Analysis of Trade liberalization between India and Pakistan

States’ trade policies are primarily determined by their desire to increase their domestic benefit in international economic transactions and to minimize their adverse consequences. Mercantilism and liberalism have been competing ideologies based on fundamentally different concepts of states’ relationships and transactions among them. 1 The purpose of the paper is to analyze the issue of trade liberalization between India and Pakistan from the prevailing multi dynamic perceptions of Mercantilist as well as the liberalist and understand its impact on the inter-state relationship in case of Pakistan-India. Pakistan and India have checkered history of unresolved territorial dispute and historical animosity that prevents both states to develop bilateral trade ties and to benefit of their geographical contiguity, comparable GNPs and population. Statistics indicates that the level of trade between India and Pakistan is considerably lesser than what would be estimated of their GNPs, distance, and population, geographical and cultural peculiarities.