MFN talks with Pak to take backseat in Agra summit

Written by Kirtika Suneja | New Delhi | Updated: Jan 15 2013, 07:51am hrs
With a Pakistani delegation leaving the Vibrant Gujarat summit midway and doubts being cast on Pakistan sending a high-level delegation for the investment summit in Agra, talks between the two nations on the MFN (most favoured nation) issue may take a hit. While New Delhi is unhappy with Islamabad not granting India MFN status by the 31 December deadline, Pakistan commerce ministry officials say that delayed internal consultations have led to missing the deadline. Moreover, MFN talks may take a backseat in the wake of the recent tensions along the LoC due to killing of two Indian soldiers by Pakistani troops.

Nothing is known officially on whether the delegation will come or not, but till now a ministerial visit is on schedule. As for the delayed MFN status, Pakistan is still in the process of internal consultations, said a commerce ministry official.

The commerce ministry, along with the Uttar Pradesh government and Confederation of Indian Industry (CII), is jointly organising the 19th edition of the Partnership Summit in Agra with the theme Global Partnerships for Enduring Growth.

Pakistan was supposed to grant MFN status to India by the end of 2012. However, with tension mounting, this seems unlikely.

Over the April-December 2012 period, Pakistans exports to India rose more than 50% while those from India to Pakistan declined by 10%. The number of cargo trucks from Pakistan to India increased by 101% .

India had granted Pakistan the MFN status under the World Trade Organisation (WTO) rules way back in 1996, which means that in terms of trade matters it would be treated like any other country. MFN status doesnt imply any additional benefits, but merely that the country concerned will not be discriminated against in terms of trade.

Commerce ministry officials also attributed the delay to Pakistans agriculture department's demand that, like India, their agriculture should be protected and the government should provide central agricultural subsidies.

It is a known fact that India gives agricultural subsidies and if Pakistan has similar needs, they should not link it with an international agreement, the official added.

Ministry officials also added that Islamabad has made slow progress on other commitments. During secretary-level talks in November last year, Pakistan had offered its high-capacity wagons to be accepted in India and, despite Indias request for specifications, Pakistan did not send them.

In February last year, Pakistan eased curbs on imports from India by shifting from a positive list of imports that allowed less than 2,000 goods to be imported from India to a negative list.

The transition towards full normalisation of trade relations with India was initiated by moving from a positive list regime to a negative list regime.

Pakistan had earlier moved its Cabinet for removal of restrictions on trade through land route and notified the removal of all restrictions on trade by the Wagah-Attari land route, after which India would bring down its SAFTA sensitive list by 30% before December, 2012, keeping in view Pakistans export interests.

Thus, before the end of 2017, both India and Pakistan would have no more than 100 tariff lines in their respective SAFTA sensitive lists. Before the end of 2020, except for this small number of tariff lines under respective SAFTA sensitive lists, the peak tariff rate for all other tariff lines would not be more than 5%.