Though trade is an engine of economic growth, Indo-Pak trade also needs to be understood in its strategic politico-economic importance for both neighbouring countries. The relevance of the land route trade through the ICP-Attari, too, needs to be appreciated in this vein. Eventually, it has the potentialities to provide trade access to the Central Asia and Middle East, besides paving the way for developing friendly relations with neighbours, so important for India’s aspirations of becoming a superpower. Both countries should act and behave in a responsible manner and keeping in view the larger interests of their citizens, they should resume trade at the earliest possible, notwithstanding their political animosity.
The strengthening of trade has huge potential for growth and employment not only for Punjab (border and landlocked state) but also for the north-west India. It is equally true for Pakistan’s Punjab.
Immediately after Independence, India and Pakistan had a huge stake in each other’s trade. However, over time, their bilateral trade witnessed a drastic decline, mainly because of the fear psychosis. Their trade relations have always been subject to a faceoff between economic rationality and politico-security rationality and the latter has always been the deciding factor.
The nine-year trade embargo, driven by the three-week war in 1965, supports such a perception. In the process, they lost an opportunity to reap the benefits of their huge trade potentials. The current trade embargo — virtual embargo in February 2019 when India imposed a 200 per cent customs duty and Pakistan imposed a trade embargo in August 2019 — is also a manifestation of their hostile political relations.
According to a World Bank report (2018), the bilateral annual trade potential between India and Pakistan is to the tune of $37 billion. In my PhD thesis (1985) on Indo-Pak trade, I estimated that in 1995, their bilateral trade should have been around $7 billion. However, their actual trade was just around $2.56 billion in 2018-19. Around 25 per cent of it is taking place through the ICP-Attari. Just imagine how much gains would have been there even if half of the World Bank estimated trade-potential could have been realised.
Paradoxically, informal trade between the two nations has always been there despite the trade embargoes — often via other countries, such as the UAE. The border and landlocked states, such as Punjab, have always been the worst sufferers in such a scenario as trade originating from Punjab and its neighbouring states becomes economically unviable as compared to the states having proximity to sea ports.
Exports originating from Punjab can reach Pakistan — through ICP-Attari — in much less time and at a much lower transport and trans-shipment costs as compared to the sea ports and via a third country. The same is applicable to imports from Pakistan.
A study by the Centre for Research in Rural and Industrial Development (CRRID), completed in August 2020, revealed that the current trade embargo has had a significant adverse impact on Punjab’s economy. To disseminate the findings, we organised a webinar on September 14, in which 13 panellists comprising eminent scholars, diplomats, industrialists, exporters/importers from India and Pakistan expressed their views. Besides, about 75 other participants from the academia, civil society, traders and students attended the webinar. All panellists and participants advocated that the adverse political relations should not come in the way of normal trade relations as the latter can, rather, help normalise political ties.
We were expecting active participation of MLAs and MPs of Punjab as 41 MLAs and all 20 MPs were invited to the webinar, but no one, except one MLA, responded. Their presence at the webinar would have sent a positive message to the stakeholders, besides empowering them to formulate a collective and affirmative strategy to prevail upon the Union Government.
Our field study revealed that Punjab (border and landlocked state) and its stakeholders (exporters, importers, manufacturers, truck operators, porters, roadside eateries, filling stations, weighing bridges, retailers and wholesalers, private schools, health clinics, repair shops, auto-dealers and liquor shops, tea and beverages etc) have suffered huge losses in income and employment due to the closure of ICP-Attari for trade.
Entrepreneurs, truck owners and traders are unable to repay the installments of loans. A large number of truck owners had to sell their trucks at a much lower price to repay the loans and many trucks are lying idle and getting depreciated. The parents had to withdraw children from private schools, the seriously ill people are suffering for want of treatment, and many are facing mild to serious depression.
Our estimates have revealed that the above-mentioned service providers just in Amritsar district have suffered an income loss of about Rs 152 crore during the last 18 months of trade curbs and embargo. Exporters and importers have suffered an income loss of Rs 1,178 crore during the same period. Government agencies — Customs, plant protection, quarantine storage department and Central Warehousing Corporation — also lost revenues of about Rs 774 crore during the same period.
Based on these moderate estimates, the total income loss comes out to be Rs 2,104 crore during the last 18 months of trade curbs and embargo. This, however, does not include the financial loss to the manufacturers-cum-exporters and truck owners whose investment has been rendered idle, besides maintenance cost. Leaving aside the government revenue, most of the income loss is to the stakeholders in Punjab. The consequent operation of inverse-multiplier is aggravating the losses.
Some small-scale manufacturers of agricultural implements in the Malwa region of Punjab had to forego the export of straw reapers to Pakistan — worth Rs 60 crore per annum, with a huge potential in future as the product is in high demand — because of the trade embargo. Exporters of cotton (Nahar Spinning Mills and Vardhman Group) are also suffering from an unused capacity of specially designed spindles of particular counts, suiting the requirements of Pakistan importers.
Direct employment of nearly 12,000 workers (including 2,500 porters, 1,000 drivers and cleaners), in addition to a huge indirect employment, have gone because of the trade curbs. Thousands of families have lost their livelihood. Needless to say, the Covid-19-driven lockdown must have pushed them into a more vulnerable situation.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
