Pakistan and Bangladesh Resume Direct Trade for the First Time Since 1971
For the first time in over five decades, Pakistan and Bangladesh have resumed direct trade, marking a significant milestone in their economic and diplomatic relations. This historic event comes as the first government-approved cargo shipment departed from Pakistan’s Port Qasim, heading towards a Bangladeshi port. The deal, finalized in early February 2025, involves Bangladesh purchasing 50,000 tonnes of rice from Pakistan through the Trading Corporation of Pakistan (TCP). This development is expected to pave the way for stronger economic ties between the two nations, which have had a complex relationship since the 1971 separation.
The resumption of trade between Pakistan and Bangladesh is being seen as a breakthrough in diplomatic efforts, with economic cooperation serving as a bridge to better relations. Historically, the two nations shared strong trade and cultural ties before the separation of East Pakistan, which led to the creation of Bangladesh in 1971. However, for more than five decades, direct trade routes between the two countries remained closed, largely due to political differences and unresolved issues stemming from the events of 1971. Over the years, despite both nations being part of various regional trade agreements, direct bilateral trade remained limited, with most transactions being routed through third-party countries.
The current trade agreement is expected to not only boost economic cooperation but also establish new maritime trade routes between the two South Asian nations. The shipment of rice, which is the first of its kind since 1971, will be transported in two phases, with the first 25,000 tonnes already en route and the remaining 25,000 tonnes scheduled for delivery in early March. The vessel carrying the rice is operated by the Pakistan National Shipping Corporation (PNSC), further signifying a new era of direct shipping between the two countries.
According to reports, the decision to resume trade was facilitated by recent political shifts in Bangladesh. The departure of Sheikh Hasina as the Prime Minister led to a thaw in relations, with both governments engaging in high-level exchanges to rebuild economic and diplomatic ties. The interim government in Bangladesh extended an olive branch, which Pakistan reciprocated, leading to discussions on re-establishing trade links. This positive shift in relations is now materializing in the form of economic agreements, with rice being the first commodity to be traded directly.
The resumption of direct trade is expected to have long-term benefits for both economies. Bangladesh, as one of the world's largest consumers of rice, is looking to diversify its import sources to stabilize food prices and ensure food security. Pakistan, being a major rice exporter, sees this as an opportunity to expand its market in South Asia. This agreement could also open the door for trade in other commodities, including textiles, pharmaceuticals, and manufactured goods, which both countries produce in large quantities.
Experts believe that this step could lead to further trade deals in the future, benefiting industries in both nations. Historically, Bangladesh has been a key market for Pakistani textiles, and in return, Pakistan has shown interest in Bangladeshi jute and ready-made garments. However, political tensions and trade restrictions have limited the full potential of these sectors. With direct trade channels now open, businesses in both countries could benefit from reduced costs and shorter delivery times, leading to increased economic activity.
Beyond economic benefits, this agreement carries significant geopolitical implications. The South Asian region has long been dominated by trade routes that bypass direct Pakistan-Bangladesh trade. The resumption of maritime trade between the two could alter regional trade dynamics, especially within organizations like the South Asian Association for Regional Cooperation (SAARC). Strengthening economic ties between Pakistan and Bangladesh may also encourage other South Asian countries to re-evaluate their trade policies and look for similar opportunities to boost regional commerce.
Despite the optimism surrounding this development, challenges remain. The legacy of historical tensions, trade regulations, and logistical hurdles could slow down the full-scale resumption of trade. Moreover, political uncertainties in both countries may influence future trade agreements. Nevertheless, the current deal sets a strong precedent for further collaboration, demonstrating that economic interests can transcend political differences.
The successful execution of this rice deal could lead to discussions on broader trade agreements, potentially including more goods and services. If both governments continue to prioritize economic cooperation, there is potential for long-term trade normalization that benefits businesses and consumers alike.
The resumption of direct trade between Pakistan and Bangladesh is a remarkable development in South Asian geopolitics and trade. After more than 50 years of separation, the decision to re-establish direct trade links demonstrates a mutual willingness to move forward. The shipment of rice from Pakistan to Bangladesh is just the beginning, with both countries having an opportunity to expand trade in various sectors. If this momentum continues, it could lead to stronger economic ties, benefiting not only Pakistan and Bangladesh but also the broader South Asian region. This development marks a new chapter in Pakistan-Bangladesh relations, proving that economic cooperation can play a vital role in mending historical divides.