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A Trade Perception Survey was undertaken to understand how stakeholders engaged in India-Pakistan trade perceived impediments faced by them in realizing the trade potential between the two countries. Based on an analysis of information collected in the survey on six indicators–awareness of trade policy, ease of meeting standards, market access, business facilitation, customs and documentation, and infrastructure at ports–the study recommends policy options that the Indian and Pakistani governments could ..
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Improvements in the land route between India and Pakistan can help lower transaction costs which can play in important role in realizing the trade potential between the two countries. Connecting India and Pakistan by the land route offers gains not only to the two countries but would spread over a wide geography covering several countries. With the vision of connecting India and Pakistan to Central Asia and East Asia, this paper makes an attempt to examine trade between India and Pakistan by different modes of transport, identify physical and non-physical impediments to transporting goods by rail and road while taking into account the implications of trade policy for transporting goods; suggests measures to address these constraints which are also in compliance with the provisions in the recently signed WTO Agreement on Trade Facilitation. The paper also suggests how acceding to international conventions will make it easier for the two countries to connect with the rest of the world.
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India-Pakistan bilateral trade negotiations are pegged to two key issues - Pakistan granting most favoured nation status to India and the latter removing non-tariff barriers. The resolution of these issues is likely to result in larger market access gains for India than Pakistan. To achieve mutual benefits, the two countries should, despite recent political events, also focus on removing barriers such as transport protocols that are specific to bilateral trade.
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The sixth round of trade talks between India and Pakistan is noteworthy for having followed up on all the decisions taken in the fifth round of April 2011. Pakistan has decided to grant the Most Favoured Nation status to India, and the latter has initiated business-to-business and government-to-business interaction for addressing information gaps. These measures could help realise a bilateral trade potential of $25.2 billion, estimated as of 2010, an amount 10 times larger than the current $2.5 billion trade.
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This paper aims to identify the bilateral trade possibilities and non-tariff barriers between India and Pakistan. The study shows that there is a large untapped trade potential between the two countries. Using the potential trade approach, the study finds that the export potential from India to Pakistan is to the tune of US$ 9.5 billion while that from Pakistan to India is US$ 2.2 billion. Items having export potential from Pakistan are largely in the textile sector while items having export potential from India are predominantly in non-textile sectors. Very few items having export potential from India are on the positive list adopted by Pakistan. At the same time there are several items that India is importing from other countries but not from Pakistan. This indicates that there is a huge information gap on both sides on - 36 - items that can be imported by India from Pakistan. A working definition of non-tariff barriers adopted in the study included six major categories, namely, quantitative restrictions, trade facilitation and customs procedures, technical barriers to trade and sanitary and phytosanitary measures, financial measures, para-tariff measures and visas. The study was based on an extensive survey conducted in several cities in India and Pakistan. Further, despite the two countries having liberalized their import regimes, Pakistan continues to follow a positive list approach towards Indian imports. The study identifies the ways in which this policy impedes India's exports and recommends the dismantling of the positive list. It also identifies problems related to transportation, custom procedures, rules of origin certification and valuation and suggests measures to address them. The imposition and application of standards in India was perceived as a major non-tariff barrier by Pakistani exporters. The study found that even though the TBT and SPS measures are not discriminatory across trading partners, Pakistani exports to India are surely affected by these. Pakistan has an export interest in textiles and agricultural products which also happen to be sectors where import restrictions/standards are most rigorously applied by India. It also found that due to a restrictive visa regime only selected traders have access to trade-related information. Thus lack of transparency, market imperfections and information asymmetries on both sides raise transaction costs and restrict market access for several other aspiring traders.
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Quantitative studies estimate that potential two way trade between India and Pakistan can be about 10 times than its rather unsatisfactory current level of $ 613 million. Moving towards realizing this trade potential is clearly in the interest of both countries and the region. In this context this study identifies areas of trade and investment co-operation between the two countries. On the basis of a survey conducted in three cities viz., Delhi, Mumbai and Amritsar the paper examines the characteristics of firms engaged in Indo-Pakistan trade. It also estimates existing transport arrangement between the two countries and the impact of all extant non-tariff barriers. The study suggests that the most important step towards enhancing trade would be to adopt the MFN principle as the current policy inhibits trade, lacks transparency and leads to high transaction costs. The study finds that transportation links between the two countries are inadequate and suggests that new rail and road links should be opened. Transaction costs of trading between India and Pakistan are high and can be lowered by implementing some rather simple policy measures that are spelled out in the paper. The study also examines recent developments in BIMSTEC, ASEAN and in Indo-Sri Lanka and Indo-Nepal trade agreements, and draws lessons to enhance Indo-Pakistan trade.
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