In the right direction

India and Pakistan have shown some maturity in
talking trade; do they actually mean it? 

Unfortunately, a mention of Pakistan and India; and one gets ready to hear some unpleasant news. However, after a long time the meeting between Pakistani and Indian Commerce Ministers resulted in an excuse to rejoice. Not only that, after three and a half decades Pakistani Commerce Minister visited India. Both the ministers were also able to take some tangible and positive steps towards trade normalisation between their countries.

For the last many years, few of us have been advocating that small steps towards promotion of friendly relations between Pakistan and India should not be underestimated. There are no quick fixes for the chronic mistrust and misunderstandings between the two neighbours but to trust each other more.

It is said that trade follows the trust; but my theory is that trust follows trade. Despite its flaws, I am a believer in multilateral trading system. Trade between India and Pakistan would not only provide an opportunity for enhanced people-to-people contact but also turn the business community into a catalyst force for peace as they would have to safeguard their business interests. We have already observed this happening in case of “China and USA” and “China and India”. Normalisation of trade between India and Pakistan would also provide increased choices to consumers both in terms of quality as well as in terms of prices.

The cost of economic non-cooperation between the two countries is extremely high not only for both of them but also for the whole region. Pakistan and India had been the main stumbling block in success of South Asia Free Trade Agreement (SAFTA) which was signed in Islamabad in 2004. As per SAFTA, SAARC members have to bring their tariffs down to zero for each other by 2016. If implemented with political will and get accompanied by an agreement on trade in services as well as an agreement on investment; SAFTA has the potential to turn around the economy of whole region.

Although their bilateral trade grew over the last decades, their estimated mutual trade potential is around US$11 billion. Various studies have been suggesting that both Pakistan and India can save billion of dollars by importing from each other, the essential items that they have been importing from third countries.

As I mentioned earlier, there is no quick solution to the chronic bones of contention between India and Pakistan. However, the issues hampering trade could have been resolved following a fast track approach. Some of these issues include visa for business community; non-tariff trade barriers (NTBs) that Pakistan complains are being imposed by India on its products; “most favoured nation” (MFN) status that India requires from Pakistan; trade on negative trade lists versus positive trade lists; infra structure development for enhanced trade; treaty on free flow of investment; and mutual recognition of standards.

Both the countries showed the resolve to tackle these issues by jointly agreeing to work to more than double bilateral trade within three years, from current levels of US$ 2.7billion per annum to about US$ 6billion.

Pakistan complains India about its NTBs, especially on cement and textiles. However, India claims that its NTBs are not Pakistan specific. In fact, India is ranked 115th of 125 countries to impose trade tariff on “Trade Tariff Restrictiveness Index” (TTRI) by the World Bank. One of the positive developments of current talks between trade ministers is the identification of issues impeding trade in sectors such as cement, textiles, and surgical instruments. From Pakistan’s point of view this is quite substantial achievement as India has recognised that there are factors impeding Pakistani exports.

Another positive development is on the issue of visas. Both the ministers have showed consensus to issue multiple entry one year visas to the business community. Pakistani visitors would be able to travel anywhere in India unlike the current city specific visas. This initiative on its own, if implemented in letter and spirit, has the potential to double the bilateral trade over next three years.

Pakistan indicated to give India the MFN status. Here it is pertinent to mention that India gave Pakistan the MFN status in 1995 (since inception of WTO). We do need to raise awareness in Pakistan about the term MFN. Its Urdu translation has created so much media hype as Pakistan would declare India its best friend. Although both the countries should declare each other their best friends and live in peace and harmony so that billions of dollars which are being spent on military expenditures to counter each other’s defense power may be diverted to social sector development. Yet, MFN has nothing to do with friendship. Together with the principle of national treatment (i.e., there cannot be discrimination among WTO member states on the basis of nationality), MFN is one of the cornerstones of WTO trade law. In effect, if India gets an MFN status from Pakistan then Pakistan would have to treat it at par with all other WTO member countries. Here it is pertinent to mention that all WTO member countries are bound to give each other MFN.

There is also a welcome development on trade on the basis of negative lists during the recent ministerial discussion. Current “positive list approach” allows only those items to be traded which are on positive list. Everything else gets restricted by default. Whereas negative list approach, which is practised internationally will contain only those items which should not be traded hence creating new venues for bilateral trade.

Ministers have also agreed to improve the infrastructure facilities to promote trade at Wahga and Atari. India is also contemplating removing its blanket ban on capital inflows from Pakistan (Islamabad has no such ban on Indian investment). Another significant development that tool place during Pakistani Commerce Minister’s tour is that India has announced to withdraw its objections on the European Union trade concessions to Pakistan.

To me all of the above-mentioned developments are extremely important milestones in the trade history of both the countries. Those of us who are always vocal in criticizing our policy makers and political leaders when they are in wrong should come forward to appreciate these positive developments that may lead to a sustainable peace in this region.

The writer is the executive director of Sustainable Development Policy Institute and is contactable at suleri@sdpi.org

Revival of local governments

A one-day consultation to discuss the revival of local governments was organised in Islamabad recently. Interesting political economy discourse took place during the meeting. The principal point of conflict that surfaced was between two groups, both comprising academics, activists and practitioners. One of them was of the view that the local government’s revival needs to be questioned in the context of its history, i.e. the military governments in Pakistan have instituted local governments for their own political purposes. The other group attacked politicians and political parties, blaming them for non-implementation of the constitutional requirements for setting up local governments and for their patronage politics.

The other argument was that, since, the national and provincial assembly politicians are allocated huge developmental budgets for their constituencies; they are opposed to local governments due to a fear of them cutting into their spheres of power. Both arguments have elements of truth in them. The real challenge, however, was to make both camps think about a way forward.

Setting aside the origins of the local government and its relationship with issues of legitimacy, the basic reality is that local governments are a constitutional requirement now. Article 140 A of the constitution states: “Each Province shall, by law, establish a local government system and devolve political, administrative and financial responsibility and authority to the elected representatives of the local governments. Elections to the local governments shall be held by the Election Commission of Pakistan.” Articles 32 and 7 also support the local governments as public institutions.

The 18^th Amendment of the constitution is a truly historic document, in the way it has decentralised functions of the federal government to the provincial governments by doing away with the concurrent list. However, the buck does not stop with the provinces. Just as the federal government was working along the principles of administrative and financial concentration, now provincial governments have become the ‘new centres’. Hence, provincial governments do not want to devolve further to the local governments. The main issue, therefore, is how to create incentives for the provincial governments to move towards instituting local governments as per the constitutional requirement. A strongly supported courses of action was to encourage grass roots mobilisation to push for change. Once the provincial governments and politicians will see a groundswell in this direction, they may be inclined to call for elections for the local governments. One of the natural constituencies for such a mobilisation will be ex-nazims and counsellors, particularly in the marginalised community of peasants, workers and women.

Of course, some such process is underway in the provinces. Sindh has re-enacted the local governments, however, it needs to be presented to the provincial assembly. In the Khyber-Pakhtunkha, the local government bill is almost ready and needs to be presented in the provincial assembly. The Balochistan provincial government is sitting on the 1979 Local Bodies Ordinance draft. In Punjab, three different committees were formed to draft the local government’s law for the province and none of them have been successful in drafting a law. There is a need for massive push for the implementation of this constitutional requirement.

The situation is more complex in Sindh. Representatives from interior Sindh are highly apprehensive about ethnic economic marginalisation for Sindhi-speakers in the revived local governments system whereby they may lose their economic prospects to work and prosper in Karachi and Hyderabad. Such concerns are not new in history. Malays had similar concerns about the Chinese economic superiority in Malaysia. Mahatir, however, brilliantly resolved a potential ethnic economic conflict turning into political violence and retarding growth. This was done by explicitly granting economic rights to Malays and resolving the potential conflict. A similar way of alleviating Sindh’s grievances need to be worked out to make local government a just solution for everyone across the board.

One cannot emphasise the need for the local governments enough. Not only is it necessary to fulfil the constitutional requirements, it is also necessary to deal with disasters, deliver efficient services and empower women, peasants and workers.

Rain rhetoric

Our policy makers will have to adjust themselves to the demands of rains and flood-affected areas

Many laughed it away when a couple of years ago climate change gurus professed that Pakistan would be one of the most vulnerable countries to the impacts of climate change. Recent floods in Sindh and Balochistan did prove that seasonal variations due to climate change may not be ignored any more.

There is a visible change in rainfall pattern in Eastern Sindh. The average annual rainfall in district Badin used to be 120 to 280 mm. During the last few years, it increased to 440 mm, 560 mm, and this year Badin received a record rainfall of 1100 mm. The increase in average annual precipitation is also observed in Rajhisthan as well. One may say that weather changes due to seasonal variations are bound to happen. Natural calamities are hard to avoid. However, as I keep on repeating, a right set of policies and actions on those policies can stop getting the natural calamities turning into human disasters.

Meteorology department had already predicted about the possibility of sporadic rains in Sindh during the months of August/September. We also knew that like most parts of the country irrigation infrastructure that got damaged during last year’s flood has not been repaired to take care of more water.

The flaws of controversial left bank outfall drain (LBOD) are already known to us. LBOD was designed for saline water drainage only when the average yearly rainfall in Sindh never exceeded 280mm. Its carrying capacity is 6000 cusec ft. The rainwater is simply beyond the carrying capacity of LBOD. Even if it were not recent heavy rains and there were no design flaws in LBDO, the mere fact is that drain was blocked. There was no silt removal from the drain for ages. There was no unhindered flow of water in that drain anyway.

Badin is dead flat almost at sea level where the flow of standing rain water to sea would be a problem due to lack of natural flow. Things are getting further aggravated due to Kirther range (hills and elevations) from Khairpur to Hub. There can be at least four small hydel dams in that range. Rain water from Kirther range, coming towards lower Sindh, has the tendency to turn into flash floods.

Flash floods are very common in Balochistan too and this year again they have displaced a sizeable population in Balochistan, especially in Naseerabad district. Why is the NDMA not paying any attention to the flood affectees in Balochistan?

Unfortunately, despite the devastated floods of last year the government is still unable to come up with its flood policy and flood zoning. There is a big question mark on coordination of relief activities. NDMA is there but provincial and district disaster management authorities are non-existent. The later two were supposed to frame disaster management plans at district level. Obviously, when the institutions are not functional, the plans are not there either.

Initially, when the rains started everyone undermined their intensity and the government very clearly declared that it would not go to international community for a flood relief appeal. However, this appeal had to be made at later stages. As was expected, the response of international community is quite cold: partially because they face disaster fatigue in Pakistan. Unfortunately, Pakistan is facing disasters in a close succession since 2005; earthquake, Balochistan floods, internally displaced people of Swat, last year’s floods and now floods again. Thanks to the lack of preparedness on our part, we are gradually losing sympathies of the international community.

Another factor responsible for cold response from the international community is lack of a meaningful effort on government’s part to highlight major success stories in previous disasters. There must have been some good examples that may be shared with the rest of the world, showing how resilient we are. International community is also blank about individual and private charity. What to talk of contribution of individual donors, the international community is not properly aware of the role that organisations like Edhi Welfare Centre have played in relief and rescue efforts. All these efforts should be highlighted to prove that we the 180 million commoners are not beggars.

INGOs are also not able to deliver this time. There are visa restrictions on expatriates of various INGOs. If they do not come to Pakistan on an assessment mission how can they mobilise their humanitarian wings to deliver in the time of need.

One thing that concerns me most is that we have started tackling disasters at provincial level too. Dengue fever is supposed to be the problem for Punjab only and floods are only to be taken seriously by Sindhi politicians. I wish we could rise above these provincial prejudices and support the people in disaster.

Finally, I would again mention lack of effective policy responses. I remember that last year former advisor to CM Sindh made this excellent suggestion that opportunity should be availed to “rebuild better” the scattered goths of Sindh. His suggestion was that three to four hundred basic houses should be constructed in an elevated place in each deh (comprising of few goths). Inhabitants of small hamlets in Sindh should be settled in those newly constructed houses. This would have been cost-effective not only from disaster preparedness point of view but also from service delivery point of view. However, two feudal lords (parliamentarians) in that meeting strongly opposed that idea, partly because they had the fear to lose their control over their tenants.

I wish if Premier Gilani had not tried to gain political popularity through promising to dole out money via Watan Cards. He never had the fiscal cushion to pay the promised 100,000 rupees and that scheme is literally abandoned after release of first installment of Rs20,000. The same amount could have been more wisely spent.

The writer heads Sustainable Development Policy Institute and can be contacted at suleri@sdpi.org