 2009.  President Karzai and Zardari were summoned to Washington for a trilateral summit with President Obama. Secretary of State Clinton presided over two negotiation rounds and the three foreign ministers signed a draft.  Similarly the agreement on gas pipeline (IPI) with Iran was signed on June 09 in Istanbul.  The latest in the series is the regional summit held on January 21, 2010 to initiate process of reconciliation with Taliban.

    These agreements are extremely important for Pakistan’s economic future and political stability.  Neither of them however, was deliberated on Pakistan soil.  Nor the “sovereign” parliament was taken into confidence.  The cabinet also remained ignorant, as did the public and other relevant institutions. What motivated these meetings to be held out side Pakistan remains a mystery.

    The trilateral summit in Washington during May 2009 was held to secure Pakistan willingness on the renewal of Transit Trade Agreement between Kabul and Islamabad. The meeting at Foreign Minister level discussed a new MoU and a draft agreement was initialed providing for “achieving Trade Transit agreement by end 2009” with the proviso that India could use Wagha – Khyber route for trade with Kabul. Secretary Clinton waxed eloquence over the draft agreement and its economic benefits for the three countries.  The trilateral meeting was not limited to the trade issues and covered a wide range of subjects beyond the TTA.  The US delegation included CIA Director Leon Paneta, Director FBI Robert Muellor, Under Secretary Pentagon Michelle Flournoy and General Patreaus. The composition of the delegation was a clear indication that the range of discussion included, inter alia, security issues. No official briefings were held for media or parliament. The report emanating from Washington revealed that US was looking at a dominant role for India in the region and wanted Pakistan to provide overland trade route for Indian export to Afghanistan which it has been requesting for past forty four years.  Commerce Minister Amin Fahim on September 30, however, is stated that Pakistan has agreed to provide transit facilities and formalities are being worked out.  The draft agreement is expected to be finalized by March 2010. Looking at the record of this government of submission to US diktats, it is highly probable that the government will quietly relent, and reverse the policy held so far.

    Pakistan reluctant till date has been countered by the US advice that Pakistan’s “obsession” with India as an adversary was misguided.  India is keen for transit facility to promote its bilateral trade with Afghanistan and enhance its trade relations with six Central Asian Republics.  

    The Pak-afghan Transit Trade route has very serious implications for Pakistan economy and security. Extremely grave and volatile situation along our border with Afghanistan demand strong vigil and circumspection.  Regrettably, however, no consultations have yet been held with trade bodies and other stake holders.  FPCCI have expressed serious reservation on the proposed draft agreement.  The Executive Committee of the Federation in a resolution on 21 December 2009 rejected the draft being against national interest and detrimental to Pakistan’s expanding trade relations with the countries in the region.   

    Concurrent with these developments, trade with India has been quietly encouraged by the rulers in Islamabad.  Statistic shows that Pakistan has diverted its global trade worth US $ 4.12 billion towards India, following the policy of “gradual liberalizing”.  Official figures show that Pakistan tradable list with India had 591 items in 1997 and enhanced to 1938 items in 2008.  Another 302 items were added to the list in October 2007 and 138 items in July 2008. Yet additional 438 new importable items were added during last year.  This expansion had widened Pakistan trade deficit with India to US $ 893 million in 2006-07 from 73.736 million in 1999-2000.  Pakistan exported 200 million dollars worth commodities as against goods imported by India cross US $ 1.3 billion.  Pakistan exports to India have stagnated between $ 200 million to $ 400 million.  The trade deficit with India has crossed $ 1.5 billion. The government has made a significant shift in its trade policy as evident from the above narration.  While for public consumption, it has denied Most Favoured Nation status to India it has in practical term made MFN status meaningless for India. Other steps such as withdrawal of 15% duties on the import of CNG buses would also facilitate Indian investment in this sector.

    There are number of factors relating to our economy and security that demand a cautious and prudent approach.  The draft agreement is likely to be finalized by March.  There is still time that Pakistan national interest are preserved and the proposed agreement is examined in detail and the views of FPCCI and regional trade bodies are given due consideration.

    The concessions granted to India, on the quiet, until now should also be examined to ensure a symmetrical bilateral trade. To illustrate in October 2007 under the road excess Transport Agreement Pakistan unilaterally allowed 100 Indian trucks to enter Pakistan without any reciprocal concession. India has denied Pakistan’s trucks carrying cement to cross Indian side.  On the pretext that India has to install a scanning gate for security reason. It is highly unacceptable while India does not allow Pakistan transport trucks for security consideration Pakistan does not subject Indian trucks to any kind of security check. Similarly Afghanistan has been allowed to engage foreign transport company to lift goods from the Wagha Border to Karachi Sea Port but Pakistan has been denied similar facility to its exports of fruit, cement, pharmaceuticals, garments etc are denied to Central Asian States market and Tariff and non Tariff barrier are imposed on Pakistani exporters.  This discriminatory policy has resulted in Pakistan’s export to Central Asian States to just $ 1.6 million as against $ 600 million.

    It is well known fact that under ATT Afghanistan import 24 consumer items including tea, tyres, cigarette and electrical items. 80% of them are smuggled back to Pakistan seriously impacting on our indigenous industry.  Instances of Afghan import of contraband items are frequent.
 
    The right course of action would be to continue denial of transit trade facility to India. The question of transit right to India should be seen in the larger context. Consultation with FPCCI and other regional trade bodies would be an integral an important element of this exercise. The trade policy of Pakistan should take into account our economic and strategic interest and not follow American advise (read pressure).