Why in News:

• The government has issued orders to suspend the Line of Control (LoC) trade between Jammu & Kashmir and Pak Occupied Kashmir (PoK) after receiving reports that the cross-LOC trade routes were being misused by Pakistan- based elements for funnelling illegal weapons, narcotics, fake currency,

Details:

• On April 18, the Ministry of Home Affairs announced the suspension from midnight of trade at the two designated points at Salamabad and Chakan-da-Bagh.
• It is being cited that “illegal weapons, narcotics and fake currency” is transported into India. A leader of the cross-LoC traders association argued that they had been seeking a “foolproof mechanism” to enforce the terms of the agreement.
• Opening of cross-LoC trade was the confidence-building mechanisms which followed the 2003 India-Pakistan ceasefire along the line, and it includes a bus service between Srinagar and Muzaffarabad (in PoK).
• It is hoped that people-to-people contact between those living in J&K and PoK would become obstruction-free where the suspension of LOC has become a Occasional disruption.
• It is estimated that since the barter trade commenced along two routes across the LoC in October 2008, provides employment to the order of more than 1.6 lakh days and the volume of trade has crossed ₹6,000 crore.

Background:

• The LoC trade was meant to facilitate exchange of goods of common use between local populations across the LoC in Jammu & Kashmir.
• The trade is allowed through two Trade Facilitation Centres located at Salamabad, Uri, District Baramulla, and Chakkan-da-Bagh, District Poonch. The trade takes place four days a week. The trade is based on barter system and zero duty basis.
• But unscrupulous and anti-national elements are using the route as a conduit for Hawala money, drugs and weapons, under the garb of this trade.
• According to ongoing investigations of certain cases by the National Investigation Agency (NIA), it has been brought out that a significant number of trading concerns engaged in LoC trade are being operated by persons closely associated with banned terrorist organizations involved in fuelling terrorism and separatism.
• Investigations have further revealed that some individuals, who have crossed over to Pakistan and joined militant organizations have opened trading firms in Pakistan. These trading firms are under the control of militant organizations and are engaged in LoC trade. After the Pulwama incident, Government of India has withdrawn the most-favoured nation (MFN) status to Pakistan. Inputs have also been received that in order to evade the consequent higher duty, LoC trade is likely to be misused to a much larger extent.
• So Government of India decided to suspend the LoC trade at Salamabad and Chakkan-da- Bagh in Jammu and Kashmir with immediate effect.and the issue of reopening of LoC trade will be revisited thereafter.

Trade across LoC:

• LoC trade is meant to facilitate exchange of goods of common use between local populations across the LoC in Jammu & Kashmir.
• The trade is allowed through two Trade Facilitation Centres located at Salamabad, Uri, District Baramulla and Chakkan-da-Bagh, District Poonch.
• The trade takes place four days a week.
• The Trade is based on Barter system and zero duty basis.

Why is it being suspended?

• LoC trade is being misused on very large scale. It has been revealed that the trade has changed its character to mostly third-party trade and products from other regions, including foreign countries, are finding their way through this route.
• Unscrupulous and anti-national elements are using the route as a conduit for Hawala money, drugs and weapons, under the garb of this trade.
• Significant number of trading concerns engaged in LoC trade are being operated by persons closely associated with banned terrorist organizations involved in fuelling terrorism/separatism.
• Some individuals have crossed over to Pakistan, and joined militant organizations. Trading firms established by them are under the control of militant organizations and are engaged in LoC trade.

What is LoC?

• Originally known as the Cease-fire Line, it was redesignated as the “Line of Control”
• following the Simla Agreement, which was signed on 3 July 1972.
• The part of Jammu that is under Indian control is known as the state of Jammu and Kashmir. The Pakistani-controlled part is divided into Azad Jammu and Kashmir and Gilgit–Baltistan. The northernmost point of the Line of Control is known as NJ9842.
• Another ceasefire line separates the Indian-controlled state of Jammu and Kashmir from the Chinese-controlled area known as Aksai Chin.
• The Line of Control divided Kashmir into two parts and closed the Jehlum valley route.

Consequences:

• It violates the zero-tariff barter arrangement along LOC trade between Jammu & Kashmir and Pak Occupied Kashmir (PoK)
• exchange of third-party items such as U.S.-origin California almonds is interrupted. Way to transfer funds by traders who operate via the Wagah border is suspended. It affects the trade of local goods along border communities.
• Article 370, the special status of J&K is disrupted in a course of election campaign.
• National Highway between Udhampur and Baramulla to civilian traffic to secure the movement of troop convoys ia disrupted.

Way Forward:

• The step has been taken without careful consideration of the consequences and also for political reasons. The suspension should be urgently revoked.
• The solution to violations of a trade agreement is to enforce the rules stringently, not stop exchange of goods and also to avoid the risk of livelihood of countless people on both sides of the LoC.