Rafik Hariri Center Nonresident Senior Fellow Mohsin Khan writes for The Cipher Brief on the benefits of increased trade between India and Pakistan: 

Even though both India and Pakistan are members of the South Asia Free Trade Area (SAFTA), established in January 2006, trade between them is strikingly small. Total trade (exports plus imports) between the two countries in the last few years has been averaging only a little over $2.5 billion. Currently, Pakistan accounts for less than 0.5 percent of India’s trade, and India in turn represents a little over 3 percent of Pakistan’s total foreign trade.

A question frequently raised is why India and Pakistan trade so little with each other despite the existence of common history, language, culture, and long borders. Economic theory and evidence from around the world would predict that trade between the two largest economies in South Asia would be far greater than its current level of around $2.5 billion. While both countries are aware of the merits of trade, a variety of political and infrastructural—physical, legal, and regulatory—impediments have virtually paralyzed bilateral trade relations between the two neighbors. Tariff and non-tariff barriers have proliferated, making it exceedingly difficult for trade to take place.

Read the full article here.

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