AS the December 31 deadline for implementing major agreed decisions on boosting trade between Pakistan and India draws near, one finds momentum and anxiety in both camps to ensure that the new year ushers in a snag-free close bilateral economic relationship.

One such decision is the grant of Most-Favoured Nation (MFN) status to India by Pakistan.

Top leaders of two Indian states (provinces) visited Pakistan to lend weight to the emerging friendly atmosphere between the two countries while the Indian High Commissioner paid trips to the Lahore Chamber and APTMA House to know the reservations, if any, of the Pakistani business community on trade issues. He announced a special visa service for members of APTMA, in line with the SAARC model, with one-year triple entry visas covering 10 cities.

Indian Punjab’s Deputy Chief Minister Sukhbir Singh Badal, like other visitors from his state, was upbeat over landing in the other Punjab with which his state shares the same language, much of the culture and lifestyle. While showing his awareness of the prevailing sense of fear among a section of the Pakistani industrialists over MFN issue, he asked the businessmen, at Lahore Chamber, to ‘shed feelings of any threat’ from their Indian competitors. “Rather you should workout a strategy to be competitive. Indian Punjab has a big consumer market that should be captured by Pakistani businessmen,” was his advice.

Mr Badal felt concerned over the slow process of bilateral trade which, he was sure, would pick up only after all issues were resolved. But all issues may not be resolved so soon although the Grievances Council has been set up to address complaints of businessmen of the two countries. Pakistan may take up the issue of charging of customs duty on personal wearing by Indian customs authorities, in its first meeting as first case.

However, the elimination of bureaucratic hurdles and non-tariff barriers by India would take some time as implementation of three agreements, namely, on mutual recognition of standards, removal of trade grievances and customs cooperation has yet to be carried out, according to Commerce Minister Amin Fahim. He gave an update on the current status of trade relations with India to the members of the National Assembly committee on commerce on November 8. But the Indian diplomat says his country has taken up the issue of non-tariff barriers on Pakistan’s complaint.

The two countries have agreed to issue visas to businessmen for two categories. In the first category, a businessman declaring Rs0.5 million profit in a year would be eligible for a police-reporting visa valid for five Indian cities. In the other category, a businessman declaring profits of Rs3 million or above will be allowed to apply for a visa, which would be valid for ten Indian cities and would be exempt from police reporting. The procedure to validate the income claims of the visa applicants has yet to be determined.

Pakistan will complete the process of granting MFN status by December-end. India had earlier granted MFN status to Pakistan and had been asking for the same status from its neighbour. These days, says Amin Fahim, countries are more interested in looking for ‘markets for their products rather than war.’

However, despite elimination of negative list, liberalisation of trade and MFN status for India, Pakistan, the minister says, would still be putting in place safety valves to protect its industries such as motor cycle manufacturing, auto parts vendors and pharmaceuticals.

Currently, there are 138 items which can be imported from India through Wagha.

But Pakistan has now decided in principle to allow the import of all tradable items on land routes from India.

Such a decision will enable India to export more than 5,600 items via land route especially the Wagha boarder. Besides, long-hour customs facilities have been introduced on both sides of this border. A second gate for a land route with India has also been formally inaugurated and when infrastructure on Indian side is complete, trade will be faster between the two countries. Once the restriction is lifted, India will cut down its Safta Sensitive list by 30 per cent and by April 2013 this list would be curtailed to only 100 tariff lines and the peak tariff will not be more than five per cent.

Earlier Pakistan had allowed Indian imports under a positive list containing 1,967 items. After liberalisation of trade process which began in March 2012, the country has switched over to 1,209 items negative list which cannot be imported while all other items can be imported in Pakistan. As per its trade liberalisation plan, Pakistan is set to eliminate its negative list by next month’s end.

Meanwhile, banks in Pakistan and India, which intend to open branches in each other’s country, have been advised to complete the required documentation by November 30. Three Indian banks, namely, the Reserve Bank of India (commercial operations), Bank of India and Punjab National Bank, are opening branches in Pakistan while the National Bank of Pakistan and United Bank Limited have initiated the process to open branches in India. The opening of bank branches will greatly facilitate trade between the two countries Indians are looking for major investors in Pakistan in the near future because their brands are already popular. By making investments in Pakistan, they would be in a position to expand their operations towards Central Asia — their next target.—Ashfak Bokhari