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Pakistan's trade can rise eightfold: World Bank report
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Pak-India trade much below full potential: World Bank
Mubarak Zeb Khan Updated December 06, 2018
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Trade between the neighbours can be as high as $37bn, report claims. — File photo
ISLAMABAD: Trade between Pakistan and India is only valued at a little over $2 billion, but it could be as high as $37bn, says a World Bank report.
The current trade between the two countries is much below its full potential. It could only be harnessed if both countries agreed to tear down artificial barriers.
The bank also estimated Pakistan’s potential trade with South Asia at $39.7bn against the actual current trade of $5.1bn.
Report unpacks four critical barriers
The report, “Glass Half Full: Promise of Regional Trade in South Asia”, released here on Wednesday unpacks four of the critical barriers to effective integration.
ARTICLE CONTINUES AFTER AD
The four areas are tariff and para-tariff barriers to trade, complicated and non-transparent non-tariff measures, disproportionately high cost of trade, and trust deficit.
Talking to a group of journalists on key points of the report here at the World Bank office on Wednesday, lead economist and author of the document, Sanjay Kathuria, said it was his belief that trust promotes trade, and trade fosters trust, interdependency and constituencies for peace. In this context, he added, the opening of the Kartarpur corridor by governments of Pakistan and India would help minimise trust deficit.
He said such steps will boost trust between the two countries. For realising the trade potential between Pakistan and India, he suggested the two countries start with specific products facilitation in the first phase.
Mr Kathuria said Pakistan had least air connectivity with South Asian countries, especially India. Pakistan has only six weekly flights each with India and Afghanistan, 10 each with Sri Lanka and Bangladesh and only one with Nepal, but no flight with the Maldives and Bhutan.
Compared to this, India has 147 weekly flights with Sri Lanka, followed by 67 with Bangladesh, 32 with the Maldives, 71 with Nepal, 22 with Afghanistan and 23 with Bhutan.
The report recommends ending sensitive lists and para tariffs to enable real progress on the South Asia Free Trade Agreement (Safta) and calls for a multi-pronged effort to remove non-tariff barriers, focusing on information flows, procedures, and infrastructure.
Policy-makers may draw lessons from the India-Sri Lanka air service liberalisation experience. Connectivity is a key enabler for robust regional cooperation in South Asia.
Mr Kathuria says reducing policy barriers, such as eliminating the restrictions on trade at the Wagah-Attari border, or aiming for seamless, electronic data interchange at border crossings, will be major steps towards reducing the very high costs of trade between Pakistan and India.
He argues that the costs of trade are much higher within South Asia compared to other regions. The average tariff in South Asia is more than double the world average. South Asian countries have greater trade barriers for imports from within the region than from the rest of the world.
He says these countries impose high para tariffs, which are extra fees or taxes on top of tariffs. More than one-third of the intraregional trade falls under sensitive lists, which are goods that are not offered concessional tariffs under Safta. In Pakistan, nearly 20pc of its imports from, and 39pc of its exports to, South Asia fall under sensitive lists.
World Bank Country Director for Pakistan Illango Patchamuthu said Pakistan is sitting on a huge trade potential that remains largely untapped. “A favorable trading regime that reduces the high costs and removes barriers can boost investment opportunities that are critically required for accelerating growth in the country,” he said.
World Bank’s Director Macroeconomics, Trade and Investment Caroline Freund said Pakistan’s frequent use of tariffs to curb imports or protect local firms increases the prices of hundreds of consumer goods, such as eggs, paper and bicycles.
They also raise the cost of production for firms, making it difficult for them to integrate in regional and global value chains, she said. “Pakistan needs to promote export promotion policies to ensure sustainable growth.”
On the issue of currency devaluation, she said undervalued currency is an anti-export measure. She suggests exchange rate should be determined by the real market trend.
Published in Dawn, December 6th, 2018
----
@SunilM @ranjeet @GHALIB @Nilgiri @BHarwana @war&peace @third eye @Mugwop
Mubarak Zeb Khan Updated December 06, 2018
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Trade between the neighbours can be as high as $37bn, report claims. — File photo
ISLAMABAD: Trade between Pakistan and India is only valued at a little over $2 billion, but it could be as high as $37bn, says a World Bank report.
The current trade between the two countries is much below its full potential. It could only be harnessed if both countries agreed to tear down artificial barriers.
The bank also estimated Pakistan’s potential trade with South Asia at $39.7bn against the actual current trade of $5.1bn.
Report unpacks four critical barriers
The report, “Glass Half Full: Promise of Regional Trade in South Asia”, released here on Wednesday unpacks four of the critical barriers to effective integration.
ARTICLE CONTINUES AFTER AD
The four areas are tariff and para-tariff barriers to trade, complicated and non-transparent non-tariff measures, disproportionately high cost of trade, and trust deficit.
Talking to a group of journalists on key points of the report here at the World Bank office on Wednesday, lead economist and author of the document, Sanjay Kathuria, said it was his belief that trust promotes trade, and trade fosters trust, interdependency and constituencies for peace. In this context, he added, the opening of the Kartarpur corridor by governments of Pakistan and India would help minimise trust deficit.
He said such steps will boost trust between the two countries. For realising the trade potential between Pakistan and India, he suggested the two countries start with specific products facilitation in the first phase.
Mr Kathuria said Pakistan had least air connectivity with South Asian countries, especially India. Pakistan has only six weekly flights each with India and Afghanistan, 10 each with Sri Lanka and Bangladesh and only one with Nepal, but no flight with the Maldives and Bhutan.
Compared to this, India has 147 weekly flights with Sri Lanka, followed by 67 with Bangladesh, 32 with the Maldives, 71 with Nepal, 22 with Afghanistan and 23 with Bhutan.
The report recommends ending sensitive lists and para tariffs to enable real progress on the South Asia Free Trade Agreement (Safta) and calls for a multi-pronged effort to remove non-tariff barriers, focusing on information flows, procedures, and infrastructure.
Policy-makers may draw lessons from the India-Sri Lanka air service liberalisation experience. Connectivity is a key enabler for robust regional cooperation in South Asia.
Mr Kathuria says reducing policy barriers, such as eliminating the restrictions on trade at the Wagah-Attari border, or aiming for seamless, electronic data interchange at border crossings, will be major steps towards reducing the very high costs of trade between Pakistan and India.
He argues that the costs of trade are much higher within South Asia compared to other regions. The average tariff in South Asia is more than double the world average. South Asian countries have greater trade barriers for imports from within the region than from the rest of the world.
He says these countries impose high para tariffs, which are extra fees or taxes on top of tariffs. More than one-third of the intraregional trade falls under sensitive lists, which are goods that are not offered concessional tariffs under Safta. In Pakistan, nearly 20pc of its imports from, and 39pc of its exports to, South Asia fall under sensitive lists.
World Bank Country Director for Pakistan Illango Patchamuthu said Pakistan is sitting on a huge trade potential that remains largely untapped. “A favorable trading regime that reduces the high costs and removes barriers can boost investment opportunities that are critically required for accelerating growth in the country,” he said.
World Bank’s Director Macroeconomics, Trade and Investment Caroline Freund said Pakistan’s frequent use of tariffs to curb imports or protect local firms increases the prices of hundreds of consumer goods, such as eggs, paper and bicycles.
They also raise the cost of production for firms, making it difficult for them to integrate in regional and global value chains, she said. “Pakistan needs to promote export promotion policies to ensure sustainable growth.”
On the issue of currency devaluation, she said undervalued currency is an anti-export measure. She suggests exchange rate should be determined by the real market trend.
Published in Dawn, December 6th, 2018
----
@SunilM @ranjeet @GHALIB @Nilgiri @BHarwana @war&peace @third eye @Mugwop
jamahir
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Dalits are humans too.
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Tom M
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To be frank. India won't sit at any table (irrespective who is ruling from Delhi) anytime soon until Pakistan get out of the economic mess it is in currently. And that is a fact.
Tom M
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Well I guess all ways to these nations (except BD and SL) go through India. You simply can't bypass yes.
American Pakistani
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Well I guess all ways to these nations (except BD and SL) go through India. You simply can't bypass yes.
Wrong, access to Nepal Bhutan via China, Sri Lanka Maldives by sea and Afghanistan by Pak afghan border.
Dubious
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Oh we will be out INSHALLAH....would love to see india trying to puppy us thenTo be frank. India won't sit at any table (irrespective who is ruling from Delhi) anytime soon until Pakistan get out of the economic mess it is in currently. And that is a fact.
Tom M
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Wrong, access to Nepal Bhutan via China, Sri Lanka Maldives by sea and Afghanistan by Pak afghan border.
Then your business won't be technically feasible. Business means maximum profit with minimum overhead. If this is how you do business, no wonder why your nation as a whole is suffering economically. LOL
Oh we will be out INSHALLAH....would love to see india trying to puppy us then
Well it was nothing personal. It's just my thought. And I guess if the things were other way when we were and crisis and Pakistan was doing better, I bet you would have taken the same stand.
Anyways all the very best.
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American Pakistani
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Then your business won't be technically feasible. Business means maximum profit with minimum overhead. If this is how you do business, no wonder why your nation as a whole is suffering economically. LOL
We just need to improve road/rail connectivity to China. China have better infrastructure in Tibet. Once the region from Gilgit Baltistan to Tibet get better in infra, there will be easy access.
Tom M
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And even with 7 star infra in GB as well as Tibet. Do you still believe transportation via the Himalayas are more economical and feasible than through Well established Wagha border ?? It will be the same as USA using the NDN rather than using Pakistan for NATO supplies to Afghanistan.
But I seriously doubt Pakistan will ever get an over land access via India to these countries at the present scenario.
American Pakistani
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And even with 7 star infra in GB as well as Tibet. Do you still believe transportation via the Himalayas are more economical and feasible than through Well established Wagha border ?? It will be the same as USA using the NDN rather than using Pakistan for NATO supplies to Afghanistan.
But I seriously doubt Pakistan will ever get an over land access via India to these countries at the present scenario.
Of course it is not, but afaik we were discussing about Pakistan not having access to any South Asia country, if plans bypass India.
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