Pride and Potatoes: Trade with India

THE issue of granting the MFN status to India
has prompted an intense  dialogue. Perhaps, we have woken up at last
to the changing realities of the world and we are ready to make a firm
decision about the future of our nation based on enlightened self-interest.
Are Pakistan and India doomed by history to be perpetually locked in self-destructive
hostility, like two scorpions in a bottle, or is there hope that one day
we can work together in close cooperation to solve the multi-dimensional
problems of our two great peoples like USA and former USSR?


The current "MFN status" discussions are coloured by an incorrect perception
of international trade and its effects on the economy. There is a desire
to have an even balance of trade with India. In simple terms, those who
oppose trade with India are scared that we will be importing more from
India than we will be exporting to it; and thus be dreadfully dependent
on it. Although the specifics of determining accurately the economic consequences
of trade with India are better left (not surprisingly) to the economists,
a little clarification about the basic nature of international trade would
help clear thinking about the issue. What people seem to forget is that
India is not the only other country in the world. Pakistan trades with
many countries, having diverse import and export relations with them. Though
it is desirable that we maintain a roughly even aggregate trade balance
(determined after adding total exports and total imports to and from all
trading partners), it is not even worth considering equalling exports with
imports to an individual country.


If we, as a result of granting MFN status to India, end up importing
more from India than we export to it, there is nothing stopping us from
exporting more to other countries and thus making up for any imbalance
that may occur. Also, increasing imports from India means that our imports
from some of our other trading partners will fal1, as we find cheaper substitutes
coming in from India. So, if we have a higher ratio of imports (to exports)
from India, we will have a lower ratio of imports (to exports) with other
countries. The overall picture will not be adversely affected.


In fact, if we find cheaper goods coming in from India, we gain by consuming
at a lower price (or consuming more) and also, by moving resources away
from sectors in which we are relatively inefficient to sectors where we
possess comparative advantage in production. If we are inefficient at producing
a certain commodity, it would only be wiser for us to import it if it is
available cheaply from India, and concentrate in producing those commodities
which we are good at producing. By specialising in production of commodities
which we excel at producing, we can drive down their prices and thereby
increase our exports of those products, as more countries will find them
affordable.


The fears of our "dependency" (on India), arising out of a negative
trade balance, are the result of a very naive and simplistic view of the
world. If there is any dependency in Pakistan on Indian imports, then there
is an equal dependency in India for the revenues that their exports to
us contribute to their economy. The close proximity of our two nations
make trade very convenient and once a stable pattern has been established,
both trading partners would be averse to drastic changes.


That was the economic side. There is a political aspect too. Our governments
have been in constant search for ways and means to expand and perpetuate
their dominance, mostly at the expense of national well being. I contend
that our governments have never sincerely tried to mend our relations with
India because it has been very convenient for them to keep India alive
as a scapegoat, to put the blame on whenever their pathetic domestic policies
are questioned. The same has been the record for Indian governments. When
it has been proven beyond doubt that trade among nations is beneficial
to the welfare of the people, and that petty politics must not be allowed
to interfere with free-trade patterns, our politicians still continue to
be wary of allowing trade relations between India and Pakistan to

flourish.


I do not say that we must not help Kashmiri Muslims in their fight against
oppression, but that we must explore new and realistic solutions. If we
give up hostilities now and take effective measures to strengthen our economy
and build our prestige in the world, we can then more effectively help
the Kashmiris. Persisting in militaristic endeavours will not help the
nation in any respect.


The basis of our support for Kashmir is the affinity we feel for our
Muslim brothers there. After all our creation was based on the two nation
theory and it is our duty to help Muslims. But may I ask what happened
to the two-nation theory in 1971? What were we thinking when we treated
our East Pakistani brothers the way we did? What is happening to the two-nation
theory now, when we are denying the

stranded Biharis - who incidentally were the only collaborators our
army had in their occupation of East Pakistan (remember Al-Badar and Al-Shams?)
their right to enter Pakistan and be treated as Pakistani citizens? It
is clear that a lot has changed since the patriotic days of Partition.
Our leaders' support for the Kashmiri people may not be motivated completely
by an altruistic desire to alleviate their suffering. Yet, our current
stand on Kashmir causes enmity with India, and necessitates excessive military
spending.


The only thing that excessive military spending will help in doing,
is in securing the generals of the army an undeservedly large role in national
politics and a free hand in obstructing democracy at their

whim. Maybe their aversion to allow democracy flourish in urban Sindh
and disruption of liberties of Karachiite's flow from this expanded role
they have acquired. What business do the armed forces have in dominating
politics? The army will never want Pakistan to be friendly with India,
because its reason for existence will be questioned, and it will not be
able to take the huge chunk that it does from our hard earned national
revenues. And reliance on military solutions to our security problems in
the absence of genuine political and economic endeavours will only help
us to the extent that it has helped us in the past (to be precise, not
help us at all). In any case, to feel safe we need strong friends not strong
enemies.


There have been no Hiroshima's since Hiroshima. Yes, not a single nuclear
weapon has been used offensively since the US lobbed one at the Japanese
city at the peak of World War II. It is quite likely that India won't use
one on us and face reprisals, from the international community, which it
is so trying to woo. Let India spend senselessly on building nukes, let
them tie up resources in unproductive

enterprises. It will only hamper their progress, as military competition
is out of vogue. None of the military aggressors of this age have gained
from their actions (remember Saddam?) and war is increasingly becoming
outdated, as slavery and duelling have become.


In any case, if we howl about India's military programme, it will only
strengthen their resolve to pursue their programmes with greater vigour.
The message that the Indians get when we scream about their

military programme is: "if it's bad for them, then it's good for us".
In this way Indian politicians can easily get their public to tally behind
them, using anti-Pakistan rhetoric. The same goes for our own

politicians who find India-bashing most convenient when they need a
few cheap political points. Its about time that we focus instead on building
up our economy, which is the only credible investment in

ensuring a bright future and the only real protection we can have from
our enemies. Why is Japan so safe and cosy? Definitely, not because it
has one of the most formidable military establishments in the world.


Another source of hostile behaviour towards India are the fundamentalists,
etc, who never cease in their senseless rhetoric. In another one of their
classic theatrical outbursts, they have said that the "imported Hindustani
potatoes wounded our national pride", in a recent column. One is only amused
at the logic employed by such propagandists, and saddened by the fact that
our poor, ignorant people might actually fall for such beguiling syllogisms.
What does a superarmed country have to feel proud about when it cannot
feed its hungry? When it cannot house the homeless? When most of its population
is illiterate?


Once India and Pakistan are locked into a stable pattern of trade, peace
is inevitable and mutual security will be ensured. Both countries will
have too much to lose from armed confrontation and will prefer peace vastly
to any hostility something like the US and Canada.