MFN status to India: government, traders on the same page

The government and business community are on the same page with regard to expansion of trade with India, in addition to granting the Most Favoured Nation (MFN) status and removal of non-tariff barriers. This is the crux of the poorly attended Advisory Council meeting of Commerce Ministry which met on Wednesday with Secretary Commerce, Zafar Mahmood in the chair to discuss the direction of Trade Policy 2011-12.
Commerce Minister, Makhdoom Amin Fahim did not attend the meeting because voting on the budget in the National Assembly was taking place at the same time. Secretary Commerce, however, failed to mention some of the unfulfilled promises he made last year with the representatives of business community. Chief Executive, Trade Development Authority of Pakistan (TDAP), Tariq Iqbal Puri and President FPCCI, Senator, Ghulam Ali were also present in the meeting.
According to the Commerce Ministry the country's exports are expected to touch $26 billion at the end of current financial year. "Exporters should focus on India, especially Halal food, which can capture huge Indian Muslim market. Tariff structure under SAFTA is already too low and the government will provide further facilities," said Secretary Commerce in reply to different queries raised by the representatives of business community.
Commerce Ministry has received about 500 proposals - mostly related to India. Secretary Commerce also apprised the Advisory Council that a big delegation is expected to visit India under the leadership of Commerce Minister. He advised the representatives of different chambers and associations to take up issue of Non Tariff Barriers (NTBs) during the visit with the relevant Indian officials.
Muhammad Saeed, President Karachi Chamber of Commerce and Industry (KCCI), the largest trade body in the county, also supported expansion of trade with India and grant of MFN status. He, however, criticised Free Trade Agreement (FTA) with China, saying that this pact has destroyed Pakistan's local industry. He urged the government to review the FTA with China.
Chief Executive TDAP, who conducted proceedings of the Council in the absence of Secretary Commerce, revealed that the Commerce Ministry is consulting all the stakeholders on expansion of trade with India. Commerce Ministry, he added, wants to finalise its strategy prior to the next round of talks with India scheduled to be held in November 2011. He also urged exporters to provide documentary proof of NTBs so that these could be presented before the Indian negotiators.
"Don't worry about trade with India, Iran, China and Central Asian Republics (CARs)," Puri added. Secretary Commerce, who reached the meeting three hours after it began apologised and explained that he was busy briefing the Prime Minister about Generalised System of Preferences (GSP) as well as on a bill that has been tabled in EU Parliament.
According to him, Pakistan has ratified 27 International Conventions relating to human rights, good governance and environment. Pakistan has raised several reservations on two conventions which have now been revised after consultation with the Prime Minister's Advisor on Human Rights, Mustafa Nawaz Khokhar.
Pakistan fulfils the criteria of vulnerable country and is not classified as a high income country and the five largest sections of its GSP covered exports account for more than 75 per cent of total GSP covered imports. The GSP covered exports to EU account for less than 1 per cent of total EU GSP covered imports.
Five largest sections of its GSP covered exports account for more than 90 per cent of total GSP covered exports to EU. According to the presentation of Commerce Ministry, Pakistan does not satisfy the second criterion (import vulnerability threshold) as its exports to EU are more than 1 per cent of EU's imports (1.13 per cent as per data for the period 2007-09).
Pakistan regards the GSP plus criteria as discriminatory. Data on the countries eligible for GSP plus scheme reveals that many countries with per capita income higher than Pakistan's eg Peru, El Salvador, Guatemala and Venezuela are beneficiaries of this scheme. This means "similarly situated" countries are being treated differently.
Secretary Commerce further stated that Pakistan expects that the import vulnerability threshold would be raised to 1.5 per cent soon and Pakistan would get GSP plus status. The major areas for future export development will be as follows:
(i) creating synergies to exploit the potential of agriculture sector both as direct export and as party of export supply chain; (ii) value addition in cereals and grains, vegetable, fruits and flowers, live stock and poultry and fisheries; (ii) creation of sector specific awareness about TBTs in importing countries; and (iii) launching of export oriented development and promotion programs for agro products through focused policy interventions based on informed recommendations of practitioners and technical experts. Secretary Commerce urged the Chambers, Trade Bodies and Associations to send their proposals for the Trade Policy 2011-12.