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Q&A: Zafar Mahmood, Commerce Secretary, Pakistan

'Both India, Pak normalising trade arrangement'

Nayanima Basu  |  New Delhi 


The government of Pakistan is moving steadily to normalise trade relations with India, including doing away with any ‘negative list’ for products, its commerce secretary, Zafar Mahmood, assures Nayanima Basu. Edited excerpts:

This was your second meeting with commerce secretary Rahul Khullar after the breakthrough meeting in April in Islamabad. How was today’s meet?
We discussed all issues on normalisation of the trade process. We briefed the Indian side about the steps being taken in Pakistan to do so. The Indian side was fully supportive, they showed understanding and demonstrated confidence in the process we have undertaken. We are working on certain timelines, with mutual content.

On what matters have you fixed timelines?
Various issues we’d discussed earlier, such as trade in electricity, in petroleum goods, opening of bank branches. For everything we want a timeline, because we will review the progress and then we will move forward to the next thing in the agenda.

What about MFN? Could you clear the air on this?

We briefed the (Pak) Cabinet about the trade normalisation process, which is ongoing. MFN (most-favoured-nation trade status) is not a certificate or a degree awarded to one country by the other. By simply being co-signatory to the World Trade Organisation (WTO) and GATT before that, we are automatically obligated in adopting MFN.

India and Pakistan were not observing MFN for each other from 1965 till 1995. Both were not compliant with GATT and then WTO. India did away with the positive list from 1995, but we are still continuing because the businessmen of Pakistan were concerned that India was adopting restrictive practices by having a non-tariff barrier. The atmosphere was not right.

Now, through this trade liberalisation process, we are moving in a direction in which there will be no list and there will be trade on MFN basis. We will do this gradually, after we eventually phase out the negative list by next year.

When are you doing away with the negative list?
We will phase out the negative list completely. We are following two tracks. In the first, we are having a positive list of 1,946 items for trade with India. In this, we added 12 items this year. We are now replacing the positive list with a negative list, which will be much smaller, containing fewer items. I hope we will be able to take this to our Cabinet by end-January or the beginning of February.

How many items in the negative list before you phase it out completely?
We don’t know at this time. We are talking to stakeholders, with their own wish list. There are about 8,000 tariff lines being traded. Of these, less than 200 items are importable from India at the moment. When we replace this list, a massive range of items will be importable, almost everything under the sun, except those included in the negative list. We intend to phase out this negative list over a period of time, as it is under WTO obligation.

What about the sensitive list under Safta (South Asian Free Trade Area)?
This comes under a preferential trading arrangement under Safta, applicable to products other than those in the sensitive list. This is a no-go area for the preferential tariff regime. The effort on the part of all countries under Safta is to reduce the sensitive list. We reduced it by 20 per cent this month, through the Cabinet. We wanted to demonstrate our commitment to the SAFTA members. We are hoping to reduce it further.

How is the progress on a liberal business visa regime?
The home ministry of India and the interior ministry of Pakistan have done a good job. Their new agreement on this issue is a substantial improvement over the previous deal. However, there is some scope for improvement. I have requested the secretary of (our) interior ministry to further improve the conditions of visas. They will take it up with the Indian home ministry. After signing the agreement, which is in the process, both sides will be taking up the matter with their Cabinets. It is now not a matter of months, but weeks.

When do you see trade over the Wagah-Attari route getting normalised, as we have already crossed the deadline of October on opening the second gate?
We will open the second gate soon and we will allow trade for longer hours. We hope the infrastructure on both sides would be ready by February. This will bring a sea change in our trading arrangement and would benefit the up-country industry.

When do we see movement in a Preferential Trade Agreement, which both Prime Ministers discussed during the recent Saarc summit?
PTA is a step above the normal trading arrangement. At this moment, we are concentrating on normalising this (latter) arrangement. Under Safta, we have a track for a PTA and that would come into operation once our trade gets normalised with India.

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First Published: Tue, November 15 2011. 00:07 IST