Pak 'in principle' decides to grant MFN status to India

The long-pending issue of Pakistan granting the most-favoured nation (MFN) status to India has resurfaced, with Pakistan Foreign Minister Hina Rabbani Khar announcing in the National Assembly that her country has decided in principle to grant the MFN status to India.

Khar was, in fact, echoing a long-cherished wish of India that got delayed after no announcement in this regard came during the visit of Pakistan Commerce Minister Makhdoom Mohammad Amin Fahim to New Delhi last month.

The visit by the Pakistani minister, the first such visit of a Pakistani commerce minister to India in 35 years, did not even talk of trimming its negative list of items. It just decided to double the bilateral trade to $6 billion by 2014.

 

“Pakistan has, in principle, decided to grant MFN status to India,” Pakistan-based newspaper, The Nation, quoted Khar as saying on Thursday. Granting of the MFN status means lowering of tariffs and Customs duties on products traded between the two nations. Trade between India and Pakistan reached $2.66 billion in 2010-11, compared to $4 billion with Sri Lanka. It is expected to increase to $10 billion in the next three years with the grant of MFN status and removal of non-tariff barriers, according to the Federation of Indian Export Organisations.

According to the World Trade Organization (WTO) rules, it is the fundamental right of a country to get MFN status from another member country. Grant of the MFN status by Pakistan would expand the number of products to be traded in a positive list of commodities exported by India.

At present, there are 1,938 items that are there on the positive list. Out of these, 190 tariff lines are allowed through the Wagah border, while the rest are being sent through the Mumbai port.
 

TRADE TIES
	2009-10	2010-11
India’s exports to Pakistan*	1,573.32	2,333.62
Growth (in %)	9.27	48.32
India’s Total Exports*	178,751.43	251,135.89
Growth (in %)	-3.53	40.49
Pakistan’s share in India’s exports (%)	0.88	0.93
India’s imports from Pakistan*	275.94	332.51
Growth (in %)	-25.45	20.5
India’s Total Import*	288,372.88	369,769.13
Growth (in %)	-5.05	28.23
Pakistan’s share in India’s imports (%)	0.10	0.09
Source: Ministry of Commerce * in $ million

After last month’s meeting, while nothing concrete was laid down on the table, both sides promised “constructive engagement” and “progress” in some of the issues of the most important issues such as a liberal business visa regime that would ensure hassle-free movement of traders and merchants between both countries.

“We have constructively engaged towards a liberalised business visa regime. We expect this matter to be expeditiously concluded before November,” Commerce and Industry and Textiles Minister Anand Sharma said after meeting his Pakistani counterpart Makhdoom Mohammad Amin Fahim. Fahim, was leading the largest ever business delegation of 50 businessmen.

Indian Commerce Minister Anand Sharma said India would be “supportive and constructive” in giving its consent on the trade-aid package by the European Union (EU) to Pakistan at the General Council of the WTO that is expected to take up the matter for the fourth time in its next meeting in Geneva.

According to the deal by EU, 75 tariff lines or products from Pakistan would get concessional access to the European markets for three years, out of which 67 are for zero tariff while on remaining eight tariff lines; tariff rate quotas (TRQ) will be applicable.