ISLAMABAD, July 7: The government on Friday rebutted Indian allegation of not granting it most-favoured nation (MFN) status under the South Asia Free Trade Area (Safta) agreement, saying that the issue had nothing to do with the regional agreement.

“The grant of MFN treatment to India is an issue of the General Agreement on Tariffs and Trade (Gatt), 1994. The Safta agreement does not contain any provision that trade relations between the two countries would function on MFN basis with the ratification of the agreement,” the commerce ministry said in a statement.

The Indian government has challenged Islamabad’s decision of not granting it the MFN status under the Safta agreement effective from July 1.

The Indian commerce minister has sent a letter to Saarc Secretary-General Chenkyab Dorji to convene a ministerial council meeting to resolve its trade related issues with Pakistan.

The commerce ministry said that if India intended to move the dispute settlement process under the Safta agreement, Pakistan was prepared to counter the challenge in accordance with the provisions of the agreement. The ministry, however, had not received any confirmation whether India had moved the Saarc secretariat for the settlement of the dispute, it said.

Following the ratification of the agreement, Pakistan had notified the first tranche of tariff reductions effective from July 1 on all items except those indicated in the sensitive list. The tariff reductions have also been allowed on goods which are importable from India.

The reaction followed reports that Indian Commerce Minister Kamal Nath had lodged a complaint with the Saarc secretariat in Nepal, challenging Pakistan’s decision to allow trade with India only on 773 items against the spirit of the agreement.