Less LoC, more FTA

http://indianexpress.com/article/opinion/columns/less-loc-more-fta/99/

Nawaz Sharif won the 2013 election riding a national consensus in favour of free trade with India.

Written by Khaled Ahmed | Posted: October 25, 2014 

Prime Minister Nawaz Sharif has been to the UN and made his anti-India speech, which no one can object to. Reference to “disputed” Kashmir is not banned by a world community that routinely ignores it — this UN session was no different. But Sharif was actually addressing the other Sharif, the general who heads the Pakistan army.

Christine Fair, in her book, Fighting to the End (2014), writes: “The report of the Abbottabad Commission [on the death of Osama bin Laden]… observed that the civilian government [of Pakistan] did not evidence the slightest interest in exerting control over the nation’s defence policy and further quipped that the minister of defence did not object to being ‘an irrelevance’.”

Nawaz Sharif won the 2013 election riding a national consensus in favour of free trade with India. In 2012, “a nationally representative poll among a cross-section of more than 2,600 men and women showed that 67 per cent Pakistanis thought the country should trade with India”. This was found by Gallup Pakistan, which also estimated that “only 29 per cent of people were opposed to the idea of trade with India”.

The last time Nawaz Sharif won, in 1997, he first went along with the army — and a jingoist national consensus — to test a nuclear device in 1998. It was a defiant tit for tat aimed at India, which would go on to elevate its bomb-makers to the presidency. Then he thought he could get away with a bit of normalisation with India and had then Indian Prime Minister Atal Bihari Vajpayee come to Lahore and “accept Pakistan” by going to the Minar-e-Pakistan, the national monument to independence in Lahore. But the Vajpayee visit went wrong, Nawaz Sharif got deposed and had to spend nearly a decade in exile.

This time, Nawaz Sharif is careful. The Gallup survey can wait. He has offended the army, which has done the right thing for once by taking on the Taliban instead of appeasing them, as it had in the past, scuttling Pakistan’s internal security while pretending to take care of external security. PM Sharif offended General Sharif by behaving unrealistically in the matter of General (retd) Pervez Musharraf’s trial for treason, not favoured by the nation, according to another Gallup survey.

On trade with India, the PM was on the right track, starting last year. Pakistan was getting bad press for dragging its feet on granting most favoured nation (MFN) status to India. The previous government, with the equally pragmatic PPP co-chairperson, Asif Ali Zardari, as president, had been prevented from granting MFN status amid suspicious LoC ceasefire violations. Zardari nearly died during his standoff with the army chief, suffering a nervous breakdown.

This time, the trade portfolio lies with a Muslim League politician, Khurram Dastgir Khan, who had got pretty far with India in 2013 on the trade question. He even changed the term MFN, which to the primitive, warlike Pakistani mind, sounded like surrender to India. The non-state actor “commanders” actually blasted the trade policy by spelling out “most favoured” in Urdu, which sounded like a slap on Pakistan’s martial cheek.

Trade Minister Khan changed the insulting “MFN” to “non-discriminatory market access (NDMA)” to appease those who consider trade the occupation of the lowly. He could have got away with it, had it not been for Imran Khan’s “dharna” which some thought was a “plot” made in London to get rid of Nawaz Sharif.

Pakistan’s well-regarded economist, Sakib Sherani, is in favour of India-Pakistan free trade, along with most other economists, including Ishrat Husain, ex-governor of the Central Bank of Pakistan and former World Bank economist, who actually recommends an economic union with India if things go well under PM Narendra Modi. Sherani has highlighted some of the wrinkles that the two sides will have to iron out, especially India’s trade behaviour.

First, there is the higher proportion of overall tariff lines retained by India on its sensitive list, compared to Pakistan (at the eight-digit HS code level). Second, India’s exclusion of many of Pakistan’s competitive exports in agriculture and textiles from the ambit of trade liberalisation. Third, the maintenance of a more trade-distortive and trade-restrictive regime by India, including the pervasive use of non-tariff barriers, higher subsidies to its agriculture sector, and higher applied tariffs under MFN in most product categories. Fourth, the potential undermining of greater market access for Pakistani textile exports in India by the latter’s preferential trade agreements with Bangladesh and Sri Lanka.

Trade talks are crucial to bilateral normalisation, but India and Pakistan are facing mutually “unprovoked” violations of the ceasefire on the working boundary in Kashmir. How can any aggression be “mutually unprovoked”? The world is no longer biting. It will deliver a blanket judgement, which will be of no use to the highly provoked Pakistani and Indian publics standing under the flag of the two “national consensuses” on teaching the other a lesson. So the UN secretary general has issued a tired appeal to both countries to simmer down.

Both sides have suffered civilian deaths from mortar shells. Indian citizens have protested outside the Pakistani high commission and Pakistanis are calling for the ouster of the Indian high commissioner. The religious parties say India has been cajoled into crossborder meanness by America, so let’s also get rid of the American ambassador, even while Finance Minister Ishaq Dar is in Washington asking for investments and pledging signatures on a free trade agreement with India.

Pakistan is reading into the recent past. Nawaz Sharif went to greet Modi at his investiture but Modi “slapped his face” on the LoC; Indians say Chinese President Xi Jinping came to India but “slapped India’s face” at the Chumar checkpost. Pakistanis want Nawaz Sharif to say scary things in response to “Muslim-hating” Modi’s border assault but he doesn’t want to, hoping for a detente that would get free trade going. Who is talking sense? In Pakistan, not many.

But you can’t blame me for being with the bilateral doves who get their plumage roughed up regularly on both sides of the border. Shekhar Gupta in India Today can always say it better than I can: “More immediately, India needs to make quiet diplomatic moves to restore the conversation with Pakistan and to also lower the public opinion bar on engaging with its most important neighbour… We know the Pakistanis are not helpful, that their power structure is messed up, etc. But India and the rest of the world still have more leverage there than with China. The thing on the top of Modi’s mind in the US should be to build a global coalition of peace to change the nature of Pakistan’s polity and society.”

For once, that could be happening. The new army chief has plucked Pakistan out of its posture of appeasement with al-Qaeda and the Taliban, and has given the terrorists a drubbing. Backed by Nawaz Sharif and the entire nation, he holds up the prospect of getting the country rid of the likes of Dawood Ibrahim, with international bounties on their head. India holds the key to reformation through indirection: talk about Kashmir later; for now, have free trade. If you don’t rub it in too much, Pakistan will take it.

The writer is consulting editor, ‘Newsweek Pakistan’

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