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Bumpy ride

Print edition : Feb 12, 2010

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T+T-
in Poonch and Uri

WHEN cross-border trading resumed with much fanfare from Poonch (Jammu) and Uri (Kashmir) with areas in Pakistan-Occupied Kashmir (POK) on October 21, 2008, it re-established the centuries-old commercial ties between Kashmir Valley and the Sindh valley that had come to an abrupt end in 1947.

Notwithstanding difficulties, the trade between the two parts of Kashmir went on smoothly for one year but started declining in November 2009 as the governments of India and Pakistan placed restrictions on some items that had given a fillip to trade.

Traders on both sides say the restrictions defeat the basic idea of trading and accuse the governments of not being serious in pushing the process ahead. They say the number of items approved for trade was reduced drastically from 21 by removing items that fetched good returns. And, according to them, the governments did not keep their promise to enlarge the list to other commodities having trade potential.

The talks on bilateral trade began as part of the larger process of peace and reconciliation initiated by India and Pakistan in November 2003. The resumption of the bus service between Muzaffarabad in POK and Srinagar in 2005 gave further impetus to the process, which was carried forward smoothly until 2007. In 2008, the trading community of Kashmir began to mount pressure on the government to resume the process for cross-border trade.

When the trade ultimately took a formal shape in October that year, it was seen as another Confidence Building Measure from the governments in New Delhi and Islamabad. A decision on the items to be imported and exported was finalised on May 21, 2008, at a meeting in Islamabad between External Affairs Minister Pranab Mukherjee and Pakistan Foreign Minister Shah Mehmood Qureshi. Following the meeting, both countries agreed upon trade in 21 items.

A Standing Operating Procedure (SOP) was signed on July 21, 2008, in which the modalities of trade were laid down. It was also decided in the SOP that the traders on both sides would meet after three months to increase the number of items. Finally, the trucks began to roll out on the Srinagar-Muzaffarabad road.

Governor N.N. Vohra, who flagged off the convoy from the Salamabad trade centre, had then said: We need to expand the list of items to be traded to make it more meaningful. But the trade hit a bumpy road in May 2009 when the Government of India imposed a ban on the import of garlic and ginger on the grounds that the items did not fall in the list agreed between the two countries. Ginger and garlic have a good market in Jammu and Kashmir, especially in Poonch and Jammu, and traders of POK were quite keen on the export of these two items. Traders of Jammu and Kashmir were also interested in importing these two items in view of the good market they had.

The trade relations suffered a severe jolt in October last when Pakistan banned the export of moong dal. The item had accounted for more than 60 per cent of the volume of trade until October and was a popular commodity in the Poonch area. As the Government of India failed to convince the Pakistan government to lift the restriction on it, traders announced a suspension of trade for two weeks, resulting in a setback to the whole process. Although trade did resume on January 12, it did not have the expected enthusiasm. With the ban on moong dal and other items, the trade on the Poonch-Rawlakot side, which had touched an all-time high of Rs.8 crore on a single day, slumped to Rs.1.5 crore. Despite technical difficulties faced by the traders, the turnover in the past year was Rs.150 crore.

The spokesperson of the LoC Traders Association, Sheeraz Ahmad Khan, told Frontline that both governments did not show any seriousness about resuming the trading activity. Instead of expanding it further, they put breaks on it, he said, adding that unless they showed sincerity in furthering ties, it would not work.

The trade is on barter system and there are no banking facilities. It was just the love for resuming the old trade links that made this possible, otherwise it is very difficult [to carry on trade], said Shakeel Qalander, president of the Federation of Chamber of Industries, Kashmir. His Jammu counterpart, Y.V. Sharma, said that trade had to be taken beyond symbolic gestures. Both suggested that trade should be opened from other routes, that is, Nowshehra-Mirpur and Pallanwalla Bhimber, as well.

Noted economist and Chairman of Jammu and Kashmir Bank Haseeb Drabu said that in order to make the cross-border trade a success, five basic networks should be put in place. The Drabu formula on LoC trade, as it is known, envisages banking relations, including mutual acceptance of letters of credit; a communication network in order to enable traders to know the rates prevailing on the other side; a transport network; a regulatory network to determine the composition of trade; and a legal network for dispute resolution.

The fact is that we have done the glamorous bit, the front end. The back end, which is a critical thing, needs to be put in place. The success or the importance of this trade will be determined by how critically and how meticulously we manage these five mechanisms, Drabu said in October 2008 when a delegation of the Chamber of Commerce, Muzaffarabad, visited Srinagar to work out the modalities. Nothing has moved forward as the governments did not consider pushing the trade on these lines.

According to Sheeraz Ahmad Khan, It is astonishing that though the traders recommended 85 items to expand the trade during the last three joint meetings of cross-border traders, no recommendations have been approved till date by either government on the modalities of trade.

He said both New Delhi and Islamabad had banned the items that were fetching profit and now the traders faced losses.

Traders are interested in consumption-based trade, not product-based business. They have recommended items such as iron, cement, plastic items and electronic items to be added to the list. They are of the view that the list prepared in 2008 had not taken consumption into consideration. It is owing to this fact that items such as carpets, rugs, wall hangings, shawls, gabaazs (local carpets) and aromatic items registered zero per cent trade, the traders argue. They are of the view that if both the governments agree upon the recommended list of 85, trade will once again gain momentum.

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