A study conducted by US Agency for International Development (USAID) found that opening of free trade with India under Most Favorite Nation Status (MFN) would prove as an onslaught on Pakistani industrial and agricultural sectors.
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 global scenario, Pakistan’s export to India will grow. In 8 digit items of trade with India, Pakistan is more liberalized than India. The report revealed that though India has not been given Most Favorite Nation (MFN) status, Pakistan has already operated it by liberalizing trade on 97 percent of Indian goods.
The Pakistani commerce ministry was required to conduct study regarding impact of liberalizing trade with India before granting MFN status to India. The cabinet approved granting MFN status to India in December 2012. However some officials of the commerce ministry alleged that the approval was given without conducting a comparative analysis, adding, that the USAID study had exposed the slack attitude of the ministry which was also condemned by textile and agriculture stake holders.
The Indian trade regime is more restricted for Pakistani exports. The study noted that Pakistan had given much more to India than it received by liberalizing exports of 97 percent of its products into. Pakistan. Commenting on the development, Hafeez Pasha; a renowned economist said that “India has liberalized only 43 per cent trade for Pakistani goods and our major exports are not being given preferential treatment by the former.”
The study recommends that Pakistan should not discontinue negative list at all. It said that the complete phase out of negative list should be avoided to protect the local industry and agriculture sector. The report observed that sensitive list on agricultural goods should be expanded to protect the major crops. It noted that tariffs on cotton imports from India were zero but India has tariff restrictions for the same.
The report revealed that India was granting subsidy of $ 297 per hector whereas Pakistan could afford $ 188 per hector. India subsidises almost on all items including fertilizers and the power sector.