Pakistan-India Trade:

Kalpana Kochhar and Ejaz Ghani
and availability of trade-related infrastructure, especially roads, still constrains
logistics performance. The quality of logistics services—trucking,
forwarding, and customs brokerage— is also central to trade efficiency.
Logistics performance is strongly associated with the reliability of supply
chains and the predictability of service delivery.
The picture on the ease of doing business and trading across borders,
particularly for intra-regional trade, is not impressive for most South
Asian countries. Among the major causes of high trade transaction costs
are numerous cumbersome and complex cross-border trading practices,
which also increase the possibility of corruption. Goods carried by road
are subject to transshipment and manual checking at the border, which
impose serious impediments to trade. This is further compounded by a
lack of harmonization of technical standards.
The CGE simulations show that improved trade facilitation could
increase the volume of trade between India and Pakistan by reducing the
transaction costs of trade, and thereby making exports more competitive
and imports less expensive.
To support trade flows between the two countries, India’s Integrated
Check Post at Attari-Wagah border, inaugurated on April 13, 2012,
is a welcome step forward. With regard to physical infrastructure, the
Wagah border-control facilities must be greatly expanded. Specifically,
sophisticated X-ray machines through which trucks can pass quickly
should be a top priority; warehousing is needed at Attari; and several
new train stations need to be built.
Recommendation 2: Investment
Globalization has created immense opportunities for countries to catch up
and grow. It allows countries to benefit from scale and specialization, and
from the knowledge and technologies that have been developed anywhere
in the world, whether embodied in machinery, intermediates, or inflows of
foreign direct investment (FDI). World trade has experienced a boom in the
last decade, driven by technological changes that have lowered the costs of
communication and transport. The resulting globalization of production,
with its associated value supply chains, has lowered prices and increased the
variety of imported goods and services for firms and consumers. It has also
led to unprecedented inter-linkages and inter-dependency among countries.
| 112 |