Pak considers granting India most-favoured nation status

In a move that could bolster the trade and economic relations between the two countries,Islamabad is considering reciprocating the long-unrequited Indian gesture...

In a move that could bolster the trade and economic relations between the two countries,Islamabad is considering reciprocating the long-unrequited Indian gesture of treating it as a most-favoured nation MFN.

In the recent foreign secretary-level talks between the two countries in Islamabad,Pakistani officials had indicated their willingness to replace the policy of keeping a restricted positive list of goods for India-Pakistan trade with a more accommodative negative list approach.

This policy change would inevitably lead to India becoming an MFN to Pakistan.

Although India has treated Pakistan as an MFN for many years,Islamabad has been unwilling to reciprocate that measure.

An MFN treatment doesnt imply any special or preferential treatment,but merely absence of discrimination. In other words,in the multilateral framweork, it is akin to treating the country as a normal trading partner,when it comes to opening up trade in specified goods or providing tariff benefits. In effect,a country that has been accorded MFN status would not be treated less advantageously than any other country with an MFN status.

Senior Indian officials accompanying Prime Minister Manmohan Singh to the G20 summit here told media persons that the measure could open up markets for a variety of Indian goods to Pakistans market. It will be a win-win situation for both countries and a booster to trade, a senior official said.

The two countries have agreed to resume commence secretary-level talks for solidifying their trade relations.

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Currently,Pakistan maintains a positive list of 934 tariff lines for India with India. This means that in all items except these,no trade can take place between the two countries. A negative list is in fact more accommodative as it restricts trade only in those items. The negative list usually would be a much smaller one than a positive list and is reflective of greater trade relations. Pakistans Planning Commission has recently estimated the India-Pakistan trade potential at 10 billion. The proposed policy liberalisation would help realize a large part of this untapped potential.

Under the SAFTA agreement in which both the countries are signatories,tariffs on specified items would be eliminated or brought down to very low levels by 2016.

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