ISLAMABAD: In a dramatic break with the past, the government is inclined to granting the most favoured nation (MFN) status to India in a couple of months after getting a green signal from all stakeholders.
As a first step, the commerce ministry has sent a summary to all stakeholders, seeking their comments on changing the decades-old trade regime with India, according to sources.
The summary was sent a couple of weeks ago and the stakeholders have been asked to submit their comments within three weeks. If no objection is raised, the summary will be sent to the federal cabinet for approval.
The environment turned favourable for the decision in the wake of the recent tensions in Pakistan’s ties with its top trading partner, the United States. Pakistan’s exports at an estimated $4 billion in 2010-11 make the US the only country with which it enjoy surplus.
Experts say granting the MFN status to India will not only reduce tensions between the two countries but also earn support from the Indian government at a time when the US has accused Pakistan of having links with the Haqqani network of Afghanistan.
While the government appears to have put aside some crucial issues, including Kashmir, that have marred economic and trade relation between the two countries for decades, it has made the MFN decision conditional to the removal of non-tariff barriers by India.
Prime Minister’s Adviser on Textile Mirza Ikhtiar Baig said he hoped the MFN status would be granted to India next month.
Mr Baig, who recently visited India along with Commerce Minister Amin Fahim, said the formalities were likely to be completed ahead of the next meeting of the commerce secretaries of the two countries. Pakistani and Indian commerce secretaries are scheduled to meet in November in New Delhi to finalise the issue.
Indian Commerce and Industry Minister Anand Sharma is scheduled to visit Pakistan in November along with a delegation of businessmen. “I think the decision is more likely to be announced during the Indian commerce minister’s visit,” Mr Baig said.
Pakistan’s business community, according to Mr Baig, has already recommended to the government to grant the MFN status to India. This is a key recommendation as Pakistani businessmen were not prepared in the past to compete with Indian businesses and wanted a restricted regime.
Commerce Minister Amin Fahim also hinted during his five-day visit to India that the status would be granted, saying fulfilment of procedures were delaying the decision.
Mr Fahim said it was the priority of his ministry to grant MFN status to India at the earliest.
Last week, the commerce ministers of Pakistan and India set a target of $6 billion bilateral trade to be achieved in three years from the current $2.7 billion. There are also reports of $3 billion trade through illegal channels.
Pakistan will also change its trade regime from ‘positive’ to ‘negative list’ as required under the South Asian Free Trade Agreement (Safta). This was the key issue due to which Pakistan had not ratified the treaty, Mr Baig said.
The country has included 1,945 items in the positive list for trading with India, while the import of other items is banned.
Under Safta, Pakistan has committed to a sensitive (negative) list of 1,169 items.
Mr Baig said the negative list was likely to be reduced to only a few items and the issue would be settled by November.
To reciprocate this gesture, the Indian government would formally withdraw its opposition to an EU trade concessions package at the World Trade Organisation, he said. The WTO is scheduled to take up the EU waiver issue on Oct 20 and the Indian decision is likely to be announced the same day.
The adviser said that Indian government had agreed to improve the infrastructure on Wagah border and set up cold storages for perishable items. He said Pakistani businessmen had also raised the issue of non-tariff barriers with Indian authorities concerned.