Pakistan facilitating fair trade, Indian NTBs retarding progress

“Pakistan has gone an extra mile in facilitating India for trade liberalisation,” a commerce ministry official speaking on condition of anonymity, said while talking to Profit. “However the real roadblock in trade liberalisation remains to Non Tariff Barriers (NTBs) by India, due to which trade volumes could not increase in the last 16 years despite India having granted us the MFN status,” he added.
Addressing bottlenecks
According to reports, the federal cabinet on 2nd November approved the proposal for granting India the MFN status in an attempt to improve bilateral relations between the two countries. “The Indian counterparts during their talks with the Federal Commerce Minister, Makhdoom Amin Fahim had acknowledged that Non Tariff Barriers were major bottlenecks that have served as an impediment to increasing trade volumes,” commerce ministry sources explained.
Non Tariff Barriers
In the year 2011, Indian exports to Pakistan stood at $1.445 billion, whereas exports from Pakistan to India amounted to a marginal $286 million. “While India granted Pakistan the MFN status in 1996, the Non Tariff Barriers such as visa issues, and conditions whereby exporters are expected to have an office in India have retarded progress in establishing a fair trade regime. It is beyond the scope of understanding that India expects indigenous exporters from Pakistan to have offices in India, when they might not even be granted visas,” commerce ministry sources elaborated.
MFN status to India
Pakistan has in principle agreed to grant India the MFN status, while India in return has decidedly made its intentions clear that they would not raise objections to the Pak-EU unilateral trade concession. According to the EU preferential Trade package, Pakistan will be given duty free access to European markets mainly for 75 textile related products. This preferential trade package was given to Pakistan in light of the devastative floods that hit the country in 2010, resulting in a cumulative loss of $43 billion to Pakistan’s economy. “The cabinet unanimously decided in principle to accord MFN (status) to India, which both sides will have to work towards in further engagements by their commerce secretaries,” the Foreign Office Spokesperson Tehmina Janjua explained in her weekly press briefing.
EU trade concession
Sources in the WTO, while giving an update on the European Union unilateral trade concessions, said Bangladesh has now raised some item specific concerns over the Preferential Trade Package. While seeking a clarification on the same issue with the commerce ministry, they said it was strange that Bangladesh was raising objections over the trade deal when Pakistan has, over the years, sought to facilitate Bangladesh on all forums, therefore intransigence on their part was puzzling to say the least. Elaborating further the source said, that NTB’s need to be addressed on an urgent basis, in the absence of which the entire concept of MFN would be nullified.
Perceived U-turn on MFN
Apparently, there seemed some confusion as it was perceived initially that the cabinet had agreed to grant India MFN, whereas Prime Minister Gilani while talking to reporters had said “The Cabinet has only given its approval in principle to move forward on the issue (of MFN) and permitted the ministry of commerce, which is actively engaged in trade talks with New Delhi, to negotiate trade-related issues.” The premier further added, “We will give it the go-ahead if the situation is quite favourable and in the national interest. Otherwise, proceedings on it would be withheld.”
Rising pressure
Dr Ashfaque Hasan Khan, an eminent economist, was of the view that the statement by the prime minister was indicative of the rising pressure by the business community to grant the MFN status only after India addresses the Non Tariff Barriers. “Till India does not eliminate the NTBs and a fair trade regime is not established, there can be no progress,” he said. Dr Ashfaque was of the view that it was indeed intriguing that while on the one hand the two countries were focusing on establishing a fair trade regime between themselves and on the other, India was linking MFN by Pakistan to removing its objections on the preferential trade agreement being offered by the EU. Pak-EU trade is a different matter altogether and India should not link it to Pakistan’s trade with the EU.
Misleading reports
“Till India does not address these issues, such attempts at establishing a fair trade regime will prove to be non-starters,” Dr Ashfaque said. It is pertinent to mention that while elements in international media have accused Pakistan of backtracking on the MFN issue, the foreign office spokesperson clarified, “The cabinet gave the ministry of commerce the mandate to take the process of normalisation forward, which would culminate in the observance of the MFN principle in its true spirit.” “Such reports in international media, raising doubts over Pakistan’s intentions, are indeed disturbing since Pakistan has made all possible efforts to facilitate the trade process, and has taken serious steps to ensure the implementation of the MFN status to India which has to follow proper procedures before it is implemented in letter and spirit,” commerce ministry sources added.