“Pakistan and India must talk despite negative mood”

Business Recorder, Pakistan, December 19, 2014

At the book launch of ‘Growth and Equity’, which has experts like Kamal Nath, Nitin Desai and Jagdish Bhagwati contributing essays, the talk turned to the policy issues India faces and how consumers in India have now become more aware and are fighting for their rights

Pradeep S Mehta is the founder and Secretary General of the Jaipur-based Consumer Unity & Trust Society (CUTS International). He has studied commerce at the Calcutta University and law at the Rajasthan University, Jaipur. In April, 2012, Mehta was nominated to the High Level Stakeholders Panel of WTO on Defining the Future of Trade. Among other notable appointments, Mehta has been Honorary Adviser to the Commerce & Industry Minister of India and NGO Adviser to the WTO Director General from 2002 to 2005. He serves on several policy-making bodies of the Government of India and Inter-Governmental Organisations related to trade, investment, competition, and environment and consumer affairs. He has published/edited several books and papers on trade, investment, competition and development.

Following are selected excerpts from Mehta’s recent sit-down with BR Research at an SDPI conference in Islamabad. We discussed regional trade, consumer gains, and the contentious Indo-Pak relations these days.

BR Research: Please tell us briefly about CUTS and how it has evolved over the last three decades? Pradeep Mehta: CUTS is a leading economic policy research, advocacy and networking, non-governmental group in India. I founded it in 1983 in Jaipur, India, as a consumer organisation. In the last 31 years, we have graduated to do policy research and advocacy on issues that are directly related to enhancing consumer welfare. I had a business, but I sold my stake to my partner in 1990, because I couldn’t do this job on a part-time basis.

Today we are an international organisation – with offices in Nairobi, Lusaka, Accra, Hanoi and Geneva. By and large, we do a lot of work on economic policymaking, like trade, investment, competition, regulation and consumer protection. We are donor-dependent but we are well-endowed in terms of finances. We have several regional partnerships with other organisations.

BRR: What are the areas CUTS is currently working on?

PM: At CUTS, we divide our work into three verticals: Trade, Regulation and Governance. We have several projects in trade. Now we have a think-tank agreement with the department of agriculture, food processing and department of animal husbandry in India to provide them regular data analysis on tariff and non-tariff barriers facing Indian exports. That is a big breakthrough for us and it is in sync with the new government’s “Make in India” campaign. The government wants to cut non-essential imports and promote domestic manufacturing and processing. This is not to suggest that we are reverting to the olden days of import substitution.

BRR: Intra-Saarc regional trade is very low, around 5 percent. CUTS being at the intersection of consumer protection and trade, how do you see this situation hurting consumers in South Asia?

PM: Yes the region’s consumers are suffering. We have conducted a study on the cost of economic non-co-operation in South Asia and we came up with the conclusion that Saarc countries can achieve a minimum consumer welfare gain of $2 billion per annum by way of savings on aggregate consumer expenditure on imported products in selected countries. Moreover, non-tariff measures including customs procedures and other procedural non-tariff measures account for more than 80 percent of cost of doing trade.

In the Indo-Pak context, once Pakistan gives India the currently held up Non-Discriminatory Market Access (NDMA) or MFN status, you will see a lot of benefits flowing to the Pakistani consumers. Inspired by our study, which was conducted in partnership with the SDPI in Pakistan, Dr Nadeem ul Haque, Pakistan’s former Planning Commission deputy chairman and minister, carried out many tariff-related reforms and turned the positive list into negative list, which straightaway had an impact of 18.5 percent growth in Indo-Pak trade volumes. So the Pakistani consumers have gained.

But the scope of gains for Pakistan is much higher, especially in the automobiles and pharmaceutical sectors. And this is true for Pakistan-made products as well. India’s consumer market – there are about 350 million Indians who are at middle class and above level – is as big as the United States’. India’s domestic market is its huge advantage to foreign companies. Pakistan can also benefit from the big market next door.

BRR: Relations between the two countries are icy right now. Do you expect a thaw anytime soon so that the NDMA issue can be resolved?

PM: I don’t know for sure. The Kashmir issue has again surfaced, which I honestly think is irresolvable. Unnecessary aggression is taking place from both sides. People need to move on, for which, maybe, the Kashmir issues needs to be put aside so that economic measures can be discussed. Otherwise, we will be shooting ourselves in the foot.

BRR: Does Pakistan have any incentive to go back to trade talks when putting Kashmir on the backburner (as happened during 2008-13) hasn’t been fruitful in the past?

PM: That is a tragic conclusion, although I think you can make progress on trade while still talking on Kashmir. But let me tell you, and I am saying this as a realist and not because I am from India, that India is too busy on too many fronts and is simply not interested in picking up fights. The government in India is ready and willing to move forward on trade, but nothing is happening on India-Pakistan front as a whole. Recently, the Saarc leaders wanted to sign two agreements: one in transport and the other in electricity. But Pakistan has been dilly-dallying.

But let’s keep the dialogue alive. Track-I dialogue has come to a standstill, yes, but track-II is still going on. As we speak (the interview took place on December 9) there is a Pakistani parliamentary delegation in India talking to their counterparts. We need to keep talking, and solve smaller issues like connectivity and visas. Right now, the mood is negative, and as a result, the number of visas issued is declining.

In the larger picture, I think Prime Minister Nawaz Sharif, who also campaigned for peaceful relations with India in last year’s elections, needs to make a better case for peaceful relations. I like coming to Pakistan; I get a lot of love and respect here. I would like to have better and productive bilateral relations.

BRR: But the dominant perception in Pakistan, after recent LoC skirmishes, is that Narendra Modi, who comes from the hard-liner RSS background, is promoting Indian hegemony in the region. That doesn’t go down well here. How do you respond to that?

PM: Narendra Modi is a pragmatist. When he was sworn in, he invited all Saarc heads of state, including PM Sharif, to his swearing in ceremony back in May. So the signals he has been giving suggest we want a peaceful South Asia. And that’s because all regional economies will benefit from peace. Nobody wants a full-scale war. It’s extremely unnecessary to fight. Look at the challenges of poverty and unemployment facing this region. Knowing what is doable and what is needed to be done will help the political leaders avoid distraction.

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