International Trade and Finance Case Study

Indo-Pak Trade Through Kashmir: Opportunities and Challenges

OR

Abstract:
The South Asian Association for Regional Co-operation (SAARC) was established with a view to achieve greater economic integration and regional co-operation between the member countries of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The two prominent economies of India and Pakistan have long been rivals over the disputed territory of Kashmir, with both claiming the land. The political dispute had led to the closing down of the trade route via Kashmir between the countries. However, October 2008 saw the historical initiative of the Kashmir trade route being opened up by the two countries after approximately six decades. This symbolic move brought about both optimism and scepticism. While some believed that the two nations will be able to tap the true trade potential thereby maximising their revenue and welfare gains, critics believed that the history of mutual distrust and myopic competitiveness between the neighbours would act as a spanner in the growth story of the region. It remains to be seen, whether these two leaders of South Asia will be able to exploit the trade potential or will they merely continue to remain fragmented.

Pedagogical Objectives:

• To understanding the role and importance of international and regional trade blocs in achieving economic development
• To outlining the formation and contribution of SAARC in the economic integration of the South Asian region.
• To examining the history, the changing contours and the trade potential of trade between India and Pakistan, with special reference to the Kashmir trade route.

Keywords :  Indo-Pak trade, SAARC (South Asian Association for Regional Co-operation), SAPTA (South Asia Preferential Trading Agreement), SAFTA (South Asia Free Trade Area), Gains from Trade, Trade barriers, Tariff lines, Regional Trade Arrangements (RTAs), Trade liberalisation, Trade facilitation, Intra-regional trade, Kashmir trade route, Competitive advantage, ASSOCHAM (Associated Chambers of Commerce and Industry in India), Most favoured nations (MFNs)