MFN status for India

Published October 13, 2011

THE respective Pakistani and Indian positions on the most-favoured nation status for each other thus far are a study in contrast. While New Delhi granted Islamabad MFN status some 15 years ago, the way for Pakistanis wanting to do business in India has remained largely blocked because of a number of non-tariff and tariff barriers. Pakistan has been dithering for all these years on reciprocating with an MFN status for India, and has been accused of not following the current economic script as enunciated by the World Trade Organisation. Yet, Islamabad has been giving concessions to imports from India by adding ever-newer items to the positive list of trade items from across Wagah over the years. This sets theory apart from practice. Every country has its own interests to protect. Consequently, it was not entirely unexpected that the Pakistani decision to award MFN status to India would coincide with the preparation of a negative list of items by the commerce ministry in Islamabad. These items will not be allowed to be imported from India to protect domestic interests, such as the all-important textile sector.

Speaking in the National Assembly on Wednesday, Foreign Minister Hina Rabbani Khar sought to de-link the MFN from some other issues between the two uneasy neighbours. She repeated Pakistan's stance on holding a plebiscite in Kashmir — a humanitarian issue close to Pakistani hearts and one that cannot be reduced to a mere political dispute. But after years of an unfruitful stand-off, a relationship based on mutual economic dependency may inspire new thinking and spawn hitherto unseen solutions.

The Pakistani commerce minister's recent visit to India after 35 years indicated a readiness to try the alternative to old hostilities. It would be good if officials here drew sufficiently upon the economic trade-off with India as a way of explaining the situation to the general public. It is not that Pakistan is not getting anything of immediate value from the MFN decision. New Delhi is willing to not oppose tariff concessions for Pakistani exporters in the European market that we so desperately crave. This give-and-take is one plausible reason why local businessmen appear to have softened their old position on the MFN for India. However, their mood will be defined by the entries on the negative list that is in the making at the commerce ministry. After all, few Pakistani businessmen ever opposed trade with India per se. Unlike countries, they seldom if ever mixed politics and business. Like countries, they were a bit apprehensive of unbridled business that could hurt their own little interests.

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