Pakistan is likely to grant India the status of “Most Favoured Nation” (MFN) at the two-day commerce secretary-level talks which will begin in Islamabad today (Wednesday). Commerce Secretary Zafar Mehmood and his Indian counterpart Rahul Khullar will discuss trade-related issues between the two countries.
Sources said the Commerce Ministry, which had been consulting various traders’ groups, chambers of commerce and other associations in the last few days, was set to accept India’s demand of MFN status. Sources said the talks would explore promotion of bilateral trade, especially export of cement to India and import of cotton and petroleum products to Pakistan, as well as starting a cargo train service and the development of trade infrastructure along the Wahga border.
“There will not be any dramatic changes, of course, but it can help put things on the right track for further progress,” a Pakistani official familiar with trade negotiations with India told Reuters. “There is nothing specific on the agenda.” Sources claimed that the two countries’ discussions would span three categories: the expansion of the positive list of trade items, evaluation of the negative list and investment in both countries. Sources said Pakistan would ask for the removal of non-tariff barriers (NTBs), including stringent quality norms identified by Islamabad as factors that impede trade, with the suggestion that Pakistan could only reciprocate if India opened up its markets genuinely.
Pakistan was also likely to ask the Indian side to expand the positive list of trade items to enhance existing bilateral trade, they said. Pakistan trades with India on the basis of a positive list of items, which allows imports of select products instead of the usual way of trading, which allows trade of all items except a negative list of excluded items. Both sides would also discuss the issue of giving less restrictive business visas to businessmen, said the sources. Another important point in the bilateral discussion, the sources said, was the opening of investment in both countries for each other’s investors, as there was currently a mutual ban on investments between the two countries.
India is very interested in having an open market in both countries for investors as it has huge potential to invest in Pakistan and aims to capture further markets here, such as cement, rice, POL products. According to sources, if the MFN status was not accepted by Pakistan, India would try to press Islamabad to at least move for trade liberalisation under the South Asian Free Trade Agreement (SAFTA). India has given MFN status to Pakistan, but the move was not reciprocated by Pakistan.
Islamabad has faced a huge trade deficit because of the NTBs in India, but has so far been very cautious about this issue for fears that opening up Pakistani markets to Indian products would hurt the domestic manufacturing sector. The commerce secretary has held discussions with leading businessmen of Karachi, Lahore and Faisalabad in the last few days to find out their concerns so that they can be presented before the Indian officials.
Mehmood and Foreign Secretary Salman Bashir also met Prime Minister Yousaf Raza Gilani on Tuesday to discuss the trade talks, and the Indian High Commissioner met Commerce Minister Makhdoom Amin Fahim to discuss issues related to the talks as well. Gilani said that Pakistan wanted to move towards a comprehensive and wide-ranging engagement with India on the basis of equality, mutual trust, interest and respect.
The SAARC Chamber of Commerce and Industry also supported India’s demand of MFN status in a statement issued on Tuesday.
