Every country’s largest trading partner is its neighbor, the only exceptions are India and Pakistan, and it is primarily because of Pakistan’s consistent policy not to trade or have regular relations with India without the resolution of the Kashmir dispute. That makes no sense and has hurt Pakistan more than India.
It was good to hear Finance Minister Aurangzeb note at a press briefing in Washington that not trading with your neighbours doesn’t make sense. Yet, the minister added “political connotations” or “geopolitical issues” affecting regional trade were outside his purview.
As an editorial in Dawn noted, Pakistan’s trade with regional states is negligible and South Asia remains the least integrated region in the world. As the editorial pointed out, “the biggest obstacle standing in the way of greater regional commerce is long-time strained relationship with India. Yet it is also true that if Pakistan and India were to improve trade ties, better bilateral ties could develop across the spectrum.”
Further, while “ruling PML-N, with its ‘pro-business’ outlook, has historically always argued for better trade ties with India” and “both the prime minister and the foreign minister have earlier expressed the desire to improve trade ties with our eastern neighbour, hence there is nothing novel in what the finance minister suggested in Washington.” The issue, as the Editorial clarified, “is that important stakeholders within the state must be on board if there is to be a normalisation of trade ties.” Basically, the ubiquitous military establishment needs to be on board.
The first step for this would be “a friendlier visa regime, direct flights, and banking channels.” For that it would need to be seen if India is willing to resume trade with Pakistan and that powerful quarters within Pakistan are fully on board.