India granted Pakistan MFN status in 1995-96, the cabinet division of Pakistan unanimously reciprocated this move after 16 years. Although the Parliament was not given an opportunity to debate the MFN issue as what political consequences may be found for this decision? In SAARC conference Dr Manmohan Singh, the Prime Minister of India stressed the need that both Pakistan and India should jointly work for economic prosperity of the poor masses of this region. The ministers of both sides agreed to jointly work for more than doubling bilateral trade within three years, from the current level of 2.7 billion US dollars per annum to about 6 billion dollars.
These actions and responses seem meaningful for the people of this region but granting India as MFN should not distract from political issues like Kashmir; rather bilateral trade agreements should ease and mobilise the efforts to resolve political conflicts between India and Pakistan. Supportive trade relationships should be used as an instrument to resolve political conflicts between both countries. These conflicts have been impediment in awarding India MFN status by Pakistan.
Pakistan steadily softened the bilateral trade policy by increasing the number of items in the list of importable goods from India. The list had 1,075 items as part of the South Asian Free Trade Area (SAFTA) process. Despite having a large number of items, the list remained restrictive and rather ambiguous. To strengthen the relationships number of items was increased
A questionable point is would it be advantageous granting MFN to each other in the presence tariff and non-tariff barriers in both nations. Though, India appreciated Pakistan’s decision but there has been a more restrictive trade policy in India than any other large emerging economies such as China, Mexico, Brazil.
Highest Trade Tariff Restrictiveness Index (TTRI) of India than Pakistan as depicted by World Bank may be impediment in achieving trade liberalisation objectives for both countries. Further highest tariff in India particularly on agricultural, textile, automobile and apparel goods are still barriers for Pakistani exporters to access the Indian market. These are considerable obstacles in trade liberalisation without removing these barriers targeted results may not be achieved to both countries.
Among many other measures, a dialogue should continue to ease the mobility of goods and services across the borders and further to make MFN successful, both countries should mitigate visa restrictions. Other hindrances for traders of both sides are financial and logistic problems. To encounter these problems both countries should set up ware houses, Electronic Data Interchange system, and bank braches at their borders to financially facilitate their traders.
A status of MFN to India is the part of debate among politicians, traders, business communities now days in Pakistan. Would present government be able to get support from military highups on the issue? A recent meeting of military authorities, DG, ISI with foreign minister Hina Rabani Khar at foreign office is significant. The information minister Firdous Ashiq Awan declared this a unanimous decision of the cabinet, but without the opinion of the Kashmir committee chairman would it be worthy, unless the reservations about its impact on the Kashmir policy are ruled out.
Anyhow this time it is different move instead of discussing political conflicts, trade related issues are on priority, which may lead both countries to resolve their other conflicts through dialogue, if the granting of the MFN turns out to have a positive outcome.
NAWAZ AHMAD
Lahore