Minister denies army opposing grant of MFN status to India

Updated May 15, 2014


Commerce Minister Khurram Dastgir Khan addressing the participants of Business Roundtable conference on the textile and apparel sector at USTR office. -Photo by APP
Commerce Minister Khurram Dastgir Khan addressing the participants of Business Roundtable conference on the textile and apparel sector at USTR office. -Photo by APP

WASHINGTON: Giving India status of the most favoured nation (MFN) is not necessary, says Commerce Minister Khurram Dastgir Khan, dismissing speculation that Pakistan is ready to make the offer after a new government is installed in New Delhi.

The minister also tried to dispel the impression that the PML-N government was ready to make the offer but the military was opposing the proposal.

“Giving (India) the MFN status is not necessary. We are offering non-discriminatory trade access on a reciprocal basis,” said Mr Khan when asked at a news briefing if Islamabad would offer the status to India now as the elections were over and a new government might soon take charge.

“We have received no formal communication from the army,” said Mr Khan when he was asked if the military was opposing the suggested move.

An MFN status binds the two countries to grant equal trade advantages to each other. India granted the status to Pakistan in 1996. Pakistan, however, is reluctant to reciprocate because it would require it to allow transit trade between Afghanistan and India.

Pakistan fears that this will increase India’s influence in Afghanistan and New Delhi will use it to create problems on its Western borders.

“The objective behind the MFN status is granting non-discriminatory trade access and we are willing to do so,” said the commerce minister while explaining the government’s policy on the issue.

The minister said that Pakistan was willing to engage the new Indian government “with an open mind” for talks on all issues, including trade.

In March, senior officials at the commerce ministry indicated that Pakistan was ready to grant the MFN status to India “within days”. The speculations were further strengthened when the commerce minister postponed a trip to the US, apparently for visiting New Delhi for offering the MFN status.

The visit did not take place and reports in the Pakistani media suggested that Islamabad had decided to delay the move because of the Indian elections. Now it wanted to make a goodwill gesture to the next Indian government by offering the MFN status.

Diplomatic sources in Washington say the minister’s reluctance to use the term MFN does not necessarily mean that Islamabad has decided not to make the offer. They insist that Pakistan may still offer the status to India once the new government takes over there.

Mr Khan also told the briefing that Pakistan was seeking the same arrangement for preferential trade with the US that it had with the European Union.

He said that Pakistan had joined an alliance of 20 nations to lobby for it. “We are working with the alliance and we hope that Congress will re-authorise the General System of Preferences (GSP) status for all of us.”

The 20 nations enjoyed the GSP status till July 2013, when it expired and the Congress did not re-authorise it.

The GSP is a programme designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from one of 123 designated beneficiary countries and territories.

“The GSP is good but we want a GSP Plus arrangement, the same that we have with the European Union,” Mr Khan remarked. “The US response is very positive.”

In December last year, the European Union granted GSP Plus status to Pakistan, allowing almost 20 per cent of Pakistani exports to enter the EU market at zero tariff and 70 per cent at preferential rates.

“We qualified for this on merit and we want the same arrangement with the US, also on merit,” the commerce minister said. “The US government is keen to help us and we have sympathisers on the Capitol Hill as well.”

The minister said the United States and Pakistan were also exploring the possibility of concluding a bilateral investment treaty (BIY).

In February, the United States proposed a new template for BIY talks, as the old template lapsed in 2012. Pakistan has some reservations on the non-conforming measures in the proposed template.

The Strategic Plans Division and the Pakistani military have also raised objections over the insertion of security-related clauses in the draft treaty.

“We will soon be sending a detailed non-paper, spelling out our reservations on the new template,” Mr Khan said.

Published in Dawn, May 15th, 2014