Missing the deadline

Pakistan has missed the promised deadline for normalising trade relations with India by the end of December. Has the most consequential agreement between the two countries in many decades been too good to be true? Has the Pakistan army decided to torpedo the only positive dynamic in relations with India? Few in official Delhi would want to proffer definitive answers at this stage. For the moment, India has no choice but to accept the word from Islamabad that the delay in granting the MFN status is merely procedural. Pakistan's commerce minister, Amin Fahim, called his Indian counterpart, Anand Sharma, a few days ago to reaffirm Islamabad's commitment to grant the MFN status to India.

Anyone familiar with the political and administrative culture of the subcontinent should not be surprised at the delay in implementing even the simplest decisions, either in India or Pakistan. Trade politics everywhere can be rather complex, with those fearful of losing ground trying to scuttle the efforts towards liberalisation. Also, there is no denying that the decision to normalise trade relations with India, announced in Islamabad early last year, was a bold one. Few governments in Pakistan have been willing to contemplate, let alone seek, political support for opening the door for Indian business. President Asif Ali Zardari, heading one of Pakistan's weakest civilian governments, started out five years ago by saying that trade with India is more important than such political disputes as Kashmir.

Defying the widespread disbelief in India, Zardari delivered a roadmap for normalising trade relations. As the first step, Islamabad started trading with India on the basis of a negative list rather than a small positive list. India reciprocated by addressing Pakistani concerns about non-tariff barriers. Pakistan was to take the next step, by the end of October, by lifting the current restrictions on the number of items that India could export through the Attari-Wagah border in Punjab. Islamabad's inability to deliver on that front has been followed by the delay in the complete phasing out of the negative list by December 31. Delhi was to respond to these moves by immediate unilateral reduction of its sensitive list of imports from Pakistan. While India must give the benefit of doubt to the Zardari government, it cannot ignore the mounting political mobilisation of the conservative forces in Pakistan against normal trade ties with India. If the internal balance in Pakistan shifts away from the elected civilian leaders, the hopes for normal trade will be dashed. That, in turn, could signal that a new negative phase in bilateral relations is at hand.

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