Mohammad Shehzad

Federal Commerce Minister Humayun Akhtar Khan is the son of late General Akhtar Abdul Rahman. He has been a member of the last four National Assemblies and was Minister for Investments between1997-1999. Humayun, 49, is a Fellow of the Society of Actuaries, USA [1980] and a Fellow of the Canadian Institute of Actuaries [1981]. He has a master’s in Actuarial & Business Mathematics [University of Manitoba, Canada, 1977]. In the wake of the SAARC summit and issues of trade and single currency, TFT spoke with him to ascertain his views on the prospects for SAFTA and the bilateral trade between India and Pakistan.

Question: Information Minister Sheikh Rashid Ahmed has linked the issue of trade with India to the resolution of the Kashmir dispute. Is he speaking on behalf of the government?

Let’s look at the trade issue from two angles. One is regional trade among the seven SAARC [South Asian Association for Regional Cooperation] states. We have signed a framework - South Asia Free Trade Agreement [SAFTA] - under which the agreement will come into place in 2006. By that time, the issues of tariff would be resolved and the member states would have ratified the agreement. With respect to bilateral trade, I have always maintained that when there is a sustained bilateral dialogue between India and Pakistan, we are prepared to discuss the trade issues.

Question: Let me put it in a different way. Will Pakistan trade with India without insisting on resolving Kashmir first?

We are talking of free trade in the context of SAARC. All I’m prepared to say right now is that when there is a sustained political dialogue, we are prepared to discuss trade issues with India. I’m very encouraged to note the start of political negotiation between India and Pakistan. Let’s see where they go!

Question: A section of the national press says trade with India will negate the two-nation theory.

We have been trading with India since 1947! It is not a new concept. The only thing is that we have been trading with India on somewhat different lines compared to the rest of the world. That’s the whole concept of giving them the MFN [most favored nation] status. I think MFN is a deceptive term. A more appropriate term would be “normal trade relationship”. We don’t have normal trade relationship with India, though we have a ‘trade relationship’ with India. It is not that we have started trading with India all of a sudden. The bilateral issue is to accord India MFN or normal trading status.

For example, when we trade with the rest of the world, everything is free for export or import for the items mentioned in the negative list. We have about 6,000 or so six digits HS codes in our custom manuals. So, we can trade in all of them except for 30 or so odd items that’s in the negative list. That is the status with the rest of the world. With respect to India, we trade in about 600 or so items only. So with respect to India, there is a positive list right now. A normal trade relationship will be that we start trading with India and we start treating it like any other country. These are the issues which can come up in bilateral trade negotiations whenever they start.

Question: Hardliners say trade with India would drastically reduce the buying power of the poor in Pakistan and the Hindu bunya [trader] will snatch the last morsel of bread from their mouths.

If and when we expand our trade ties with India bilaterally we will put adequate number of “protections” to protect our interests. This is normal in any trade relationship.

Question: There is a view that trade with India, particularly the single currency suggestion by the Indian Foreign Minister Yashwant Sinha, is an extension of India’s Akhand Bharat [complete India] agenda.

The single currency suggestion is a totally different proposal. It s in the SAARC context and is not bilateral. It is just a suggestion and we have not reacted to it in any way.

Question: Do you subscribe to the Akhand Bharat line India is accused of by some?

I am trying to explore international markets for Pakistani products, particularly in the region. That is why, we have signed a preferential trade agreement with China, are negotiating one with Sri Lanka and have started negotiations with Bangladesh and Indonesia. We have just signed an agreement with Turkey. We are negotiating with Iran, OIC, etc. I believe in free trade. You have seen that as we have liberalized trade in Pakistan, we have brought down the barriers, we have reduced our tariffs and trade is actually increasing. For the first time in Pakistan’s history, we have gone beyond US$12 billion. I believe free trade is in Pakistan’s interest and that s how we can grow! That’s the only way we will reach the growth level of 6-8% we require to eliminate poverty.

With respect to India we have stated our position very clearly. When there is a sustainable political dialogue, we will talk about trade. I can’t predict the outcome of these talks. But I am encouraged at the developments between India and Pakistan that have taken place in the shadows of the SAARC Summit.

Question: But don’t you think as a liberal person that this Akhand Bharat argument is outrageous?

I don’t want to react to it. I have told you very clearly what I think of trade in the context of SAARC, internationally, and with respect to India. I have very clearly stated that we will start this dialogue [of trade] when there is sustainable political dialogue. We cannot make progress on trade without political progress. The two will move parallel to each other. And I am very clear that we will have adequate protection to safeguard the interests of our industrialists, farmers, traders and the common people.

Question: Indian goods are much cheaper compared to our goods. The Pakistani businessman fears trade with India will ruin him. Is it a legitimate fear?

If Indian goods are cheap, although I dispute it, in many areas we are competitive in terms of finished goods, with the components in raw materials. They would also be cheap. So who benefits from that then?

Question: For instance, Indian cars are so cheap!

What about raw material? If we could get cheaper raw material, who would benefit? Our industries! Trade deals take place when they benefit all the parties. Otherwise, they don’t take place. Any trade agreement that has taken place regionally or otherwise, has always benefited all the countries involved. You look at NAFTA, EU, ASEAN, all the stakeholders have benefited.

Question: Did Pakistan take its business community into confidence while signing SAFTA?

Whenever we sign anything, we always interact extensively with all the stakeholders. We have a built-in mechanism to do that.

Question: When does Pakistan plan to accord India the MFN status? Under WTO, India could take Pakistan into an international court of law for that.

Well, India has not yet taken us into an international court of law! All I am saying is, if there is a sustainable political dialogue, we will be willing to start negotiations on trade. I can’t predict the outcome of these negotiations.

Question: Free trade is likely to bring India and China into competition. Pakistani markets will be flooded with their goods. Will anti-dumping laws apply on their goods?

Obviously! Whatever trade remedies are available to us under the WTO will be accessed. We have all the legislation in place for that. We have the institutions in place. And anti-dumping negotiations have been conducted and anti-dumping duties have been imposed by Pakistan.

Question: What is the hitch in considering positively the proposal of single currency?

I am not ready to discuss it yet. In SAARC, we have signed SAFTA and that will be fully implemented by 2015. These are subsequent issues. And we will see how things go. It was a proposal made by India. But look at NAFTA, a free trade agreement made a number of years ago. NAFTA has not talked of a single currency yet. Europe started the free trade a long time back and gradually moved into a single currency.

Question: Yashwant Sinha, India’s foreign minister, has recently said in the US that Kashmir is an integral part of India. The Pakistani leadership has been claiming post-Islamabad that India has acknowledged Kashmir as a dispute between India and Pakistan. Who is right?

I am not going by newspaper stories or statements. I simply have the joint declaration [Jan 6, 2004] before me. It clearly says the issue of Kashmir will be resolved to the satisfaction of all the concerned parties. And I leave it at that.

Copyright ©2002 Mohammad Shehzad and The Friday Times. About the author