ADB to assist border trade transit regime

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ISLAMABAD : The government has decided to establish a border management regime to deal with increased trade and transit traffic through Torkham, Chaman and Wagha borders and has sought assistance from the Asian Development Bank (ADB) in this regard, sources said.


Sources said that the ADB has started evaluating the project and is expected to allocate a sum of $120 million to modernise border point infrastructure to help meet the demand for quality border crossing services. ADB has planned to send a fact-finding mission to Pakistan early next year to evaluate the project.


The project components will include land acquisition, design and lay out of border crossing points in line with the security requirements, installation of inspection-related and information and communication technology equipment and hardware, changes in cross-border process and procedures, and capacity development of border officials.


The impact of the project will be speedy cross-border processing of goods and people through Torkham, Chaman and Wagha borders. It would also cut down on waiting time for people and goods to cross the borders.


Meanwhile, a new World Bank report pointed out that South Asia is the least integrated region in the world, and stronger cooperation between India and Pakistan would reduce the vulnerabilities of South Asia’s poor.


The report says that Pakistan and India account for almost 92 per cent of South Asia’s GDP, 5pc of South Asia’s population, and 80pc of South Asia’s surface area, whereas only 20pc of the regional trade is India Pakistan trade.


The report says that three of the poorest South Asian countries, Afghanistan, Bhutan and Nepal, are land-locked while several lagging regions in the larger South Asian countries of Bangladesh, India and Bangladesh are located in the border areas.


The potential benefits of economic cooperation [among regional countries] are undoubtedly obvious, and global examples of successful cooperation agreements reinforce the point that possible gains for India, Pakistan and other South Asian countries from effective cooperation and partnerships can be substantial.


Though cross-border physical connectivity has improved tremendously through land, sea and air-based transport network, poor logistics deter engagement in regional production sharing. Logistics encompass an array of essential activities for trade including transport, transit trade, warehousing, cargo consolidation, border clearance, distribution and payment systems.


The report says that recent thaw in India-Pakistan trade relations could signal a change as in 2011, trade with Pakistan accounted for less than half a percent of India’s total trade, whereas Pakistan’s trade with India was 5.4pc of its total trade. Pakistan has agreed to grant the most favoured nation status to India, while India has already granted the most favoured nation status to Pakistan.


Stating that several studies have estimated that large gains are available from removing barriers to trade between India and Pakistan, the World Bank report estimated that there are significant welfare gains for India and Pakistan out of MFN trade; however, the welfare gains increase dramatically with the improvement in bilateral trade facilitation.


According to the report findings, with improvement in connectivity and trade facilitation, Pakistan could narrow the welfare gap while giving MFN to India, there will however be some negative welfare effects for the countries outside of South Asia, since Pakistan, after giving MFN to India, would divert the source of some of its imports from other countries to India.


The report projects that mere MFN status to India would raise Pakistan’s import from India by 32pc whereas MFN plus enhancement of bilateral facilitation would lead to rise in such import by 202pc. Under the MFN plus bilateral trade facilitation scenario, Pakistan’s total import would rise by 2.7pc, which is 2.43 percentage points higher than that under the mere MFN scenario. On the other hand, Pakistan’s exports to India would rise by a staggering 202pc under the MFN plus bilateral trade facilitation scenario against only 0.4pc under the MFN scenario.

Courtesy:  Dawn

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