Trade relations between Bangladesh and Pakistan

Anyone who chooses to browse through the myriad of publications, research papers and newspaper articles available online will not be surprised to find that rarely is there singular focus on bilateral trade between Pakistan and Bangladesh. As more and more attention is given to the South Asian Association for Regional Cooperation (SAARC) as the engine for regional integration, the status and prospects of bilateral relations between Bangladesh and Pakistan takes a backseat. Even when there is focus on bilateral relations, it is namely on Indo-Pak, Indo- Nepal or Indo- Bangladesh relations. And this comes as no surprise since India is the only member of SAARC which happens to share a common border with Pakistan, Bangladesh, Nepal, Bhutan and China. As the largest nation in the South Asian region, both in terms of geographical and economic strength, boasting of porous borders with many of the SAARC members it is natural that trade between India and its neighbours is what grabs attention.

But, does this mean that simply because Bangladesh and Pakistan do not share common borders that trade between them should be minimal? In today's fast globalising world, where the world is indeed getting smaller, this cannot be the case. A look at both these country's major trading partners will bear witness to this fact. Both nations have as their major trading partners countries such as the USA, Germany, Spain, Japan; countries that are widely dispersed when it comes to geographical distance hut bound together hy their common trading interests. So, the question then is does Bangladesh and Pakistan not share common trading interests? The aim of this article is to answer this question amongst many others. This article intends to take a closer look at the current status of trade that exists between Bangladesh and Pakistan. It further intends to examine whether greater trade can be achieved under the framework of SAFTA or whether the two countries should move forth with emphasis on bilateral cooperation. In this paper we intend to scrutinise the underlying factors that are holding back trade between the two nations and subsequently examine the possible roadmap that can enhance trade and economic cooperation.

Let us first take a closer look at the current situation that exists between Bangladesh and Pakistan. If we look at Table 1, and Figure 1, we see that starting from FY 97-98 to FY 01-02; Bangladesh has been experiencing a chronic trade deficit with Pakistan. But what is of greater concern is the fact that for Bangladesh, both in terms of export and import, Pakistan accounts for only 1% of total exports and imports of Bangladesh respectively, Similarly, in the case of Pakistan, exports to Bangladesh accounts for approximately 1% of total exports, while imports from Bangladesh accounts for less that 0.5% of total imports. This alone speaks of the dwindling trade relations that exist between the two nations.

Now, let us take a closer look at the export and import basket of either country. As highlighted by The Federation of Pakistan Chamber of Commerce and Industry (FPCCI), the main items that Pakistan exports to Bangladesh include textile yarn and fabrics, cotton, petroleum products, pharmaceutical products, chilies. cement Portland. cement clinkers, telecommunication equipment, vegetable and fruits, sugar cane refined. chilli powder, articles of apparel/cloth accessories and PVC unmixed substances. A look at Table 2, which gives a detailed breakdown of the commodities exported by Pakistan to Bangladesh confirms the information given by FPCCI. As can be seen it is mostly textiles in the form of cotton fabrics, cotton yarn, raw cotton, knitted croached fabric, knitwear, towels, and ready made garments.

On the other hand, the export basket of Bangladesh to Pakistan mainly includes tea, Jute cutting, Jute raw, Sacks and bags of Jute, Jute Hessian cloth, Betel leaves, text hast fiber. Amongst these items, raw jute and tea ranks as the top export items bringing in the most foreign exchange earnings from Pakistan. As can be seen from Table 3, raw jute accounts for 62.71 % to 69 % of total export earnings from Pakistan. while tea in bulk follows close behind accounting for approximately 20 to 25% of total export earnings. in FY 2002-04. Bangladesh also exports other products such as cut flowers, bamhoo poles. pharmaceuticals, vegetables, shrimps. woven garments, dried fruits, leather. furnace oil, knitwear, frozen fish, carbon rod, etc but these account for very little foreign exchange earnings from Pakistan.

At this point, it is prudent to take a look at how Pakistan ranks in terms of exports and imports. If we look at Figure 2, which shows how each country ranks in terms of export earnings for Bangladesh, we see that in a regional context, Pakistan is to some extent an important export destination. Even though Bangladesh earns more foreign exchange from neighbouring countries like China, Hong Kong, India and Japan, countries like Malaysia, Singapore and China rank below Pakistan.

Similarly, if we refer to Figure 3, which compares the trend of imports of Bangladesh with different regional partners, we see that compared to other trade partners like China, India, Singapore and Hong Kong, Pakistan is least important. Bangladesh tends to import goods of greater value from neighbouring countries like India and China.

A look at the importance of Bangladesh- Pakistan trade in a regional context reveals that both in terms of an export destination and an importer, Pakistan ranks below other neighbouring countries. This is proof enough of the fact that there might be greater scope for Bangladesh and Pakistan to enhance their trade relations and look into the untapped trade potential of both the nations.

A look at Section 2 and 3 makes it quite clear that trade between the two nations leaves much to be desired. The pressing issue now is what are the underlying factors that would account for the negligible volume of trade that takes place between the two nations?

(To be continued)