Pakistan's trade can rise eightfold: World Bank report

By Islamud Din Sajid

ISLAMABAD, Pakistan (AA) - Pakistan’s trade with South Asia could rise eightfold if Islamabad removed its trade barriers with regional countries, a new World Bank report said on Thursday.

The report indicated that trade between the two South Asian neighbors Pakistan and India is valued at only a bit above $2 billion.

"Pakistan is sitting on a huge trade potential that remains largely untapped," said Illango Patchamuthu, World Bank country director for Pakistan.

A favorable trade regime that brings down high costs and removes barriers could boost investment opportunities critically needed for accelerating growth in the country, he added.

The report further said that regional trade could create many more jobs and make the country prosperous if trade barriers with South Asia were lifted.

According to the report, the costs of trade are much higher in South Asia compared to other regions, as the average tariff in the region is more than double the world average.

"Pakistan's frequent use of tariffs to curb imports or protect local firms increases the prices of hundreds of consumer goods, such as eggs, paper, and bicycles. They also raise the cost of production for firms, making it difficult for them to integrate in regional and global value chains," said Caroline Freund, the World Bank’s director of macroeconomics, trade and investment.

Though together Pakistan and India represent 88 percent of South Asia's gross domestic product, trade between the two countries is only valued at a little over $2 billion, but it could be as high as $37 billion, the bank suggested.

The report recommended ending sensitive lists and para tariffs to enable real progress on the South Asian Free Trade Agreement (SAFTA) and called for a multi-pronged effort to address non-tariff barriers.

"By reducing man-made trade barriers, trade within South Asia can grow roughly three times, from $23 billion to $67 billion," added Sanjay Kathuria, a World Bank economist.