FRIDAY APRIL 29: Pakistan and India agree to remove restrictions on cross border trade

ISLAMABAD: While pledging not to let the political and security situation hamper bilateral trade, Pakistan and India agreed on Thursday to put in place an institutional framework to remove all restrictions on cross border trade by moving from 'positive to negative list' along with undertaking a new initiative of power and petroleum products import.
However, both sides did not take up the issue of European Union (EU) concessionary package, as EU itself had granted the package and defended it. Besides, both the countries showed intention to explore the possibility of entering into a mutually agreed Preferential Trade Agreement (PTA) to further promote bilateral trade by extending tariff concessions.
Addressing a press conference, Secretary Commerce Zafar Mahmood said that the fifth round of talks was successful, constructive and productive as both the countries had created clear cut institutional mechanism to move ahead on addressing issues relating to bilateral trade.
Responding to question about EU package, he said "Concessionary package was given by EU, taken up by EU, tabled and defended by EU and Pakistan was only its beneficiary." Therefore, the EU package has not been made part of the negotiations," Mahmood said adding that India should extend its support.
He said that the issue of Afghan transit trade was dependent on the resolution of all outstanding political disputes creating more conducive environment. About the MFN issue he said it had never been linked with Kashmir dispute resolution but always with general political atmosphere and lowering tensions.
Responding to another question on agreeing to grant MFN status to India, he said "we have agreed to move from "positive list to negative list" what experts have termed it moving towards granting MFN status to India. Both the countries have formed Joint Working Group and task specific committees with clear deadlines to resolve the disputes relating to bilateral trade. He said that Pakistan had given a list of 20 items to India to exclude them from negative list.
"We have also taken up this issue and Indian side has informed that no specific trade barriers were mentioned in the list," he said, adding therefore no progress had been made on that issue. For the fifth round of the talks, which were held after a break of almost four years due to Mumbai carnage, both the countries decided adopting a structural approach towards resolving all the outstanding trade issues. The Indian delegation was led by Commerce Secretary Rahul Khullar and the Pakistani delegation by his counterpart Zafar Mahmood.
Pakistan agreed to replace "positive trade list with negative list by October 2011", said the Secretary. After abandoning the current positive list that consists of only 1946 importable items, the negative list would only include items that the business community thinks can hurt the local industry, he added. He said for the first time structural approach has been adopted to resolve trade issues and progress of all the issues was linked with the resolution of non tariff barriers to the trade.
He said all the chambers have raised no objection to the MFN, provided India lowers non-tariff barriers. He said India assured Pakistan that it did not have any Pakistan specific non-tariff barriers and if there was any the business community should highlight that, which would immediately be addressed by the Joint Working Group. The work of the Joint Working Group work would be over sighted by the Secretaries who would meet biannually.
Mahmood also added that Indian side agreed to facilitate opening branches of Pakistani banks in India. "Our investment policy is also open for all and we will also welcome Indian companies if they come forward to invest in Pakistan," he added. Meanwhile, according to a joint statement, the 5th round of India-Pakistan talks on Commercial and Economic Co-operation was held on 27-28 April 2011, in Islamabad.
The Indian delegation was led by Commerce Secretary, Rahul Khullar and the Pakistan delegation was led by Zafar Mahmood, Secretary Commerce. Both sides agreed that increase in trade and economic engagement would help not only in the mutual quest for national development, but also contribute to building trust between the two countries. The discussions were guided by the mutual desire to realise the full potential of bilateral trade. To facilitate this objective, they agreed to make efforts to create an enabling environment for trade on both sides. The two sides also agreed to encourage greater engagement between the private sectors of the two countries.
With this in view, the following decisions were taken: To build confidence, dispel misunderstandings and allay any misapprehensions, it is essential that governments in both countries support the business communities in promotion of bilateral trade. Further efforts would be made to make the bilateral trading environment more business friendly. Necessary outreach activities would be undertaken to bridge information gaps relating to the trade environment and economic opportunities.
To promote trade, both tariff and non-tariff barriers (NTBs) need to be reduced/removed. It was decided to establish a Working Group (WG) specifically dedicated to address and resolve clearly identified sector-specific barriers to trade. The WG would comprise technical experts and representatives of regulatory bodies directly concerned with the clearly identified barriers. The first meeting of the WG will be held by September 2011.
Both sides appreciated the significant progress made in developing physical infrastructure for trade through the Wagah-Attari land route. Closer co-ordination needs to be ensured to open the second gate and new dedicated roads for passenger and freight traffic. The Indian side intimated that its new Integrated Check Post is expected to be fully functional by October, 2011. To facilitate the co-ordinated effort of both sides, it was agreed that the Joint Technical Group for promotion of trade and travel would meet in June 2011 and thereafter every month to ensure adherence to the October 2011 timeline on both sides.
Both sides agreed to expand trade through Wagah-Attari by inter-alia (a) increasing trading hours taking advantage of the new infrastructure (b) expeditious clearance of cargo and (c) facilitating movement of large vehicles and containerised traffic. It was also agreed that Pakistan side would remove its present restrictions on trade by land route as soon as the infrastructure to facilitate mutual trade is completed. The timeline for this purpose would be before October, 2011.
It was noted that an informal and effective Customs Liaison arrangement was already operating at Wagah-Attari. It was decided to formalise the arrangements in the form of a Customs Liaison Border Committee which would meet at least once in two months to resolve any operational issue at the field level.
For harmonisation in customs procedures, facilitation of trade consignments, exchange of trade data and information, both sides agreed that the Sub Group on Customs Co-operation would meet in New Delhi before 15th June 2011. Nodal officers shall be notified by both sides before 15th May, 2011 to establish regular direct contact by email/fax/telephone on all matters relating to delay in clearance of trade consignments, trade document requirements, and other customs co-operation. It was agreed that Pakistan would send a draft Customs Co-operation Agreement within a month.
It was decided to undertake a new initiative to enable trade of electricity between both countries. To this end, a group of experts from both sides would examine feasibility, scope and modalities of such trading. Inter alia, the group may also address itself to issues such as suitable site(s) and routes for transmission lines, funding mechanisms and other related issues. The composition of the Group would be finalised before the end of June 2011 and the first meeting would be scheduled by October 2011.
Both sides also agreed to work out how to initiate and substantially expand trade in all types of petroleum products. A group of experts from both sides would be set up for this purpose before 15 June 2011. The Group would inter alia discuss trade arrangements, building of cross border pipelines and use of road/rail route, including the Munabao-Khokhrapar route. The Group's first meeting would be held before September 2011.
A new initiative to promote bilateral trade in Bt cottonseeds was identified. This would help Pakistan's farmers and its textile industry by significantly raising cotton yields and ensuring better cotton security. It was agreed to take this process forward by enabling Business-to-Business contact and governmental regulatory clearances.
Co-operation in the Information Technology (IT) sector would be encouraged through the private sector route. Pakistan recognised that grant of MFN status to India would help in expanding the bilateral trade relations. Both sides also agreed to remove the NTBs and all other restrictive practices which hamper bilateral trade.
It was informed by Pakistan side that it would take immediate necessary steps to ensure that non-discriminatory trade regime is operationalized at the earliest. The consultative process in this regard has been set in motion and information from all stakeholders including business chambers and trade bodies is being collected to replace the present "Positive list" with a "Negative list". It was agreed that this process would be completed by October, 2011.
Both sides expressed the intent to explore the possibility of entering into a mutually agreed preferential trade arrangement to further promote bilateral trade by extending tariff concessions on products of export interest to both countries. Both sides agreed that facilitating grant of Business Visas was essential to expansion of trade. It was noted that during the recent meeting of the Home Secretaries, it was decided to set up a Joint Working Group to look at the Visa regime.
Suitable inputs would be provided by both sides to this JWG, to realise the goal of easier access to Business Visas. In this regard the possibility of effective involvement of private sector through officially recognised joint chambers would be explored. While appreciating the need for business-to-business contact, both sides desired to create an enabling environment and encourage Chambers of Commerce and Industry on both sides to form officially recognised Joint Chambers at the apex and regional levels. Both sides agreed on the desirability of promoting bilateral investments and removing any impediments for such investments.
On opening of bank branches in each other's countries, both sides agreed that banking channels are important and the process needs to be fast tracked. Trade Development Authority of Pakistan (TDAP) and its counterpart organisation, India Trade Promotion Authority (ITPO) will collaborate on trade promotional activities. TDAP will send a draft MOU to ITPO for mutual co-operation by June 2011.
A Joint Working Group on "Economic and Commercial Co-operation and Trade Promotion" will be co-chaired by the Joint Secretaries of the respective Departments of Commerce. Implementation of decisions taken in this round and any other trade promotion issues that may arise from time to time will be reviewed by this JWG. Commerce Secretaries of both countries would meet bi-annually to oversee the functioning of this JWG. The talks were held in a very cordial and constructive atmosphere.