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Pak obliged to grant MFN to India under WTO

Pakistan agrees to open its market to more Indian goods by February next year as part of the ongoing process to move towards the normalisation of bilateral trade.

Commerce minister Anand Sharma (L) & Pakistan's secy of commerce Zafar Mehmood in New Delhi on Tuesday. Commerce minister Anand Sharma (L) & Pakistan's secy of commerce Zafar Mehmood in New Delhi on Tuesday.
Pakistan on Tuesday agreed to open its market to more Indian goods by February next year as part of the ongoing process to move towards the normalisation of bilateral trade.

Pakistan commerce secretary said Zafar Mahmood said that by February next year, the country would allow more Indian goods to flow in and restrict only a smaller number of goods, which will be covered by a "negative list".

This negative list will also be eventually phased out and then the most favoured nation (MFN) status announced for India would come into effect, which would lead to normal trade ties. Currently, Pakistan allows the import of only 1900-odd items from India covered in the "positive list". India's commerce secretary Rahul Khullar said once Pakistan moves from the positive list to the negative list, the bilateral trade would improve considerably.

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The bilateral trade at present is a paltry $2.65 billion. But trade between the two neighbours that has to be routed through third countries, such as the UAE and Singapore because of the existing restrictions, is estimated at around $10 billion. According to the joint statement issued after the commerce secretary level talks, "the move to full normalisation of trade relations shall be sequenced".

In the first stage, Pakistan will transition from the current positive list approach to a negative list. A small negative list shall be finalised and ratified by February, 2012.

Thereafter, all items other than those on the negative list will be freely exportable from India to Pakistan, adds the joint statement issued after the two-day talks.

Mahmood admitted that Islamabad has an obligation under the WTO rules to grant the MFN status to India. "MFN is not an award or a degree which we can give to Khullar saheb (India's commerce secretary).This would not need any notification or a document.

Under WTO rules, members are to grant MFN to each other. That obligation stands and will be completed when there is no list, either positive or negative," he told journalists. The two countries, which have been improving their political and economic relations in the past few months, formally agreed to move towards enhancing the preferential trading arrangements under the SAFTA process. Both sides will slash duties on a specified number of items in a phased manner.

However, more spadework needs to be done before the trade relations are normalised. Since India exports more goods to Pakistan than it imports, the neighbouring country faces a trade deficit which it would not like to see moving up.

Mahmood told Mail Today that Pakistan would be taking up the issue of non-tariff barriers with India. Islamabad has been constantly complaining that these barriers block Pakistani goods from entering Indian markets. Once this issue has been addressed, Pakistan's exports to India would also go up, he added.

He said that Pakistan has a trade surplus with both the US and Europe and both these are very advanced economies. However, India does not agree with Pakistan that it has deliberately put non-tariff barriers in place to keep Pakistan's exports out.

Courtesy: Mail Today