Pakistan on Wednesday extended Most Favoured Nation (MFN) status to India amid protests from jihadi outfits and the media. The decision was taken at the Cabinet meeting in which Commerce Secretary Zafar Mahmood set his ministry’s proposal in a historical perspective by pointing out that Pakistan had given MFN status to India during Quaid-e-Azam Muhammad Ali Jinnah’s time.

Even as the decision was announced to the media at the Cabinet briefing, Information Minister Firdous Ashaq Awan and Mr. Mahmood were bombarded with questions on why MFN status was being granted to India when the Kashmir issue was yet to be resolved.

Maintaining that the move would not dilute Pakistan’s position on Kashmir, the Minister pointed out that people of the two Kashmirs were already engaged in trade across the Line of Control. Admitting that Cabinet members raised questions about how the decision would impact the Kashmir cause, she said India and China had a flourishing trade despite territorial disputes.

Amid a volley of impassioned questions, Mr. Mahmood said India had granted MFN status to Pakistan in 1995 and World Trade Organisation (WTO) commitments mandated that Islamabad reciprocate. Also, he clarified that the MFN status would not alter the Afghanistan-Pakistan Transit Trade Agreement that allows Afghan goods to cross over Pakistan into India and not vice versa. At the same time, he added that Indian goods were allowed to move into Afghanistan over land through Pakistan between 1959 and 1965 as per an Af-Pak agreement.

Quoting surveys that show MFN status to India as a move beneficial to Pakistan, he said both countries were committed to dismantling the non-tariff barriers (NTBs). Asked if India had agreed to dismantle NTBs, he said both countries were in the process of doing so; adding that maintaining a positive list approach towards trade with India was in itself a NTB.

Pointing out that the Pakistani media tended to interpret MFN status in its literal sense, the Secretary said both countries had granted the status to each other after ratifying the General Agreement on Tariffs and Trade (GATT) in July 1948 despite the bloodletting of Partition less than a year ago.

This regime continued till 1965. Between 1947 and 1965, he said, Pakistan and India signed 12 trade agreements as per which four points for border trade were opened in Punjab, one each in Bahawalpur and Sindh besides a customs point on the Chenab river for timber trade.

Trading relations between the two countries resumed after the Simla Agreement by putting four items on the positive list. But, India moved ahead and granted MFN status to Pakistan in 1995 when WTO replaced GATT.