May 16, 2006	Tuesday	Rabi-us-Sani 17, 1427

ISLAMABAD, May 15: The World Bank has advised Pakistan to grant MFN status to India for increasing the economic ties between the two countries. Presenting the recommendations of the bank’s report “Challenges and potential of Pakistan-India trade” here at a seminar, Mrs Zareen F. Naqvi, an official of the bank, proposed three-pronged strategy to Pakistan including the granting of MFN status to India for tapping the enormous potential for closer economic ties between the two countries.

She said that Pakistan should grant MFN status to India with eventually signing of a free trade agreement with New Delhi. “If it is politically not palatable, then Pakistan should replace its current positive list with a negative list and restrict a minimum number of goods banned for importing from India,” she added.

She said for trade liberalisation Pakistan and India should improve political relations across a broad spectrum of issues and build on the recent gains from the composite dialogue process (CDP).

The two countries should continue to discuss ways to streamline their domestic trade regimes to provide equal opportunities to producers and exporters, she added.

Pakistan should, among other things, negotiate issues of agriculture subsidies, high specific tariffs on textile products and protection to the small scale sector in India, she suggested.

The report, however, did not mention the reasons, which restricted the entry of Pakistani goods into Indian market while New Delhi had already granted MFN status to Islamabad.

Another World Bank official Philip Schuler highlighted various findings of the study and said that downstream industries would benefit from cheaper inputs and greater competitiveness.

The two countries when moved from conflict to peace, the trade increase by more than 400 per cent. He was of the opinion that trade was distorted during the time of conflicts the recent one was the Kargil crisis.

World Bank Country Director John Wall also asked for liberalisation of trade between the two countries. He said that the study was conducted on the request of the ministry of commerce to find out ways for increasing trade with India.

Commenting on the findings of the study, Secretary Commerce Syed Asif Shah said that Safta was a regional treaty and it could not bind Pakistan to grant MFN status to India.

He said Pakistan would continue trade with India through positive list until further progress in the composite dialogue. However, he added that the expansion of the list was under consideration of the government.

PIDE former director Dr A R Kemal said that trade liberalisation with India means closure of some industries in Pakistan, which would not compete with Indian cheaper imports.

He said currently South Asian countries were negotiating FTAs with each other, which he said endangered the future of the Safta agreement. He said there should be at least a level-playing field for both countries.

FPCCI representative Mohammad Sulaiman said that the WB report did not mention the non-trade barriers (NTBs) especially related to agriculture and textile products in India. He said it was not possible for Pakistan to export products to southern part of India.

He pointed out that every state in India had its own duties and taxes besides cumbersome procedures, which halted the movement of goods from one state to another.

Joint Secretary Shahid Bashir said India had included products of Pakistan’s interest in their negative list under Safta.

He said that India had a long list of NTBs which restricted entry of Pakistani goods into that country.