MFN Status to India: The Pakistani Perspective

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MFN Status to India


More than 16 years after it became a founding member of the World Trade Organisation, Pakistan has finally decided to live up to one of its most important obligations under that treaty: granting Most Favoured Nation status to India. In a decision that came after several hours of reportedly heated debate, the cabinet – ultimately unanimously – chose to approve the commerce ministry’s proposal to grant MFN status to India. New Delhi had already granted that status to Pakistan in 1996 and had been demanding that Islamabad reciprocate, particularly during the most recently concluded round of trade talks, held last month in Mumbai. Trade could not be allowed until the Kashmir issue was resolved to Pakistan's satisfaction. So after the 1965 war with India, all trade was banned, except a short list of necessary items. What it means?

The decision to grant MFN status to India essentially just means that Pakistan will no longer discriminate against India and treat it the same as it treats over 100 other countries. It does not mean an automatic removal of the barriers that currently exist to trade with India, though it makes removing them easier. Although granting MFN does not mean any out of the ordinary trading facilities, yet it signifies that the same importance is given to the products imported from India as is provided to other countries. The World Trade Organisation (WTO) bounds its members not to use discriminatory methods against other member countries for both tariff and non-tariff regulations. Therefore, Pakistani businessmen will be allowed to import nearly 2,000 out of 10,000 plus products, which are registered on the positive list by the Government of Pakistan. Consequently, this would ease restrictions on Indian products. The debate is continuing on two planes — one economic and the other political. Arguments in Favor

* Opposition to MFN status for India was based on ignorance. It has also been pointed out that by treating India as a most favoured nation Pakistan will only be fulfilling its obligations under the WTO Protocol and reciprocating New Delhi’s decision of 1996. * Trade was already taking place illegally. We have just regularised it * After economically benefiting from Pakistan, New Delhi may decide to settle the outstanding political issues that will help to normalise relations between the two countries. * Pakistani consumers will be able to get cheap goods specifically medicines, automobiles and, to a certain extent, raw materials for the industries. * The government will be able to earn revenue in the form of import duties, since many Indian products currently available in the markets were smuggled. * Is it fair to increase the liabilities of the future generations only for the sake of covering up the muddle-headedness of the past and the present generations? Leave economists and traders aside, common sense alone can guide any citizen to answers in accord with the national interest and reason. True, the creation of a new trade regime cannot be a push-button affair, but wisdom lies in starting the process sooner rather than later. * For years illegal/informal trade between India and Pakistan has been twice as much as the trade through official channels. The gap will continue to grow and both the state and the people will be the losers. * There is no doubt that the people of Kashmir have a just cause and to the extent their cause is supported, regardless of their views on the territory’s future, Pakistan will have an objective worth struggling for — of course, short of war. This struggle cannot be conducted by an unstable, non-democratic, aggressively theocratic, politically divided and economically dependent Pakistan. Nobody will lift a finger for Pakistan unless it achieves political cohesion and economic strength under a democratic canopy. * Why India should be kept out especially since, as compared to China, transport costs were lower...
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