Deepening global recession in Europe and the US has forced the developing economies to consider readjustments in their international trade strategies. Diversifying their markets and exploring new trade partnerships is the need of the hour,
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These CBMs include normalising trade relations reflected in India being granted the most favoured nation status (MFN) by Pakistan. The move is a big step towards liberalisation of trade and eliminating all form of discrimination in trade with India by December 2012. Free trade of all those items which were previously prohibited and imported from far off destinations, will not only result in import of low cost inputs and raw materials lowering the cost of production and prices of many manufactured goods domestically but also open a new market for Pakistani exporters, reducing their dependence on ever more bullish European markets. This will also curb the informal trade phenomenally and add to the customs revenue.

The successful development of physical infrastructure also greatly helped to expand bilateral trade. An integrated check post (ICP) through the Wagah Attari has already been developed to expand the land route to accommodate the burgeoning cargo movement of large vehicles and containerised traffic. Built at a cost of nearly Rs1500 million and spread over about 130 acres, the Indian ICP can handle about 600 trucks at a time. Pakistan has built its ICP over nine acres. Both the ICPs are connected through new gates allowing trade for 12 hours a day, between 7 am and 7 pm,
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Exploring each other’s markets for business ventures and aligning of opportunities has become an immanent reality with extravagant trade fairs organised on both sides of the border. India’s recent decision to allow foreign direct investment from Pakistan indicates a similar policy adjustment. It is most timely when Pakistani investment was flowing to other countries of the region such as Bangladesh,
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The State Bank has already allowed the National Bank of Pakistan (NBP) and the United Bank of Pakistan (UBL) to open branches in India following India’s decision. Similarly the plan to import energy from India is another constructive step that can give much needed relief to the energy starved economy and restore the dwindling investor confidence in Pakistan,
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Many trade economists argue that normalising economic relations between these two adversaries will eventually lead to neutralising political friction, to some extent, in the long run. India, on being granted MFN status,
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All these CBMs signify the potential gains of a progressive relationship, aimed at nurturing a regional partnership between the two most important,
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Hence,
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