Less than a month after a change of government, Islamabad appointed a Trade Minister in New Delhi. However, its Ministry of Commerce (MoC) dispelled the impression that Pakistan is changing its trade policy with India. Thus, for now, the status of trade relations with India, which was downgraded after that country illegally annexed occupied Kashmir, remains the same. That said, the new coalition government has not vociferously linked the resumption of trade to India taking back its draconian decisions in Kashmir. This is in contrast to what Pakistan’s former Prime Minister Imran Khan publicly said about trade with India. Last year, after initially allowing the import of essential items from India through the Economic Coordination Committee (ECC), Khan termed normalizing trade relations with it as betrayal to the people of occupied Kashmir. While the incumbent government has not announced a resumption of trade, it hasn’t rejected doing so outright. This could be a precursor to Pakistan adopting a softer approach towards India. Therefore, it is important to analyze as to whether a thaw in relations with India, brought about through revitalizing trade, could help bring about peace between the two South Asian, nuclear-armed adversaries. In other words, it is important to ascertain whether or not trade could become an impactful Confidence-Building Measure (CBM) between the two countries. While the advantages of a more integrated South Asia cannot be ignored, Indo-Pak trade, in and of itself, cannot be expected to make the environment propitious enough to achieve that. There are three reasons which make trade between India and Pakistan an ineffective CBM.
First, that Pakistan’s decision to downgrade its trade relations with India was a response to the latter’s illegal annexation of Kashmir in August 2019 is a critical factor in assessing the impact of its reversal. India’s revocation of Articles 370 and 35-A, the abolition of Kashmir’s statehood, domicile laws, and delimitations of constituencies are actions repugnant to United Nation Security Council’s Resolutions on Kashmir, the spirit of the Simla Agreement, and the 4th Geneva Convention. Other than taking these brazen measures, New Delhi has ramped up the use of a bevy of high-handed tactics, to suppress Kashmiris’ freedom struggle. Resuming trade with New Delhi while it continues its unremitting violence and incendiary rhetoric will only indicate that Islamabad accepts, or at the least, is willing to work with and within the status quo. With Kashmiris looking up to Pakistan for help, such optics would only be damaging. Also, even the impression that Pakistan is willing to consider India’s annexation of Kashmir as a surmountable point of contention would elicit criticisms from all quarters. India would gain political and diplomatic mileage if Pakistan were to restart trade without the former having met any Kashmir-related preconditions. That Kashmir is a disrupted territory is reason enough to not give India space to get away scot-free. In a recent interview, Pakistani scholar Rabia Akhtar argued that unless India takes back its August 5 decisions, there would be no space to start a substantive Indo-Pak peace process. Thus, at a time when dialogue between the two countries is a hard sell, Pakistan taking an about-turn on trade would have negative political and diplomatic fallouts for it.
Second, other than upping the ante in Kashmir, the Narendra Modi-led government has, many a time, threatened to wrest back territories from Pakistan, including Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB). This, coupled with enunciations of discomfiture with its nuclear No- First-Use policy, shows its hawkishness towards Pakistan. Through its aggressive posturing, New Delhi is showing its willingness to use force, to tackle what it calls a strategic paralysis against Islamabad. India’s expansionist tendencies, fuelled by an ideologically and religiously-bigoted leadership, do not augur well for the future of Indo-Pak relations. In such a scenario, trade, which even otherwise did account for large market shares in each country, cannot be expected to lessen tensions between the two. Had they depended on each other for the supply of value-added products, trade would have gained more salience in their relations. While there is no denying the fact that a conflict-free South Asia would be a boon for regional connectivity, Indo-Pak trade cannot reach its true potential if the region remains crisis-prone. Besides, India does not see the region’s biggest economic connectivity jackpot, the Belt and Road Initiative (BRI), and its flagship, the China-Pakistan Economic Corridor (CPEC), as advantageous. If anything, through its sub-conventional war against Pakistan, it has committed itself to subverting the project. Hence, even if trade with India were to resume, it is least likely to act as a CBM that could lead to sustained improvements in Indo-Pak relations. Certainly, for the current Indian leadership, talking tough with Pakistan is more rewarding than engaging in negligible trade with that country.
Third, successful CBMs between India and Pakistan, to include the 1988 Agreement on the Prohibition of Attack Against Nuclear Installations, have addressed one aspect or another of their relations, like nuclear risk-reduction. They have not been able to generate enough goodwill and confidence to make headway in resolving contentious issues, especially those that relate to Kashmir. Moreover, they were finalized because both countries equally gained from them. In fraught environments like today’s, both do not stand to gain much from trade. Facing soaring trade imbalances, Pakistan can ill-afford to add to its import bill. Also, up until now, India has neither signaled its desire to recalibrate economic relations nor promised a change of tack on Kashmir. Therefore, it is reasonable to argue that, other than bringing down prices of some essential products, trade with India would do little to help Pakistan. While a thaw may ensue a resumption of trade, a two-way confidence and trust may not build. Au contraire, it is India that could gain confidence to pull the plug on the Kashmiris. Also, because Pakistan is trying its best to sharpen its lawfare against Indian war crimes, initiatives like cross-border trade would raise many a question, especially in the minds of the Kashmiris.
All this, it must be stressed, does not imply that opening conduits of trade should not be on the agenda. In fact, Pakistan should make it contingent upon India’s behavior in Kashmir. However, expecting that reopening trade with India would incentivize it and not invite censure from hapless Kashmiris would be wrong. If anything, resuming trade, despite India’s recalcitrance, would signal Pakistan’s weakness, much to the former’s delight and latter’s chagrin.
 ‘No Change in Trade Policy with India, Says Pakistan amid Appointment of Trade Minister’, ANI News, accessed 29 May 2022, https://www.aninews.in/news/world/asia/no-change-in-trade-policy-with-india-says-pakistan-amid-appointment-of-trade-minister20220513010056/.
 Dawn.com, ‘Normalising Relations with India at Present Would Be a Major “betrayal” to Kashmiris: PM Imran’, DAWN.COM, 30 May 2021, https://www.dawn.com/news/1626579.
 Agencies, ‘Hindu Majority Areas Get More Seats in Held Kashmir’, DAWN.COM, 6 May 2022, https://www.dawn.com/news/1688232.
 EKOTÜRK TV, İmran Han’a Ne Oldu? | Rabia Akhtar | Feyza Gümüşlüoğlu | Saat Farkı, 2022, https://www.youtube.com/watch?v=ervSPT9rAqw.