by Bidhi Adhikari / Sapan News
A recent ruling by the U.S. Court of International Trade in New York revoked the tariffs, including reciprocal tariffs, that President Donald Trump had imposed on over 180 countries, including several in Southasia.
The three-member judicial panel ruled that the International Emergency Economic Powers Act of 1977 that Trump had used, does not give the President the authority to impose tariffs that do not directly address declared national emergencies. Nor can it be used to address U.S. trade deficits, says the Center for Strategic and International Studies, a think-tank in Washington, D.C.
The Trump administration filed an appeal with the U.S. Court of Appeals for the Federal Circuit on 29 May, challenging the ruling. The Federal Circuit court granted a temporary stay on 10 June allowing the tariffs to remain in place as the appeal process continues. A full hearing is scheduled for 31 July.
As the tariff standoff in U.S. courts continues, like the crisis caused by the recent conflict between India and Pakistan, this might be an opportune moment to consider the importance of reviving regional trade.
This is something that Nikita Singla, international trade, logistics and Inclusion specialist, has long argued for. Her article Facilitating Confidence-Driven Trade in South Asia, published by the Carnegie Endowment for International Peace on 20 Feb. 2025, much before the Pahalgam tragedy, highlights how trade can be used as a confidence-building measure in a region often defined by political tensions.
Singla presents the restoration of India-Pakistan trade ties as a tangible path toward peace and cooperation, which resonates with Sapan’s vision of integrated Southasia.
Trade between India and Pakistan has been suspended since the 2019 terrorist attack in Pulwama and India’s revocation of Article 370, a constitutional provision that had granted Jammu and Kashmir a degree of autonomy. The suspension of trade has impacted livelihoods across the Line of Control (LoC).
Intraregional trade in Southasia remains low (6-8%), making it the least integrated region globally. The inauguration of a direct sea trade link between Karachi in Pakistan and Chittagong in Bangladesh in November 2024 could be an important confidence-building measure (CBM) in the region. Trade combined with CBMs can offer a path toward conflict resolution such as Brazilian Argentine Accounting and Control of Nuclear Material Agreement (1991).
Noting that trade between India and Pakistan has long been constrained by political tensions, Singla identifies developments that have expanded the scope for exchanges between the two nations. These include amendments to the maritime protocol (2005), land-based trade from the Wagah-Attari border, and trade across the Line of Control in Kashmir.
Cross-LoC trade, one of the first major trade CBMs between India and Pakistan, that survived over a decade. It facilitated over USD 1.2 billion in trade and created 170,000 job days, benefiting tens of thousands in border regions. However, its suspension in 2019 exposed the fragility of trade ties, with impacts spreading across sectors and states in India.
Strategies Singla identifies to revitalize bilateral trade ties and lay the groundwork for a more resilient, cooperative Southasian trade ecosystem include:
- Economic alternatives for border traders via rail and rail connectivity.
- Rules-based trade frameworks, including reinstating South Asian Free Trade Area, launching a joint trade portal, and promoting product-specific collaborations.
- Reforms to cross-LoC trade, such as improved infrastructure, digitized tracking, dispute resolution mechanisms, and updated commodity pricing and classification systems.
Additionally, enhancing Trusted Trader Programs, like India’s Authorized Economic Operator, can increase security, efficiency, and compliance in trade. Mutual recognition of these programs across Southasia would help streamline cross-border operations and strengthen public-private cooperation.
Ultimately, insulating trade from political volatility and embedding it within robust institutional frameworks can transform trade into a stabilizing force. Rebuilding India-Pakistan trade ties through CBMs not only holds promise for bilateral peace but also for broader regional integration and prosperity.