India, Pakistan try trade route to improve ties

April 23, 2012, Monday/ 15:08:00

In a cavernous warehouse in north India, workers grade and blend mounds of tea for shipping to Dubai, Europe, Singapore - just about anywhere around the globe, except for the country right next door, Pakistan.

Decades of conflict have decimated trade between the two nuclear armed South Asian neighbors. Now, with peace efforts between the rivals stalled, officials are hoping that trade could lead the way to easing tensions. They have promised to throw open their economies to each other by the end of the year and have already liberalized some commercial ties. A new border depot for trade was inaugurated recently. India's Commerce Minister Anand Sharma said that investment "can form the basis for building political trust." The commercial thaw is welcomed by traders who have deep historic and cultural ties but who were cut off from each other when India, a former British colony, was split into two countries upon independence in 1947.

The three wars they fought did not dampen Pakistanis' craving for India's green tea nor Indians' longing for Pakistani dates and nuts. So, Indian traders routed their Pakistan-bound products by ship via Dubai in a 28-day journey that is 40 times as expensive as trucking it over their shared land border. And Rakesh Arora, one of north India's biggest tea suppliers, can't sell to the world's second largest tea-buying market barely 30 kilometers (20 miles) away from his warehouse. Instead, Pakistan buys tea from faraway Kenya. The two sides hope that they can quadruple trade that reached $2.8 billion last year by setting aside their competing claims to the Kashmir region and other thorny disputes to focus on restoring economic links. "What India and Pakistan are doing is long overdue," says Rajinder Goel, president of the Amritsar Tea Traders Association.

In recent months, Pakistan drastically reduced the number of Indian products barred from the country and said it will eliminate the bans completely by the end of the year. It also said it planned to grant India "Most Favored Nation" trade status, which would reduce tariffs. New Delhi gave that status to Pakistan in 1996. India said this month it would lift the ban on Pakistani investments here, held a Pakistani trade fair in the capital and is talking of exporting electricity and petroleum to the energy-starved country. Both countries' central banks are exploring opening branches across the border. Indian Foreign Secretary Ranjan Mathai said they were close to an agreement on visas to make it easier for business leaders to cross the border and stop forcing them to report to police. And India unveiled a new customs depot at the Attari border, which separates India's Punjab region from the Pakistani Punjab. In the 100 acre (40.47 hectare) hangar-like warehouse the size of two football fields, neatly stacked rows of cardboard cartons filled with dried fruit and nuts stretched to the ceiling awaiting customs checks. An army of blue-uniformed porters waited to load them onto trucks for the vast Indian market.

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