MFN status to India

The federal cabinet approved a proposal granting the Most Favoured Nation (MFN) status to India encompassing a 20 percent reduction on 233 tariff lines in the sensitive list. The total number of tariff lines in the sensitive lists of member countries in the South Asian Free Trade Area (Safta) is as follows: Pakistan 1169, India at a much lower level of 865, Bangladesh 1254, Sri Lanka 1065, Nepal 1313, and the smaller economies of Maldives at 671 and Bhutan at 157. The MFN is the extension of bilateral relationships following both the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organisation (WTO) through adherence to norms of reciprocity and non-discrimination and mainly includes reducing tariffs and quotas. The Pakistani Commerce Minister and the Commerce Secretary are on record as having stated that all stakeholders, including traders, importers, and industrialists were taken on board and were all supportive of granting of MFN status to India. Analysts also maintain that the decision to grant MFN status to India had the approval of the army, a key player in our relations with India. Given the claim that there is unanimity of views of various relevant pressure groups in the country with respect to the MFN status to India the statement by Minister of Information Firdous Ashiq Awan that the decision was "in accordance with the philosophy" of the Quaid-e-Azam Mohammad Ali Jinnah, a man whose philosophy in all other areas is obviously, consistently and blithely ignored by successive governments, brings to mind the proverb that something is rotten in the state of Denmark. And the source of this rottenness may well be with India's notorious use of non-tariff barriers (NTBs) to limit imports, a charge that was also levelled by the US Commerce Secretary, Gary Locke, earlier this year. NTBs remain a major issue in other countries' trade relations with India, however it is well-known that some of India's NTBs are Pakistan-specific. These, according to Tariq Saeed, a prominent businessman and former President of the Federation of Pakistani Chambers of Commerce and industry and SAARC CCI, include dual standards in the name of quality and standards which must be done away with by the Indian government to enable our industrialists a level playing field with other countries. India has also taken other restrictive trade measures that include subsidies and anti-dumping actions that negatively impact on imports from Pakistan. In response the government of Pakistan has indicated that it is committed to eliminating India's formidable NTBs prior to the implementation of the MFN next year. In other words, one would hope that till such a time as India removes all its non-tariff barriers in trade with Pakistan, or at least levels these with what it allows its other trading partners, the government of Pakistan must impose reciprocal non-tariff trade barriers while vigorously pursuing negotiations with the objective of enabling the peoples of India and Pakistan to benefit economically from the envisaged doubling of trade between the two countries. India in return for the MFN status is reportedly going to withdraw its objections to allowing the European Union to grant Pakistani exporters a time-barred trade concession as a measure to support the 2010 flood victims. This concession is unlikely to cost India anything in terms of lost export revenue and one has to admire India's skilful negotiations with the Pakistani government, which is a win-win situation for it. Be that as it may, it is relevant to note that trade expansion will also benefit Pakistan and at the same time set an environment conducive to peace in the region through the reactivation of the composite dialogue. Trade however must be, as agreed in the WTO, be on the basis of reciprocity. Copyright Business Recorder, 2011