Pak to open market to India,seal MFN status by year-end

India can export over 6500 items as compared to less than 2000 at present.

The Pakistan Cabinet today decided to open its doors to all exports from India,except a short negative list,a major step ahead of granting the Most Favoured Nation status to its neighbour. Even this negative list,comprising about 1,200 items in sectors such as textiles,pharmaceuticals and auto,will be phased out by December-end this year.

Under MFN,Pakistan will be required to extend the same privileges and benefits to India as it does to all other countries. Indian traders will now be able to sell more than 6,800 items to Pakistan. At present,Pakistan maintains a positive list of 1,963 items (17 per cent of the total tradeable items) that India can export. The Pakistan Cabinet today decided to shift to a negative list from the positive list and normalise trade relations by end of the year.

Federal Cabinet that met under the chairmanship of Prime Minister Syed Yusuf Raza Gilani unanimously approved the phasing out of the negative list existing between Pakistan and India by December 2012, an official statement issued by Pakistan said. With this,India will get MFN status by Pakistan. After that,the process of trade normalization between the two countries will be completed, the statement added.

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Commerce,Industry and Textiles Minister Anand Sharma spoke to his Pakistani counterpart Makhdoom Amin Fahim after the Cabinet meeting. This is a historic move. During my recent visit to Pakistan,Prime Minister Gilani and Trade Minister Fahim had assured me that a final decision would be taken by end-February. They have honoured their word in letter and spirit, he told The Indian Express.

Indias exports to Pakistan stood at $2.33 billion in 2010-11 while imports from Pakistan were $332 million. Doing away with barriers could potentially increase trade three-fold,said an Indian commerce ministry official. Sharma said that informal trade was as high as $10 billion. With no incentive to route exports through other countries,Pakistan business would automatically shift to direct imports.

Sunil Munjal,Hero Motors,who had accompanied Sharma to Pakistan said: This is a lot about a Pakistan win. Surely,it will boost regional trade. For Pakistan,India is a multiple-times bigger market than its own. Their economy stands to gain significantly. When asked,if the MFN status will set the stage for Indias corporate sector investing in Pakistan and vice-versa,he said,I think so. But we must take one step at a time.

Earlier,the Pakistan commerce ministry had finalised a smaller negative list of 636 items but this was strongly opposed by several stakeholders,including its textiles and industries ministries,which demanded greater protection. After further consultations,the ministry expanded the negative list to slightly over 1,200 items. Pakistan proposes to phase out the negative list in three phases.