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Indian Minister of Commerce and Industry Anand Sharma (L) and Pakistan's Commerce Secretary Zafar Mahmood (R) talk during a meeting in New Delhi. - AFP Photo

NEW DELHI: India and Pakistan agreed on Tuesday to resume normal trade ties in February, paving the way to end decades of political mistrust and military rivalry.

“We have turned the corner,” Pakistan’s Commerce Secretary Zafar Mehmood told reporters at a joint news conference with his Indian counterpart Rahul Khullar. “We are talking of a complete normalisation roadmap.”

Mr Mehmood said in a separate TV interview that Pakistan’s decision to accord India a most favoured nation (MFN) status would be conveyed officially to the world trade body before February. Misgivings about the move among ‘stakeholders’ in Pakistan who fear open trade with India would be allayed by then, he said.

A lengthy joint statement focused on some complicated details to be still worked out but made it obvious that the move was cleared at the highest level. In fact, the desire was now to move towards preferential trade.

Recalling the Maldives meeting between their prime ministers, the joint statement said: “The political leadership on both sides directed that the two sides also work on enhancing preferential trading arrangements as part of the shared vision to significantly expand bilateral trade”.

The Pakistani side assured India that their cabinet had “given a mandate to the commerce ministry for complete normalisation of trade with India. It appreciated India’s support in WTO for the EU concession package for Pakistan which would give the Pakistani business community confidence and create an environment of trust and cooperation. The Indian side welcomed the cabinet decision and reiterated its support for the normalisation process and building trust.”

A focus in the statement was on fixing the infrastructure for arriving increase in trade through the rail and road border at Attari-Wagah. There was no mention though of the Munabao-Khokrapar option.

“Both sides reviewed the progress made in developing physical infrastructure for trade through the Attari-Wagah land route.

It was agreed that the Joint Technical Group overseeing the work would meet at the end of November 2011 and there would be follow-up monthly meetings in December 2011 and January 2012. It was also agreed that all infrastructure construction would be completed and fully operational no later than the end of February 2012.”

This timeline, the statement noticed, would coincide with the announcement of the Negative List by Pakistan, replacing the current Positive List regime. “The new trading regime will thus be applicable to all trade through the land route after the infrastructure at Attari-Wagah is commissioned.

There could be hope for electricity-starved Lahore as the commerce secretaries also explored the feasibility of trade in that sector.

“A broad understanding has been reached on possible grid connectivity between Amritsar-Lahore to enable trade of up to 500MW of power. The second meeting of the experts is scheduled to be held in Islamabad in the first week of December 2011.

It is expected that the group of experts will reach a final understanding on grid connectivity at this meeting,” the statement said.

It was agreed that the joint group would hold its first meeting before January 2012 to discuss trade in petroleum products. If all goes well, the commerce secretaries’ meeting would have a distinct regional echo.

“In terms of the clear mandate given by the political leadership, both sides agreed to move towards enhancing the preferential trading arrangements under the Safta process,” the statement said.

“Bilateral trade can be significantly expanded by extending tariff concessions on products of commercial interest. Both sides designated the joint secretaries in their respective ministries of commerce as chief negotiators for working on how to improve preferential trading arrangements under Safta.”