Pakistan to switch to negative list for trade with India

This will pave the way for granting MFN status

Updated - December 04, 2021 11:42 pm IST

Published - February 29, 2012 11:16 pm IST - ISLAMABAD:

An Indian porter, left, hands over a sack of garlic to a Pakistani porter at Wagah, the joint India Pakistan border check post, India, Tuesday, July 26, 2005. Traders were exultant Tuesday after trucks laden with garlic and potatoes from India rolled across the border into Pakistan, marking the resumption of direct trade by road between the rival South Asian neighbors for the first time in more than half a century. (AP Photo/Aman Sharma)

An Indian porter, left, hands over a sack of garlic to a Pakistani porter at Wagah, the joint India Pakistan border check post, India, Tuesday, July 26, 2005. Traders were exultant Tuesday after trucks laden with garlic and potatoes from India rolled across the border into Pakistan, marking the resumption of direct trade by road between the rival South Asian neighbors for the first time in more than half a century. (AP Photo/Aman Sharma)

After considerable dithering, Pakistan on Wednesday decided to switch to the negative list approach for trade with India and phase it out completely by December-end. Giving its approval to the long-pending decision, the Cabinet also cleared a 1,209-strong negative list of items in which bilateral trade is barred; thereby opening up business opportunities in an estimated 6,850 commodities against the 1,900-odd items now traded.

Information Minister Firdous Ashiq Awan said all stakeholders, including the naysayers — Textile and Industry Ministries — were on board and the decision to normalise trade with India was unanimous.

This paves the way for granting the Most Favoured Nation (MFN) status to India as mandated by World Trade Organisation (WTO) commitments from next year onwards; thereby removing the discriminatory trade regime that Pakistan has had for India. India granted MFN status to Pakistan in 1996.

Given the sensitivities attached to the term MFN — which many here call Most Favourite (sic) Nation and in Urdu translates as sabse pasandida mulk — the Minister did not once refer to the WTO terminology except when asked a specific question.

Apprehensions

Till earlier this week, there were apprehensions that Pakistan may once again miss the self-imposed timeline it had announced for switching over to the negative list. Earlier, Indian officials were given to understand that the switchover would be announced during Commerce Minister Anand Sharma's visit mid-February. However, that decision was deferred as all stakeholders were not on board but during the visit itself the Indian side was assured that the switchover would be announced by month-end.

Initially, the Commerce Ministry had proposed a shorter negative list of just over 600 items. However the Industry Ministry appears to have had its way by getting nearly double that number in the protective list. And, for now, the Commerce Ministry has managed to weather the demand for staggering the normalisation of trade relations with India over five years.

Cross-LoC trade

As to whether normalisation of trade with India would tantamount to a dilution in Pakistan's position on Kashmir, the Minister said the matter was discussed in the Cabinet with Prime Minister Syed Yusuf Raza Gilani pointing to the Cross-Line of Control trade between the two Kashmirs.

Stating that 14,000 trucks had crossed over since the Cross-LoC trade began, Mr. Gilani's contention was that when the two main stakeholders in the ‘dispute' were engaged in trade, why should the rest of Pakistan not benefit from bilateral trade.

Pakistan decided to grant MFN status to India in early November 2011 but there has been considerable resistance to the move from within and outside the business community.

While some sections of the business community fear that cheaper Indian goods would swamp the domestic market, religious right wing organisations — led by Jama'at-ud-Da'wah leader Hafiz Saeed — sought to invoke traditional suspicions about India and its intent.

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