ICRIER Working Paper No. 200
Trade Possibilities and Non-Tariff Barriers to Indo-Pak Trade
October 2007
By
By Nisha Taneja
In an effort to promote trade and economic relations between India and Pakistan this paper focuses on identifying bilateral trade possibilities and identifying non-tariff barriers to Indo-Pak trade.
The study shows that there is large untapped trade potential between the two countries of around US $ 11 billion. However, very few items having export potential from India are on the positive list adopted by Pakistan. At the same time there are several items that India is importing from other countries but not from Pakistan. This indicates that there is a huge information gap on both sides on items that can be imported by India from Pakistan.
Even though the two countries have liberalized their import regimes, Pakistan continues to follow a positive list approach towards Indian imports. As a first, step Pakistan should dismantle the positive approach and trade with India on an MFN basis. However, within the context of this restricted bilateral trade, even though India applies non-tariff measures in a non-discriminatory manner across trading partners, Pakistan is affected more as the NTMS are applied by India happen to be in sectors that are of export interest to Pakistan.
The study also finds that due to a restrictive visa regime only selected traders have access to trade related information. Thus lack of transparency, market imperfections and information asymmetries on both sides raise transaction costs and restrict market access for several other aspiring traders.
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Author’s contact: ntaneja@icrier.res.in
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