November 3, 2011
About bloody time, some would say. The news that Pakistan's cabinet has approved Most Favored Nation trade status for long-time adversary India will also be greeted by the usual wry comments by skeptics and cynics on both sides of this volatile border. But though Pakistan may not have broken any barriers it may have cracked a few.

Consider that India had already given Pakistan MFN status, putting it on the back foot in trade negotiations. But Pakistani analysts and officials maintained that India's non-tariff barriers made a mockery of the MFN. Pakistan's military and civilian governments lacked the will to open trade with India, in the process missing out on huge income gains from trading with a neighbor and allowing its industries and consumers to benefit from less expensive products and inputs in numerous categories of tradable goods and services. Until now. 

 

Give credit to the civilian government for finally giving birth to an obvious and necessary condition for Pakistan's future growth. As India speeds away at 9 plus percent annual growth, Pakistan is heading in the opposite direction—3 percent or less. Trade alone will not solve its problems but even after the elephantine gestation of the MFN decision the government seems to be listening to its economic team and reason. And, if India starts lowering its NTBs, it may stop Pakistan from resorting to them. 

Why is this such a big deal? Because the most cited obstacle to better relations with India was the powerful Pakistan military. The civilians did not wish to buck the military's views, it was said. Now it seems the impossible has happened, either with the military's approval or without. An objective devoutly to be wished has emerged from Islamabad. 

What adds to the import of this first step is another statement by Prime Minister Yousaf Raza Gilani that Pakistan wishes to tie into India's power grid to facilitate sharing of electricity.

A natural corollary will be greater collaboration on water issues. Both India and Pakistan have serious problems in how they manage water, both internally and with each other, sharing water from rivers that rise in the Himalayas and come into India and then Pakistan. Joint investments in water and power projects, especially if undertaken by private investors under a joint water commission that takes forward the idea behind the Indus Water Treaty, may provide the ultimate market solution. But standing in the way of such powerful dreams are two powerful and suspicious bureaucracies that have stymied free travel and cross border investments till now. They may yet nullify the MFN decision by a war of non-tariff barriers and red tape. 

Yet, amidst the plethora of Track 2 efforts between Pakistan and India there is a growing momentum among concerned citizens, and even among the militaries that the status quo of "no war, no peace" is not favoring either country. At the Atlantic Council, we are doing our bit to "wage peace" in the region. But in the end it is the people and governments there that have the power to effect change for the better. 

Against that background, cracking open the locked gates at the Wagah border between these fractious neighbors and keeping them open day and night seems the best option. Two cheers then for Pakistan and India free trade. Confound your critics and militants. Don't botch this opportunity... for the sake of future generations.

Shuja Nawaz is director of the South Asia Center at the Atlantic Council, and is the author of Crossed Swords: Pakistan, its Army, and the Wars Within.

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