In order to boost the trade relations between the two neighbouring countries, Pakistan has agreed to extend the most favoured nation (MFN) status to India. Both the countries have jointly announced the blueprint to spur trade between the two nations at the end of a two-day meeting of the commerce secretaries on Thursday in Islamabad, an official statement said.
Currently, India accords MFN status to Pakistan but Islamabad doesn?t reciprocate this gesture.
India has been seeking MFN status from Pakistan for a long time, which would lead to the country getting the same treatment as other countries in terms of allowing exports. Pakistan so far has been allowing exports from India on the basis of a small positive list of items instead of trading the normal way using a negative list of excluded items. Pakistan said it will move to a system of trade-based on negative list as opposed to the current positive list.
The two countries have also decided to set up a working group to discuss removal of tariff and non-tariff barriers to trade between them. It will meet first on September this year. Groups of experts have been set up for expanding trade in petroleum products and to enable trade in electricity.
The joint declaration issued at the end of the fifth round of talks on commercial and economic cooperation puts firm timeline to every proposal and sets up a mechanism to review the progress through bi-annual secretary level consultations.
Hailing the new beginning in Indo-Pak economic relations FIEO president Ramu S Deora said that the biggest achievement for us is recognition by Pakistan that grant of MFN status would expand bilateral trade re-affirming India?s stand. ?The process has already stated with commitment to move from positive list to negative list of items. The bilateral trade will cross $10 billion in next three years,? Deora said.
FIEO would be taking steps for setting up joint chamber with its counterpart in Pakistan to facilitate trade. The focus of joint communique is on removal of non-tariff barrier which is key to trade expansion, observed Deora. ?FIEO, Exports of Bt cotton will benefit farmers and consumers in Pakistan and will help in gap in cotton production,? he said.
The Pakistan side, led by its commerce secretary Zafar Mehmood, said it would take immediate steps to ensure that non-discriminatory trade regime is operationalised at the earliest. The Indian contingent was headed by commerce secretary Rahul Khullar.
The trade secretary level talks were held after a gap of more than two years following the break in all interaction in the wake of Mumbai terror attacks.
According to a study by Icrier, the potential of India-Pakistan trade is pegged at $14.3 billion with India exporting about $11 billion worth of goods to Pakistan and importing $3 billion.
However, the current level of bilateral trade between the two countries is about $2 billion. Indirect trade between the two routed through third countries is estimated at another $2 billion, Icrier study said.