Pakistan, India Trade Deal Sprouts New Possibility

Nov 4, 2011
Originally published on November 4, 2011 9:20 am
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Pakistan originally built nuclear weapons to match the arsenal of its neighbor and bitter rival, India. But in recent days, the two nations have made an effort to improve relations. The deal doesn't involve weapons or border disputes. Rather, it opens up trade, as NPR's Corey Flintoff reports from New Delhi.

COREY FLINTOFF, BYLINE: The two countries have a lot to offer each other: India would like to sell its pharmaceuticals, plastics and industrial chemicals to Pakistan. Pakistan could export its textiles, cement and surgical instruments to India. Geographically speaking, each country should be the other's best customer. But India and Pakistan have fought three wars since winning independence from Britain in 1947, and the natural flow of trade between them has never had a chance.

India granted most-favored-nation trade status to Pakistan in 1996, but Pakistan didn't reciprocate. Politicians in Islamabad said progress on trade issues would have to be tied to progress in dealing with the two nations' dispute over Kashmir. Pakistan permitted trade only in a short list of items. India responded with what are called non-trade barriers, quality standards and customs rules that made it hard for Pakistani goods to cross the border. Even so, the two countries already do around $2.6 billion worth of business, not counting smuggling. Some trade is routed through third countries, such as the United Arab Emirates, to disguise its origins.

Indian trade officials say the amount of legitimate trade could easily triple over the next three years. The next step, they say, will be negotiations to make it easier for businesspeople from the two sides to get visas. And the two sides will also have to improve the customs facilities at border crossings to accommodate a lot more potential traffic. Corey Flintoff, NPR News. Transcript provided by NPR, Copyright NPR.