India inches closer to MFN status

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The government on Wednesday decided to liberalise trade with India, as the federal cabinet approved elimination of negative list containing 1,209 items with the neighbouring country by the end of the current year.
The decision was made in a meeting of the federal cabinet chaired by Prime Minister Yousaf Raza Gilani on Wednesday. Addressing a news conference after the meeting, Information Minister Dr Fidous Ashiq Awan said the negative list would be eliminated by the end of this year and from January 1, 2013, normal trade with India would begin to allow import of all items from India.
“In line with WTO trade arrangement, the cabinet unanimously approved to move from positive and negative list of items for trade with India. The cabinet also decided in principle to phase out the negative list between Pakistan and India by December 31, 2012. After that, process of trade normalisation between the two countries will be completed,” she added. Pakistan has been trading with India on the basis of positive list for the last several years even though New Delhi granted MFN status to Islamabad in 1996.
Pakistan’s stance was that the non-tariff barriers on Indian side hampered Pakistani exports as evident from marginal increase in exports even after MFN status. India agreed last year to remove all non-tariff barriers provided Pakistan granted it MFN status and ended the positive list approach.
The negative list will block free import of 1,209 items from India of a total of 8,000 Indian items. This will pave the way for the implementation of South Asian Free Trade Area (SAFTA) from January 1, 2013 that would allow import of Indian products at a concessional tariff of five percent. To a question, Awan said the minister for commerce assured the cabinet that improvement in trade relations with India was in the larger interest of Pakistan. She said the commerce minister substantiated his argument by giving examples of other regional countries and held out an assurance that interests of Pakistan’s local industry would not be damaged.
Denying the impression that trade with India would undermine the Kashmir cause, she said the prime minister told the meeting that over 14,000 trucks transported between Azad Kashmir and Indian-held Kashmir since the beginning of trade between the two parts and volume of trade was about Rs 15 billion. “If both parts of Kashmir were trading, Pakistan should also trade with India,” she added. To a question, she said that while giving MFN status to India, all stake holders were taken on board.