India, Pak move towards preferential trade pact

With Prime Minister Manmohan Singh declaring that time has come to write a “new chapter” in the history of two countries, India today decided to move towards a Preferential Trade Agreement with Pakistan under South Asian Free Trade Area (Safta) that will lead to zero customs duty on all traded goods by 2016.

Meeting on the sidelines of the 17th South Asian Association for Regional Cooperation (SAARC) summit here, Singh and his Pakistani counterpart Yousuf Raza Gilani agreed that bilateral trade will be conducted on Most Favoured Nation (MFN) basis.

During an hour-long meeting, both leaders also decided to put in place a liberalised visa regiment that is being negotiated at the earliest and revive the Indo-Pak joint Commission that has not been in operation since 2005.

The Safta is an agreement reached in the 2004 SAARC summit in Islamabad which created a free trade area of 1.8 billion people in Bangladesh, India, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.

The decision to take the bilateral engagement to a new level came in the two prime ministers’ third meeting in the past 18 months after their talks at the 2010 SAARC summit in Thimphu when they decided to resume bilateral dialogue.

The decision also comes on top of Pakistan deciding to confer MFN status to India, 15 years after New Delhi granted such a status to Islamabad. After some flip flops in Pakistan following its last week decision, it has been clarified at the highest level in Pakistan that it will not backtrack on its decision.

The two leaders, who have had meetings on several occasions in the past three years, hit it off during their talks at the Shangri-La Resort here in a beach cottage besides the Indian Ocean. After a photo opportunity at the start of the talks, they were joined by their delegations, including the foreign ministers, foreign secretaries and others. Then the one-to-one hour-long interactions started between them.

The tone was set by Singh who said he always regarded Gilani as a “man of peace” and that both the countries have lost much time in the past in acrimonious debates. “The time has come to write a new chapter in the history of two countries and the era of accusations and counter-accusations should be behind us.”

In his interaction with journalists after the meeting, Singh said he was very happy that Gilani fully endorsed his view that the two countries had a unique opportunity and therefore the next round of talks should be more productive and result-oriented to bring them close together than ever before. He said his belief that Gilani was a man of peace was further strengthened in the past three years.

The prime minister said the dialogue process that started in Thimphu had yielded very positive results but more needs to be done. “We have decided that we will resume this dialogue with the expectations that all issues which have bedevilled the relations between our two countries will be discussed with sincerity that the two countries can bring to bear on the talks.”

Singh said the destinies of people of India and Pakistan are closely interlinked.

Gilani, in his remarks, said he and Singh have discussed all issues of concern to India and Pakistan.

“We had openly discussed all issues of concern, including core issues. The prime minister had been open. The PM placed all cards on the table and said he was ready to discuss all issues,” he said.

Gilani added that core issues, including water, terrorism, Sir Creek, Siachen, trade and Kashmir were discussed.

“I think that the next round will be more constructive, more positive and will open a new chapter in the history of both the countries.”

He also thanked India for backing Pakistan in its election to a non-permanent seat at the UN security Council and for market access in the EU.

Briefing journalists on the meeting, Foreign Secretary Ranjan Mathai said in the era of trade and economic relations, the two Prime Ministers agreed that the process of trade normalisation between their countries will be pursued to its logical conclusions. Trade will be conducted on MFN basis and all the countries in the South Asian region will move to meeting trade obligations under Safta.

“We will also move towards Preferential Trade Agreement with Pakistan,” Mathai quoted Singh as telling Gilani.

Mathai said the two prime ministers agreed that people are at the heart of the relationship between the two countries and people-to-people cultural contacts should be promoted. In this context, they decided that the liberalised visa regime be put in place at the earliest.