Pakistan will normalize trade with India by the end of this year, the government announced Wednesday, signalling Islamabad’s commitment to following through on a pledge last year to liberalize trade with its regional rival.
A government statement said Pakistan will phase out restrictions on most imports from India by December 2012, the Associated Press reports, reflecting weakening opposition to trade ties between the two countries from Islamist groups and the military.
Formal trade between the Pakistan and India is worth $2.7 billion a year, according to the BBC. The World Bank estimates that trade could increase to as much as $9 billion if barriers are lifted.
Islamabad currently imposes severe restrictions on a wide variety of goods, including sugar and textiles, and Pakistani traders can only legally import around 2,000 items from India.
Wednesday’s decision now means that Pakistanis can import anything from India except for 1,200 items on a ‘negative list’ which is to be eliminated by the end of the year, according to The Hindustan Times.
More from GlobalPost: India-Iran Bizarro World - Israel plays India, Iran plays Pakistan, and India plays US
Pakistan and India, which both possess nuclear weapons, have fought three wars since gaining their independence in 1947, two of them over the disputed region of Kashmir.
The push to remove trade barriers between the pair have fuelled hopes of closer political links, a more meaningful peace process, and, ultimately, resolution of the countries’ long-standing disputes.
Wednesday’s announcement follows an earlier offer from New Delhi not to oppose Pakistan’s preferential trade terms with major importers like the European Union, a major source of revenue for the struggling Pakistani economy.
In November, Pakistan’s cabinet unanimously decided to grant India Most Favored Nation (MFN) status, a significant breakthrough in relations. Formal peace talks between India and Pakistan broke down in the wake of the 2008 Mumbai attacks, blamed on Pakistan-based militants, but resumed last year.
More from GlobalPost: Old problems plague New India