Almost two years after abruptly snapping ties with India, Islamabad is reportedly considering to resume trade ties with New Delhi, a report published in the Indian Express said.
Pakistan’s cabinet committee on economic affairs is met on Wednesday at 11:30 am Pakistan time to mull over reestablishing trade link with India. The committee is believed to take a decision on importing sugar and cotton from India.
It is imperative to note here that Pakistan, in August 2019, cut off trade ties with India unilaterally after India abrogated Article 370 to remove all riders for Jammu & Kashmir being integral part of India.
India desires normal trade ties with neighbours, including Pakistan
The meeting of Pakistan’s cabinet committee over the resumption of trade ties with India comes a week after Minister of State in the Ministry of Commerce and Industry, Hardeep Singh Puri, while replying to a question on whether bilateral trade is likely to resume after a ceasefire agreement was reached between both the countries, said in the Lok Sabha that India desires normal relations, including on trade with all countries, including Pakistan.
Puri also added that the onus of reviving the relationship between the two countries is on Pakistan, since it had unilaterally suspended bilateral trade with India in August 2019. However, he added in his response in the lower house of the parliament that the Indian government has, so far, not received any kind of proposal from Pakistan to reestablish trade relations.
However, many media houses and social media users interpreted the same as India making effort to normalise trade relations with Pakistan. Some of them even did not specify that it was Pakistan which had cut off the ties unilaterally.
Pakistan snaps ties with India after the abrogation of Article 370
In August 2019, Pakistan had suspended all ties with India after the latter abrogated Article 370 that granted separate status to Jammu and Kashmir and passed legislation that turned the state into two independent union territories. Rattled by India’s move, Pakistan called an NSC meeting that arrived at the decision of severing trade between the two countries, downgrading bilateral diplomatic ties with India and raising the issue of Kashmir in the United Nations Security Council among other things.
Besides, Pakistan NSA has also decided to close the Wagah border and suspend Bus services to India. Pakistan will also be declaring August 15 (India’s Independence Day) as ‘Black Day’ to protest against the action taken by India vis-a-vis Jammu and Kashmir. A review of the bilateral arrangements with India has also been asked for. Along with these, they have also expelled the Indian envoy to Pakistan.
However, days after severing all ties with India, Pakistan felt the heat as the prices of vegetables, most notably tomatoes, started to soar. In August 2019, days after Pakistan abruptly cut off trade ties with India, tomato prices in Pakistan went through the roof, triggering a domestic crisis in the country. The prices of tomatoes in Pakistan had soared to Rs 300 per kg. Prices of various other vegetables, including potatoes, onions and green vegetables in Pakistan had also risen considerably, given its high dependence on exports from India.
Almost a month after snapping ties with India, the Imran Khan government in September 2019 made an about-face as it partially restored trade ties with India. The Pakistan government then gave its approval for importing life-saving drugs for maladies such as cancer, tuberculosis and cardiac ailments from India.
Looming economic crisis forces Pakistan to reconsider its belligerence against India
The hostility between the two countries rose, with the marked increased in the ceasefire violations along the highly volatile border between the two countries. Pakistan PM Imran Khan ran pillar to post, approaching the UN, other global forums and western nations to get them to pushback against India’s abrogation of Article 370. In this pursuit, Khan routinely launched shrill attacks against the Indian government, including PM Modi, in a bid to persuade western governments to pressurise India into revoking the abrogation of Article 370.
However, several international forums and western countries ignored Khan’s pleas, partly because of Pakistan’s notorious record of supporting terrorism, its inclusion in the FATF grey list and its depleting economic fortunes. Pakistan is teetering on the edge of an imminent financial collapse and is suffering from an acute debt crisis.
The crisis is so severe that creditors have started using unconventional methods to claw money back from Pakistan. In January 2021, Malaysian authorities seized a Pakistan International Airlines Boeing 777 plane, with passengers still on board, at Kuala Lumpur airport for not paying leasing fees worth $15 million. The condition in Pakistan is so grim that it is compelled to borrow money from domestic and foreign sources to pay its bills, including repayments on old loans. But, many countries have stopped granting any additional loans to Pakistan.
With economy in dire straits, prolonging belligerence with India did not have any temporary gains for a cash-strapped Pakistan. On the other hand, a thaw in the relationship between the two countries would help Pakistan to a certain extent to get a handle on its ballooning economic difficulties. It is to this end that Pakistan agreed for a ceasefire agreement at the border with India some time ago and is now eyeing to resume trade relations between the two countries.
Pakistan PM Imran Khan once again rakes up the Kashmir issue
However, even while reconsidering its decision to revive trade ties with India, Pakistan PM Imran Khan did not shy away from raising the Kashmir bogey. Recently, Khan wrote to PM Modi, thanking him for conveying greetings on Pakistan Day. But, he once again raked up the Kashmir issue, stating that the two countries should resolve all the outstanding issues, including Jammu and Kashmir.
“The people of Pakistan also desire peaceful, cooperative relations with all neighbours including India. We are convinced that durable peace and stability in South Asia is contingent upon resolving all outstanding issues between India and Pakistan, in particular, the Jammu and Kashmir dispute,” he said.
India stripped Pakistan of the MFN status in the wake of Pulwama attack
India, on the other hand, had made it amply clear that negotiating on the sovereignty of Jammu and Kashmir is strictly off the table. Ever since PM Modi came to power at the centre, the government has turned the tables and placed emphasis on reclaiming the parts of Jammu and Kashmir illegally occupied by Pakistan. It has also demonstrated zero tolerance to the terrorism emanating from Pakistan and conveyed to Islamabad in no uncertain terms that terrorism and talks cannot go hand in hand.
For India, the external and internal security of the country takes primacy over the cultural and trade ties. In the aftermath of the bloody Pulwama terror attack that took place in February 2019, India withdrew the non-discriminatory market status it had unilaterally granted Pakistan in 1996, popularly known as Most Favoured Nation, and imposed a customs duty of 200% on all goods originating from Pakistan. India also suspended cross-LoC trade in April 2019 on receiving reports that these routes were being misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency.