Pak mulls MFN status to India

Written by KG Narendranath | Toronto | Updated: Jun 28 2010, 05:33am hrs
In what could bolster the trade and economic relations between the two countries, Islamabad is considering reciprocating the long-unrequited Indian gesture of treating it as a most-favoured nation (MFN). In the recent foreign secretary-level talks between the two countries in Islamabad, Pakistani officials have indicated their willingness to replace the policy of keeping a restricted positive list of goods for India-Pakistan trade with a more accommodative negative list approach.

This change is policy stance would inevitably lead to India becoming an MFN to Pakistan.

Although India treats Pakistan as an MFN for many years, Islamabad has been unwilling to reciprocate. An MFN treatment doesnt imply any special or preferential treatment, but merely absence of discrimination. In other words, in a multilateral framework, it is akin to treating the country as a normal trading partner when it comes to opening up trade in specified goods or providing tariff benefits. In effect, a country that has been accorded MFN status would not be treated less advantageously than any other country with an MFN status. Senior Indian officials accompanying Prime Minister Manmohan Singh to the G20 summit here told media persons that the measure could open up scope for a variety of Indian goods to the Pakistani market. It will be a win-win situation for both countries and a booster to trade, a senior official said. The two countries have agreed to resume commence secretary-level talks for solidifying their trade relations.

Currently, Pakistan maintains a positive list of 934 tariff lines for India. This means in all items except these, no trade can take place between the two countries. A negative list is, in fact, more accommodative as it restricts trade only in those items. The negative list usually would be a much smaller one than a positive list and is reflective of greater trade relations.

Pakistans Planning Commission has recently estimated India-Pakistan trade potential at $10 billion. The proposed policy liberalisation would help realise a large part of this untapped potential. Under the Safta agreement in which both countries are signatories, tariffs on specified items would be eliminated or brought down to very low levels.

India is keen to diversify its development projects in Afghanistan, by engaging all ethnic groups, in the country, officials said. Afghanistan is rich in minerals. Our companies would definitely be interested to increase their presence in that country. They would look forward to doing more geophysical and scientific surveys in Afghanistan. However, India wouldnt look at its Afghanistan development projects merely from a business point of view, the sourced said. We dont see the Afghanistan projects purely as transactional or extractive, an official said.