Local industries to suffer from India MFN, says USAID


A study conducted by US Agency for International Development (USAID) said that opening of free trade with India under Most Favourite Nation (MFN) will be an onslaught on local industry by Indians, and the agriculture sector will suffer.
The study recommended that tariff quota method should be adopted for import of steel, iron, pharmaceutical and agriculture sector goods from India under MFN status regime.
The report further revealed that in the global scenario, Pakistan’s export to India will grow. The report revealed that though India had not been given (MFN) status, Pakistan had already operated under it by liberalising 97 percent trade for Indian goods.
Commerce Ministry was required to conduct a study regarding impact of liberalising trade with India before taking the decision to grant MFN status to India. It had got the approval of Cabinet to grant MFN status to India by December end 2012.
“But the study has been conducted in January 2013 which exposed the flawed plan of commerce ministry to grant MFN status to India without going through any comparative analysis,” an official said adding that USAID study had confirmed the concerns raised by all stakeholders including textile, industry and agriculture sectors.
According to a study conducted with the technical assistance of USAID to assess the impact of liberalising trade with India following MFN status, Indian trade regime is more restricted for Pakistani exports. The study noted that Pakistan had given much more to India in allowing items to export to Pakistan.
“However, India has liberalised only 43 percent trade for Pakistani goods and our major exports are not being given preferential treatment by the former,” the renowned economist Hafeez Pasha said in a report.
The study recommends that Pakistan should not discontinue negative list at all. It said the complete phase out of negative list should be avoided to protect the local industry and agriculture sector.
The report observed that agriculture sector was a real issue for Pakistan to open for trade with India under MFN status and recommended that sensitive list on agricultural goods should be expanded to protect the major crops.
It noted that tariff on cotton import from India is zero but India had tariff restriction in this regard. The study also accepted that cotton was a genuine issue and recommended a quota system for Indian cotton exports to Pakistan should be introduced to protect the farmer community.
It said there should have been parity in textiles. The report revealed that India was giving subsidy of $ 297 per hector whereas Pakistan gave $ 188 per hector. India is giving subsidy almost on all items including fertilizer and power.
The opening of trade for Indian industry will be an onslaught by Indian Industry and therefore the study recommended that “we should give a chance to industry to survive under MFN status with India”.