Pakistan has finally decided to award Most Favoured Nation (MFN) status to India by removing all trade barriers by December 31, 2012. Ministry of Commerce (MoC) has recommended the government to progressively phase out negative list, Profit learnt on Monday.
Official summary made available to Profit shows that MoC has proposed the government to allow the ministry to replace the positive list of 1,963 tariff lines with a negative list, comprising of 636 tariff lines at 8-digit, for imports from India.
The ministry has further asked the government to empower it to progressively phase out the negative list in three installments on quarterly basis after approval of the cabinet with quarters ending on June 30th, September 30th and December 31st, 2012. MoC has indicated that the whole exercise would be conducted in consultation with Institute of Business Administration (IBA), Karachi, and other stakeholders.
Summary shows that MoC has also sought government’s approval to make appropriate changes in trade defence laws in consultation with stakeholders to allay apprehensions of the industrial sector for using these laws more effectively against any unfair practices or injury to the local industry by Indian imports. MoC would present these recommendations to the federal cabinet for approval in its meeting that would be held today.
Summary also shows that MoC has recommended 16 tariff lines related to food and agriculture sector; three from minerals; four from chemical; 32 from pharmaceutical; 74 from plastics; 24 from rubber; 55 from paper and wood; 77 from textile and clothing; 15 from ceramics; 25 from iron and steel; and 311 from auto sectors for the negative list.
MoC is of the view that World Trade Organisation (WTO) trading arrangement is based on the principle of MFN, which implies non-discriminatory treatment among member countries. However, the trading arrangement with India is still discriminatory. Although the tariff applied on imports from India is the same as for any other WTO member state, but Pakistan has India specific goods restriction in terms of positive list that allows import of only 1,993 tariff lines from India. Summary shows that federal cabinet in its meeting held on November 2, 2011 endorsed the efforts of the ministry of commerce for full normalisation of trade relations with India and directed the ministry to complete the trade normalisation process for grant of MFN status to India. It points out that during the sixth round of commerce secretary level talks held from November 14-16, 2011 at New Delhi, it was agreed between India and Pakistan that move to full normalisation of trade relations will be sequenced. First, the negative list would be announced by February, 2012 and then it would be phased-out after approval by the cabinet.
The ministry has pointed out that the process to formulate the negative list was initiated in April 2011. An extensive consultation process was carried out by MoC, both with public and private sectors of Pakistan. It requested all the stakeholders including industry, chambers of commerce and trade associations to recommend items with justification to be included in the negative list. Secretary commerce held meetings with chambers of commerce and trade associations across the country to get their inputs. Sector specific meetings were also organised to provide opportunity to the stakeholders to express their views and concerns.
Summary further states that for the sake of academic neutrality and transparency, IBA – Karachi was assigned the task to examine the wish list/tariff lines recommended by stakeholders and propose a final negative list of items for India after critical examination of all tariff lines. IBA examined the wish list given by stakeholders, held extensive discussions with them and did not recommend the inclusion of 699 tariff lines at 8-digit.
