Despite a global trend toward increased economic interdependence, trade between India and Pakistan, two historically tense neighbors, remains unnaturally small. The Indian economy and trade continue to expand outward, to the United States and China, while Pakistan looks to trading partners like Iran and China for assistance with urgent needs in the energy sector.

Improving the economic relationship between the two South Asian neighbors could produce numerous gains for both countries, but government policies on both sides continue to restrict bilateral trade below natural levels. Under freer economic conditions, trade between India and Pakistan could increase from the current $2 billion a year to a conservative estimate of $42 billion annually, which could play an effective role in increasing economic prosperity in both countries and the region as a whole, while also contributing to its stability.

On July 29, the Atlantic Council’s South Asia Center addressed these questions with a panel discussion featuring Mohsin S. Khan, Senior Fellow at the Peterson Institute for International Economics, and Surjit Mansingh, Adjunct Professor at American University’s School of International Service. Dr. Khan discussed the nature of trade constraints in South Asia and offered suggestions for short- and long-term measures that could be taken by both governments to liberalize trade between the two countries. Dr. Mansingh provided a political perspective on this topic and offered insights drawn from her expertise on India’s foreign policy. The question and answer session covered such diverse topics as the rise of online consumer markets, the need to reconcile security and openness in both countries, and the role of American and European companies in the region.

The discussion was moderated by South Asia Center Director, Shuja Nawaz.