Indian High Commissioner, Sharat Sabharwal, last week met Acting Secretary Commerce, Munir Qureshi, and expressed his concern regarding non-compliance of decisions taken at the Commerce Secretary level talks a couple of months ago by Pakistan. For instance, Pakistan had promised to open Wagha border for all kinds of goods imported from India by October 2012 but this decision has not been implemented so far. "India has implemented the agreed decisions but Pakistan has yet to fulfil commitments made at the meeting," said an official who is aware of all developments.
According to the agreement, in the first phase, India had promised to reduce SAFTA sensitive list by 30 per cent before October 2012, in lieu of opening of Wagha border. In the second phase, India has to reduce SAFTA sensitive list by additional 30 per cent by November 2012 after which Pakistan will be required to phase out negative list by December 31, 2012. India has to eliminate entire sensitive list in five years.
"Pakistan''s non-compliance of agreement has compelled India not to reduce sensitive list by an additional 30 per cent, which shows trade normalisation process has been halted," said another official on condition of anonymity. Commerce Ministry, sources said, will submit a summary to the Federal Cabinet prior to December 31, 2012 deadline along with update on normalisation of trade with India but would leave the final decision to the Cabinet, which is the competent forum to take such decisions.
Insiders claim that agriculturists'' lobby in Punjab, which was not engaged in the process for the past two years, has now come forward in opposition to trade normalisation process. "Why agriculturists were sleeping for the last two years? Current hue and cry indicates that they are being used by political forces or those elements that are not in favour of trade normalisation with India," said an analyst who requested anonymity.
However, Chaudhry Hamid Malhi, a representative of agriculturalists'' lobby, told Business Recorder that agriculture community had not been taken into confidence prior to the agreement with India. "Farmers are not against trade with India but expect to be protected against the highly subsidised agriculture products of India. On an average, each agriculture hectare gets a subsidy of $300 per year in India," he added. This works out to around PKR 11,900 per acre of subsidy or for a 30 maunds average production of any commodity. Indian farmers have a comparative advantage of Rs 400 per 40-kg.
This implies that unless each agri product imported from India is not subjected to an import duty @ 400 rupees per 40-kg, the Pakistani farmer producing the same product would be at a disadvantage. He further argued that reliance on Indian goods should never be an option. The Bangladesh experience of 2010-11 when 5 lakh tons of wheat & rice were transacted to be exported by India to Bangladesh to avoid a food scarcity situation never materialised even after an advance payment.
According to him, recent cotton export restrictions, the cement import impediments and other tariff and non-tariff barriers by India that protect its agriculture and industry also need to be kept in mind. Even the US has complained at the WTO of Indian hidden undisclosed trade barriers and export subsidies. Pakistan''s trade imbalance is in India''s favour and has increased from 80:20 to 85:15 in the last one year.
Officials in Commerce Ministry maintain that the growers have never raised any specific objection to trade normalisation with India before and their recent objection may be for political reasons as the Punjab government has come forward in support of agriculturists.