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Friday, October 14, 2011

MFN status to India

REPORTS had been trickling down for months about possibility of Pakistan granting the coveted status of ‘Most Favoured Nation’ (MFN) to India but Foreign Minister Hina Rabbani Khar confirmed in the National Assembly on Wednesday that a decision in principle has been taken to accord this status to New Delhi. In fact, the decision was taken during Commerce Minister Makhdoom Amin Fahim’s recent visit to India and it was widely believed that it was a quid pro quo for dropping of India’s objection at WTO to Pakistan’s bid for securing more market access to EU.
Some lobbies had been opposing grant of MFN status to India on two grounds — New Delhi’s obstinacy to move towards resolution of political issues especially the core issue of Jammu and Kashmir and its protectionist attitude as demonstrated in non-tariff barriers that impeded any increase in Pakistani exports to India despite grant of MFN status to Pakistan way back in 1990s. It was believed that in this background the grant of MFN status would not produce any positive result except negative consequences for our own industry. However, as Makhdoom Amin Fahim was accompanied by a representative delegation of the business community during his Indian visit it is obvious that the decision to grant MFN status to India has the backing of the most concerned stakeholders in the process i.e. the businessmen of the country. Otherwise, too it is quite obvious that the move could reap benefits for the country if implemented in a sensible manner to ensure that our industry is not harmed in any way. Increased trade among neighbouring countries is always beneficial because of proximity factors that reduce cost of transportation and cut short the delivery time to the barest minimum. That is why other countries of the world are going for both bilateral as well as regional trading arrangements and this region should not be an exception. It would also prove to be a major confidence building measure but it should lead to the much-needed CBM i.e. resolution of the core issues, which would give a tremendous boost to multi-faceted cooperation between the two countries on a sustainable basis.
THE respective Pakistani and Indian positions on the most-favoured nation status for each other thus far are a study in contrast. While New Delhi granted Islamabad MFN status some 15 years ago, the way for Pakistanis wanting to do business in India has remained largely blocked because of a number of non-tariff and tariff barriers. Pakistan has been dithering for all these years on reciprocating with an MFN status for India, and has been accused of not following the current economic script as enunciated by the World Trade Organisation. Yet, Islamabad has been giving concessions to imports from India by adding ever-newer items to the positive list of trade items from across Wagah over the years. This sets theory apart from practice. Every country has its own interests to protect. Consequently, it was not entirely unexpected that the Pakistani decision to award MFN status to India would coincide with the preparation of a negative list of items by the commerce ministry in Islamabad. These items will not be allowed to be imported from India to protect domestic interests, such as the all-important textile sector.

Speaking in the National Assembly on Wednesday, Foreign Minister Hina Rabbani Khar sought to de-link the MFN from some other issues between the two uneasy neighbours. She repeated Pakistan`s stance on holding a plebiscite in Kashmir — a humanitarian issue close to Pakistani hearts and one that cannot be reduced to a mere political dispute. But after years of an unfruitful stand-off, a relationship based on mutual economic dependency may inspire new thinking and spawn hitherto unseen solutions.

The Pakistani commerce minister`s recent visit to India after 35 years indicated a readiness to try the alternative to old hostilities. It would be good if officials here drew sufficiently upon the economic trade-off with India as a way of explaining the situation to the general public. It is not that Pakistan is not getting anything of immediate value from the MFN decision. New Delhi is willing to not oppose tariff concessions for Pakistani exporters in the European market that we so desperately crave. This give-and-take is one plausible reason why local businessmen appear to have softened their old position on the MFN for India. However, their mood will be defined by the entries on the negative list that is in the making at the commerce ministry. After all, few Pakistani businessmen ever opposed trade with India per se. Unlike countries, they seldom if ever mixed politics and business. Like countries, they were a bit apprehensive of unbridled business that could hurt their own little interests.