Apart from the tensions along the Line of Control (LoC), lack of much-needed groundwork is holding up Pakistan granting the Most Favoured Nation (MFN) status to India. Meanwhile, bilateral trade continues to be normal, according to a written reply in the National Assembly.

Islamabad maintains that the status — agreed to in principle — will be a top priority, but only after the composite dialogue resumes and border tensions are resolved.

Ministers who replied to related questions on Thursday and Friday said there had to be de-escalation of border tensions.

Level-playing field

While the federal Cabinet approved the status, the Ministry of Commerce was directed to bring a summary on how complete normalisation of trade could be achieved and how India could create a level-playing field, according to sources who were part of this discussion.

However, the Ministry of Commerce did not get back to the Cabinet. It should have ideally created a road map by February.

The whole ambit of trade relationships would have to be clarified. Since January, Indian and Pakistani soldiers have been killed on the LoC creating tension and stalling dialogue.

The Federal Cabinet, in its meeting held on November 2, 2011, endorsed the efforts of the Ministry of Commerce for full normalisation of trade relations.

On February 29, 2012, the Cabinet accorded approval of a Negative list of 1209 items for imports from India replacing the Positive list.

The Cabinet also approved phasing out of the Negative list with the timeline of December 31, 2012 in principle, subject to further progress on creating a level playing field for Pakistan’s exports to Indian markets.

The Ministry could not meet the timeline of December 31, 2012 as it was consulting other Ministries and private sector stakeholders. Elimination of the Negative List after the approval of the Cabinet will imply grant of the status, the reply said.

However, this has not been done so far.

Once India is granted the MFN status, trade costs will be reduced due to availability of raw materials; machinery will be available at cheaper rates and freight charges will be lowered. This will help give a positive edge to the overall competiveness in Pakistan.

Consumers can buy goods at competitive rates, and Pakistan will gain access to a large Indian market.

Also linkages with Indian market will improve access to better entrepreneurial, marketing, production and distribution practices, the reply added.

Some concerns

The Commerce Ministry also said trade relations were normal and trade in edible items was continuing and the imported items from India were tested and checked at the ports as per the Import Policy Order to ensure disease-free status.

National Assembly member from the Pakistan Peoples Party (PPP) Naveed Qamar told The Hindu that agriculture was heavily subsidised and things were cheaper in India.

“If those goods will flood our market, local producers will lose out. Some of these issues need to be clarified and the Pakistan government has to talk to agriculturists also, not only industrialists,” he said. Then there is the issue of some goods not being allowed to be brought by road that will increase costs.


Pakistan could explore FTA with IndiaSeptember 27, 2013