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.
“The federal cabinet has unanimously approved India as the most favoured nation,” said Federal Information Minister Firdous Ashiq Awan while briefing the media after the meeting, though she did admit that there had been some resistance to the move within the cabinet.
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.
Several members of Parliament, most notably National Assembly Opposition Leader Chaudhry Nisar Ali Khan had opposed the move, citing Pakistan’s historical animosity to India due to the dispute over Kashmir. Yet the commerce ministry, specifically Commerce Secretary Zafar Mahmood, were careful to frame the discussion in terms of Pakistan simply meeting its treaty obligations and tried to keep the discussion in the economic realm.
Yet at least two cabinet members, notably the defence minister, had tried to bring up the security-related concerns about the proposal. One participant of the meeting told The Express Tribune that the defence minister had called for first evolving a mechanism for monitoring Indian goods that would be transported to Pakistan as a result of the new liberalisation of trade. Those concerns and proposals, however, did not ultimately carry the day.
Sources said that the other minister who did not support the move was the minister for industries and production.
“The prime minister reviewed all the objections and took the cabinet into confidence that it will not hurt our national security and then they unanimously approved this summary sent by the ministry of commerce,” Awan said.
“We can’t live in isolation in the region… it was our obligation but it doesn’t mean that we have changed our position on issues. We are still firm on our strategic interest,” the minister said in an apparent bid to pre-empt a possible hostile reaction by opposition political parties.
The challenges already seemed to be brewing. Senator Haroon Akhtar Khan, a member of the Senate Commerce Committee, said that he would be pushing his panel to summon the government to Parliament to explain its decision.
“The WTO regime does not make it binding to grant a bilateral MFN status to every country,” claimed the senator. “It was purely an executive decision without any consultation with the parliament or its relevant panels.” Pakistan and India had about $1.7 billion worth of bilateral trade in 2010, the last year for which complete data is available. The trade is tilted heavily in India’s favour, with Indian exports to Pakistan totalling $1.45 billion whereas Pakistan exported about $275 million worth of goods to India.
The commerce secretary, however, downplayed the idea that opening up to more trade with India would harm domestic producers. “Trade was already taking place illegally. We have just regularised it.”
Published in The Express Tribune, November 3rd, 2011.