Pakistan will continue its trade with India under the existing positives list of trade as the process of evaluation of the impact of trade liberalisation on domestic industry has not been completed.
“It is confirmed that Pakistan has given the most favoured nation status to India and granting new status to the neighbouring country will not affect the domestic industry,” said Zafar Mehmood Secretary Commerce in a meeting with the members of Karachi Chamber of Commerce and Industry (KCCI) here on Thursday. He had visited the chamber to discuss the matters of trade with India and proposed “Negative List”. “As the cabinet has approved the fresh move of granting MFN to India, Delhi will also not oppose the European Union unilateral trade concession package to Pakistan in the forthcoming meeting of World Trade Organisation (WTO) scheduled to be held on November 7, 2011,” he added. Both the countries are committed to implement the joint declaration made during the previous meeting between the two commerce ministers in Delhi, he said; adding that the two neighbouring countries of South Asia have decided to move forward for strengthening trade ties.
Achieving consensus: Talking about the fresh decision of moving from the negatives list of trade to the positives list, the secretary commerce said that as the process was yet to be completed with the consensus of all sectors, the government has temporarily decided to continue trading on the bases of the existing positive list. He was of the view that granting the MFN status to the neighbouring country will not harm indigenous industries or sectors as there is still room to protect domestic products. For MFN, he said that technically there should be no negatives list, however he explained that they would examine the proposals of a probable harm to the domestic industry and the problems would be overcome in a scientific manner, keeping the WTO legal framework under consideration. “The government can impose high tariffs and other duties to protect the domestic market after trade liberalisation,” Mehmood added. “In the modern world regional trade has become very important and through strengthening economic ties within the region Pakistan comparatively can move towards more economic development,” he added. As the ministry is in direct contacts with various chambers of commerce and trade bodies, every step would be taken in the best interest of the country and its industry. The ministry would definitely protect the country’s own industry.
On the other hand President, KCCI Mian Abrar Ahmad, has urged to foster the process of regional trade and economic cooperation between Pakistan and India to bring peace and prosperity in the region. In his welcome address to Commerce Secretary he said, ”We can change our friends but cannot change bordering neighbours so KCCI, firmly believes that both the countries will have to demonstrate greater political will to foster relations.” He said that it is a misconception that opening up trade with India will bring net losses to Pakistan. A win-win situation needs to be created to explore untapped potential, which is enormous and estimated at around $10 billion as compared with the current level of trade of only $2.5 billion. President KCCI was of the view that constraints on economic integration including high tariff and non tariff barriers, inadequate infrastructure, bureaucratic inertia held back trade between the two countries. Mian Abrar stated, “At KCCI, we believe that the issue of granting MFN status to India needs to be realised as an economic obligation instead of a political framework and India should come forward with an open mind to promote bilateral investment and deepen economic relations. India should oblige the commitment to support Pakistan for accomplishing GSP plus in European Union as Pakistan has offered MFN to India.”
Chairman Businessmen Group Siraj Kassam Teli said, “Since 2004, we at KCCI opine that MFN should be granted to India, a step that would be beneficial for both countries.” He explained that he led the KCCI delegation to India in the year 2004 which received overwhelming response from the Indian Government and Private Sector. Several meetings with important Indian dignitaries and counterparts were held and various MoUs were also signed, however, due to visa and trade barriers the said MoUs could not be implemented. He also urged the Commerce Secretary to support Bombay-Karachi Joint Chamber of Commerce and Industry to facilitate business communities of two countries.
Zubair Motiwala stated that the benefits of MFN between India and Pakistan must be passed in the real sense while political and economic relations must be segregated. He stressed upon the need of more CBMs between the two Governments with a focus on long term objectives. He urged the immediate resolution of Non-Tariff Barriers. He said that the Negative List from India should be shared with KCCI.
Reactions of business community in Lahore: The Business and trade community in Lahore has been divided on granting Most Favoured Nation (MFN) status to India. Farmers, pharmaceutical manufacturers and traders are against the decision, while textile, information technology, Lahore Chamber of Commerce and Industry are in the favour of MFN status to India. However, all business leaders in the country are of the view that the government should press India to remove non-tariff barriers (NTBs) and provide a level playing field to Pakistani products.
All Pakistan Textile Mills Association (APTMA) Chairman Mohsin Aziz said that APTMA welcomed the MFN status to India as it would help in normalising trade relations between the two neighbouring countries. However, he urged the Indian government to remove non-tariff barriers (NTBs) to make MFN status a success for Pakistan too. Statistics show, he pointed out, that trade between the two countries was $1.4 billion in 2009-10, of which Indian exports to Pakistan stood at $1.2 billion, while Pakistan exports to India were merely $268 million. It clearly indicated that India had not opened up its market for Pakistani goods, he maintained. He underlined that despite the MFN status from India to Pakistan since 1996 NTBs have hampered attempts of increasing trade volumes from Pakistan to India. On the contrary, there was hardly any NTB against Indian goods in Pakistan despite non-granting of MFN status to India.
Lahore Chamber of Commerce and Industry (LCCI) has also appreciated the Federal Cabinet’s decision to grant MFN status to India but urged the government to take pharmaceutical, automobile, motorcycle, petrochemical, autoparts, sugar, textile, cooking oil and ghee industries on board before signing the MFN treaty document with India. Speaking to Profit, LCCI President Irfan Qaiser Sheikh said, “LCCI had always advocated regional trade, especially with India for the sake of peace and prosperity in the region. However, the MFN status should not be granted at the cost of the domestic industry. The government should take business community in to confidence before signing the MFN treaty with India.” He was also of the view that the government should take up the NTBs issues with the Indian government so that both the sides had a level playing field to do business with each other. He said bilateral trade between the two countries could boost the economies of both countries, if customs procedures were harmonised.
The agriculture perspective: Agri-Forum Pakistan Chairman Ibrahim Mughal stated, “The MFN status to India would badly hit Pakistani agriculture. Curtailing water by India is an attempt to convert Pakistan into a desert and wants to sell its fruits and vegetables in Pakistani markets. Bilateral trade between the two countries should be on the basis of equality.” Figures show that India was giving around Rs812 billion subsidy to its farmers to reduce their production, whereas Pakistan was hardly spending Rs8 billion on that account. India’s agriculture production cost was around two to three times lower than Pakistan due to these subsidies, he maintained.
Pakistan Pharmaceutical Manufacturers Association (PPMA) Former Chairman Khawaja Shahzeb Akram said “The decision would compromise the viability of domestic pharmaceutical industry. Local industry is importing 99 per cent of its raw material from India and China, but once the MFN status is functional local pharma manufacturing would be out of question.”
Leading IT firm Managing Director Ibrahim Qureshi believes that MFN status to India would help flourish the domestic IT industry in the country. He pointed out that Pakistan could benefit from the IT experience of India as India had tremendous software exports. In addition the decision would help the domestic IT industry in establishing business to business relationships. However, he urged the government that before moving forward bilateral trade modalities should be finalised so that domestic industry could enjoy a level playing field.
