There is not much room for misty-eyed sentimentalism in business. Nor can trade be the ultimate solvent for dissolving longstanding geopolitical tensions between squabbling neighbours. Yet, its potential for bringing people together and creating a constituency that sees the mutual economic benefits flowing from such engagement is also something one cannot ignore. The best example here is the commercial pact signed between China and Taiwan in June 2010, which, by no means, ends disputes over the latter's independent-nation claims. But by opening up its huge market to the produce of farmers and fishermen in Taiwan, China has certainly earned more goodwill than through an earlier muscular foreign policy that bordered on the belligerent. The same holds for Indo-Pakistan trade relations, which cannot plausibly ever resolve issues relating to Kashmir or terrorism. What they can do, nevertheless, is to keep these disputes in a separate ‘we-shall-agree-to-disagree' box, and go ahead doing business as the Chinese and the Taiwanese today are: Annual bilateral trade between the two has crossed $150 billion, compared with the paltry $ 2.7 billion official figure for India and Pakistan in 2010-11.

It is in this light that one must appreciate the conscious steps, especially since 2011, taken by India and Pakistan to ‘normalise' trade with one another. Pakistan, on its part, has decided to accord Most Favoured Nation (MFN) status to India. Technically, it means treating imports from India on a par with that from other countries. Pakistan currently maintains a ‘positive list' of 1,945 goods that alone are importable from India. This is to be replaced by a ‘negative list' of some 700 items, which, too, is supposed to be phased out as part of the plan to grant MFN status to India by end-2012. The ‘negative list' was to have been announced during the Commerce Minister, Mr Anand Sharma's current Pakistan visit, but it appears that reservations from within the government and industry there have forced a deferment. That shouldn't surprise anyone, though one ought not to make too much out of it either. India should, in any case, keep its side of the bargain by addressing Pakistani concerns over non-tariff barriers on cement, textiles, surgical instruments and leather imports. There is no reason for India to not iron out wrinkles in its product certification and testing standard procedures, notwithstanding Pakistani intransigence on meeting trade commitments under the World Trade Organisation (WTO). How much cement, after all, can Pakistan export to India? Also, if incremental supplies from Pakistan result in cheaper cement prices, consumers here benefit.

The above ‘soft' approach of extending trade concessions without expecting too much in return is not at all incompatible with a ‘hard' stance on security-related matters. On the contrary, it lends more credibility to India's position at various international forums. Denial of MFN status is something that India can easily raise at the WTO’s Dispute Settlement Body. By not doing so, India has already scored a moral victory – a fact acknowledged even by some Pakistani commentators.

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