16 years on... Pakistan finally reciprocates granting MFN status to India

Published: November 3, 2011

Cabinet unanimously supports decision, despite initial opposition. PHOTO: AFP/FILE

ISLAMABAD: 

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.

Yet even as late as earlier this week, it seemed that there was too much resistance for the proposal to pass.

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.”

(Read: Pakistan to grant MFN status to India … eventually)

Published in The Express Tribune, November 3rd, 2011.

on Twitter, become a fan on Facebook

Reader Comments (45)

  • Wasil Arian
    Nov 3, 2011 - 6:46AM

    A very good news after a long long time. It may prove a harbinger for an era of economic turnaround for Pakistan. It will however likely to face a number of stumbling blocks raised by people benefitting from the status quo and having no heed or vision for the larger interest of the nation.

    Recommend

  • jagjit sidhoo
    Nov 3, 2011 - 7:14AM

    http://timesofindia.indiatimes.com/business/india-business/Indian-tomatoes-flooding-Pakistan-pushing-up-domestic-prices/articleshow/10520200.cms Free trade helps everyone now there is a tomato shortage in Pakistan so you import from India earlier we had a onion shortage we imported from Pakistan . Everyone benefits the consumer the trader and most importantly the poor producer in this case the farmer.Trade will improve interaction between the people and hopefully reduce tension.

    Recommend

  • SH
    Nov 3, 2011 - 7:19AM

    finally some sense kicked in……..should have happened a long time ago.

    Recommend

  • OmarSharif
    Nov 3, 2011 - 7:48AM

    At long last. This is surely a step forward for the entire region. ESP after India supported our UNSC membership.
    I was looking at some old scorecards of games against India, in 78-79. They were played in Quetta, Sahiwal, Pindi etc. Good old days. When will we ever have international cricket in these cities? How our country has changed for the worse. What a pity.

    Recommend

  • Nov 3, 2011 - 7:56AM

    Wonderful.

    Indians are wonderfully talented at trade. Let the trade wars begin! It will create a lot of jobs on both sides of the border. Numbers wise India will benefit, percentage-wise Pakistan.

    Recommend

  • Arindom
    Nov 3, 2011 - 8:14AM

    So what was all that huff and puff of the last 16 years about? Pakistan should thank India for not dragging it to the WTO complaints forum for breaking WTO rules — linking MFN status them to extranoeus political issues…

    Recommend

  • AsianDog
    Nov 3, 2011 - 8:14AM

    It was about time. This agreement will bring both prosperity and new challenges for Pakistan’s industrial sector which over time will help improve the current state of it. A healthy competition is always good; specially for countries like India and Pakistan who aspire to be economically self reliant and sovereign. Good economics betwixt these two South Asian countries is going to be foundation of lasting peace. The propensity to threaten each other quite so often will subside eventually, should the two countries have enough investment in each other.

    Recommend

  • My name is indian
    Nov 3, 2011 - 8:28AM

    Thanks to pakistan.

    Recommend

  • Mirza
    Nov 3, 2011 - 8:51AM

    Better late than never. Once the free trade starts there would be trickle down effect on all the people in the region. Not surprising that defense minister was against it till the end! Even the current democracy (regarded by some as bad) is better than the good dictatorship (?) of Mush.

    Recommend

  • John B
    Nov 3, 2011 - 8:56AM

    Same food, same clothing, same fashion, same craft, same rainy season, same growing season, same soil, same language, same music – trade is inevitable and market is there. 1.3 billion people in India are voracious market for Pakistan, from raw material to finished goods.

    Who in the right mind would not want to explore this market. Surely some protected Pakistan industries will suffer from brutal Indian competition and varieties of goods but in the end it is the common people who save and earn money and this will uplift the peoples life.

    On a lighter note, it should be the Indians who should be worried about the security of imported products, given what has happened to Indians from PAK side. PAK defense minister should rest easy.

    PAK can import all the cattle from India and can start a world wide Halal market supply chain to middle east and beyond. Transfer agricultural technologies from Punjab (India) agri university to PAK side, establish currency swap with India for its import.

    Of course trade makes national borders irrelevant and certain establishments in PAK side might not be comfortable with it. They have to grow up.

    Welcome to the new world!

    Recommend

  • Malik
    Nov 3, 2011 - 9:15AM

    Finally Pakistan is taking right directions. This region needs money so that we can build an economy. Financially satisfied people are productive people and peaceful people as a whole.

    We need Canada/USA relationship with India.

    Recommend

  • Mohammad Ali Siddiqui
    Nov 3, 2011 - 9:30AM

    I do not recall when Father of the Nation Quaid-e-Azam Mohammad Ali Jinnah ever granted or told to grant the “Most Favoured Nation” status to India, as has been said by the sitting Minister for Information Firdous Ashiq Awan.

    I am not happy at all that Pakistan’s parliament has granted most favoured nation status to India when India right from the inception did not accept the creation of Pakistan by Mohammad Ali Jinnah.

    After 24 years of creation of Pakistan, it was India which separated East Pakistan from West Pakistan through military intervention and created Bangladesh on the world map.

    India has been involved in subversive activities in Pakistan right from the very beginning and there have been three wars fought between Pakistan and India since our independence in 1947 and despite all that Pakistan has granted “most favoured nation” to India.

    For India to grant the most favoured nation to Pakistan was a easy job, as Indian did with Pakistan what it wanted to do and what an enemy country would have done to its neighbour.

    It is unfortunate that people forget the history and can not differentiate between a friend and foe.

    To me, grating most favoured status to India is equivalent to as if Pakistan’s armed forces have laid down arms in front of Indian armed forces.

    The history has repeated again in 2011 after 1971. Finally we bowed down in front of India.

    Can the Federal Minister of Information show the script of Quaidi-e-Azam’s speech in which Father of the Nation has grated “most favoured nation” status to India.

    Recommend

  • Sanjay Sharma
    Nov 3, 2011 - 10:12AM

    When Dr Manmohan Singh was the Finance Minister in early 90s, India was on the brink of collapse in financial terms. With the active support of Narasimha Roa as prime minister of India, he took great initiatives to clear the mess and opened Indian economy to foreign investors and made conducive atmosphere for industrialisation. Same fears, that the developed countries would cripple the Indian small scale industry, were echoed by certain sections of political class, individuals, media and status-quoists at that period of time in India. However, India immediately embarked on a journey to economic success and now is seen as a success-story. When you have money, you can take more risks for a better future and negotiate with other nations with more confidence. Economic progress creates more jobs and bring peace among general masses.
    We should be happy that Pakistani political class and Army have started thinking in right perspective on economic front. Granting MFN to India is itself not very important but the gesture from Pakistan is extremely important. It may go a long way. It is a small step for diffusing tension in the region and clearing air of mistrust amongst the two neighbours. Both countries have a right to differ on many issues, including Kashmir, but economic cooperation between will not allow them to deviate from a path of good behaviour. I presume India and Pakistan touching their bilateral trade at $100 billion in 20 years from now on. What an enormous success it would be for the people of both sides !

    Recommend

  • Mirza
    Nov 3, 2011 - 10:48AM

    Once there is free trade and less animosity both countries can spend huge sums of money on their civilian needs rather than military and WMD race. Recommend

  • Udaya Bose
    Nov 3, 2011 - 10:57AM

    We have to wait and see. The Cabinet decision has to be followed up by a Gazette notification then the negative list has to be pruned…… many a slip …

    Recommend

  • amit
    Nov 3, 2011 - 11:49AM

    @Mohammad Ali Siddiqui:
    India didn’t separate pakistan into bangladesh. Pakistan’s leaders had refused to accept the election results and had started killing east pakistanis. Read history. You can blame anyone for your faults, it is easy. Hard thing is to accept truth. Did India take over East pakistan? no,it didn’t, so if India wanted, it could have merged east pakistan into India but it didn’t, what does that tell you. Look at reality, not what you want to see.

    Recommend

  • Ghaznavi
    Nov 3, 2011 - 12:00PM

    A step in the right direction indeed; encouraging more people to people contacts will address the trust deficit on both sides. India and Pakistan both need to increase trade for the benefit of general public and their respective economies. However, non-tariff barriers are still a major impediment which need to be resolved.Recommend

  • AD
    Nov 3, 2011 - 1:23PM

    Better you first approve ” Most Loved Nation” .Everything else would fall into place.

    Recommend

  • Manju
    Nov 3, 2011 - 1:38PM

    @Mohammad Ali Siddiqui:

    1) “India right from the inception did not accept the creation of Pakistan by Mohammad Ali Jinnah” – Then how in the hell did Pakistan come into existence?

    2)”it was India which separated East Pakistan from West Pakistan through military intervention and created Bangladesh on the world map” – You might very well read the history from a non pakistani text books ( especially not the social studies ) as to the precendent factors of that war..

    3)”India has been involved in subversive activities in Pakistan right from the very beginning” – Do you know who has been sending terrorists into kashmir?

    4)”It is unfortunate that people forget the history” -What is even more unfortunate is people knowing twisted history..

    5)”To me, grating most favoured status to India is equivalent to as if Pakistan’s armed forces have laid down arms in front of Indian armed forces” – India is sick of winning wars against Pakistan but for your masochism the indian army will always oblige.

    6)”Finally we bowed down in front of India” – It looked as though Pakistan is trying to stand up for the first time…

    Recommend

  • Burner
    Nov 3, 2011 - 1:54PM

    I would like to see Indian Low Cost cars in Pakistan like Tata Nano :)

    Recommend

  • Hedgefunder
    Nov 3, 2011 - 2:06PM

    @Mohammad Ali Siddiqui:
    Do you really think that India really cares about this status???
    Get real the percentage of potential business with Pakistan is very small.
    One should ask why sudden change of heart???

    Recommend

  • Birbal
    Nov 3, 2011 - 2:11PM

    Want to clear a misconception -

    Many times we hear , India and Pak has “Same food, same clothing, same fashion, same craft, same rainy season, same growing season, same soil, same language, same music “. This is not correct. I am from south & we eats idli, wear lungi, speak Kannada / Tamil etc, hear karnatic music, enjoy Bharathanatyam .. We are not same .. does not mean that we need to have conflict if we are not the same

    All the best.

    Recommend

  • Wellwisher
    Nov 3, 2011 - 2:42PM

    @Mohammad Ali Siddiqui:
    Read the history of Pakistan available in the internet not from your government text books

    Recommend

  • Farhan
    Nov 3, 2011 - 2:54PM

    This will help consumers who get quality and cheap products. We all should support this decision.

    Recommend

  • Haider Hussain
    Nov 3, 2011 - 5:52PM

    @Mohammad Ali Siddiqui:
    I strongly differ from you. Not giving India the MFN status will only be good if there are concrete “economic explanation” to do so, not such emotional reasons as you cited.

    Trade simply means exchanging right goods for right price. It doesn’t involve emotional attachement (or detachement). Read our Islamic history; Muslims were involved in trade with Jews and Christians and our Holy Prophet (PBUH) never disallowed it. So why can’t we do it today? You are not forced to hug the indian prime minister before paying for your exports or receiving for imports anyway! Before making such childish comments, try to be more reasonable.

    And Oh! by the way, somehow, your comments give an impression that you don’t know what Most Favoured Nation (MFN) clause really means. I think you have confused “Favoured” with the word “favorite” :)

    Recommend

  • Pradeep
    Nov 3, 2011 - 7:13PM

    I want ready to eat onion parathas from Pakistan. I had them while I was in the US and ey were wonderful. It is a pity we don’t get them here.

    Recommend

  • Dr.A.K. Tewari
    Nov 3, 2011 - 7:49PM

    Pak will have to come on line sooner or later on Kasmir issue as well . What JOHN B. has stated will be not allowed to happen . It is merly an economic ties and not a cultural one. We will keep away the rubbish of Pak culture far away . Perhaps they know it better.

    Recommend

  • Kanishk
    Nov 3, 2011 - 9:19PM
  • John B
    Nov 4, 2011 - 12:09AM

    @Birbal:
    Understand what you say. Read my comments with a broad brush. The ingredients of food and materials that go into the making of your clothes, and surplus and shortage time cycle of food supply of the subcontinent, arrival of summer and rainy seasons, taste in music and tune, the for or against passion on issues, and the history are the same and they all make up the economy.

    PAK and India can sell millions of saris and salsas kameez, onions, tomatoes, mangoes, potatoes, rice, motor cycles,cars, bangles,slippers and shoes, and music CDs and movies, medicines, raw materials, and finished goods to each other than to the US or EU.

    Business dictum: you cannot sell a refrigerator to an Eskimo !

    Recommend

  • John B
    Nov 4, 2011 - 12:35AM

    @Dr.A.K. Tewari:
    Unique culture is a myth. Culture is an amalgam of many things-time, trade,books, religious views, changing political climate, and social awakening etc.,

    And culture is a dynamic thing. Resistance is futile. In the context of subcontinent India once had a segregated culture based on caste and now it is under water.

    Change in culture comes from within. Your apprehension is not new and cannot be eradicated by arguments and facts.

    What is the culture of India, Pakistan, US, China or Europe or Africa or south America ? Can you specify?

    Recommend

  • rajamani
    Nov 4, 2011 - 12:44AM

    @birbal.

    you are a south indian except for your name! [just fun]

    despite latent animosity between the educated classes on both sides. there was awe [and some heart-burn] among pakis for something made in india.esp apollo tyres which was imported from dubai. even then some gruntled about quality of NOKIA cellphones made in india and chose chinese ones. i got these news from economic daily.now hopefully you can get these cheaper.
    you can give us cheaper cement. your elite can get foreign cars faster and cheaper.

    this mfn thing your govt,. gave because it needs EU CONCESSIONS ON TEXTILES. which was opposed by 27 countries including bangladesh,india.those concessions are for relief fund for two successive years of floods.to get your economy on track and for flood relief . hopefully the govt.,not waste them on graft or guns!
    have nicer things guys1

    Recommend

  • Rana Athar Javed
    Nov 4, 2011 - 4:34AM

    The discourse to defuse tensions between India and Pakistan is simply the best recipe for peace and stability in the South Asian region. Giving India the status of MFN is one very important concession and step that Pakistan has taken to restore ties with its ever growing neighbour. The next step as this news item points out is to “remove non-trade barriers against Pakistani goods”, so that Pakistan’s economic progress return to its grace. This initiative will put Pak-Indian relations on a new path, and thereby pave the way to resolute all the standing issues through dialogue and mutual understanding. Currently, the US and international community are trying to balance the lead role of Pakistan with crediting India an enormous strategic importance. By all standards, growing trade ties will not address this approach, but it would improve only one aspect of this complex system of relationship. Most importantly, the “New Silk route” project is constructed in the backdrop of enhancing Indian influence vis-à-vis China, a policy that may divert the “stability project” of Afghanistan, if not considered in perspective of Pakistan’s own Silk Route and its importance. One must remain cautiously optimistic and work toward strengthening economic ties with India, in order to achieve maximum economic progress.

    Recommend

  • Dr.A.K. Tewari
    Nov 4, 2011 - 9:11AM

    PAK can import all the
    cattle from India and can
    start a world wide Halal
    market supply chain to
    middle east and beyond…..

    Mr, John There is an internatiinal commitent to stop cruelity against animals . We will always discourage the existing anlmal instincts in numan society then how can you think that we will allow such economic activity which can lead to biodiversity loss .
    The trade between the nations will be based on the WTO norms .which clearly suggest to encourage only ecofriendly trade practices. The essence of Indian culture is known to the world , we will not allow such trade activity which can go against it .

    Recommend

  • Tony Singh
    Nov 4, 2011 - 12:03PM

    @Mohammad Ali Siddiqui:
    Did WTO exist at the time of Jinnah? First get to know what MFN means, then comment.Recommend

  • D C Bhardwaj
    Nov 4, 2011 - 2:56PM

    @Dr. A K Tiwari

    Tiwariji do you know INDIA is already world no. 1 exporter in Halal Meat since long.

    Recommend

  • Dr.A.K. Tewari
    Nov 4, 2011 - 4:38PM

    Yes we have a number of such people in India . It does not mean that we should encourage further these animal instinct in our society on the name of trade with neigbouring countries . We have to discourage such trade so to fulfil our international commitments . Let others do such heinous crime against animals .

    Recommend

  • Manju
    Nov 4, 2011 - 5:48PM

    @Dr.A.K. Tewari:
    I am an Indian to put up a disclaimer first and a vegetarian and i very well know many Brahmin and so called other upper caste hindus/other religious friends who consume non veg with such voracious appetite that those who are supposed to be non veggies by their caste/ belief would be surprised off and the funny part is these new non veggies are the majority now.
    I hope my Indian brethren stop being hypocritical. If people want to bang Pakistanis there are much bigger and logical issues… But don’t stoop to this level….

    Recommend

  • Drone-Acharya
    Nov 4, 2011 - 6:07PM

    @Mohammad Ali Siddiqui:
    Please educate yourself before making comments like that. MFN status only became relevant after the WTO was formed. During Jinnah’s time, there was no such beast.
    If India wanted to subvert Pakistan’s existence, it would have succeeded. The whole world knows the true story. I wish you would try to learn the truth instead of succumbing to propaganda. There are any number of neutral websites.

    Recommend

  • Dr.A.K. Tewari
    Nov 4, 2011 - 10:13PM

    @ Manju , Yes , I know that there has been a significant down fall in so called Brahmins .In fact threy are not Brahmin in real sense . Brahmins are those who can understand the intricate knowledge .One becomes Brahmin by his deeds and not by means of birth in a Brahmin family . My opposition to non veg. Diet is not merely ethical but based on certain well established scientific facts . We should perform our duty leaving rest to other to realize the fact otherwise nature will come forward to teach them in her own style .Every action has its equal and opposite reaction and that is what going on all arround the world .

    Recommend

  • Terrorising and true
    Nov 5, 2011 - 6:36AM

    @Dr.A.K. Tewari:

    I repeat this again that i am a veggie. but that was something passed on to me by my parents as a culture attribute. And for the scientific funda. I don’t remember any scientific context quoting humans to be vegetarians. On the contrary evolution wise humans evolved into being omnivorous. That is why tribal people in jungle still continue to hunt. What you are talking of here is what is right and what is wrong in a religious context which is a belief one may or may not wish to follow.

    Recommend

  • Not from Pakistan
    Nov 5, 2011 - 2:43PM

    This will help India’s millions of poor who earn below Rs.26 per day.

    Recommend

  • Dr.A.K. Tewari
    Nov 5, 2011 - 5:12PM

    @ All intwrested , who told that all human originated from omnivorous ancesters .There are still two catagories of ape and monkeys ,one is excluxively herbivour . Anyway we are different from animals by means ofcertain vertues such as compassion, curiosity , care ,etc.
    We should keep on evolving in a different manner than animals by eliminating all existing animal instinct . We have to be a custodian of nature rather than distroyer . Biodiversity loss is a greate loss . Once gone gone forever . This is the apropriate time to discourage non-veg food habbits on all real
    well as imaginative prespectives

    Recommend

  • Terrorising and true
    Nov 5, 2011 - 10:56PM

    @Dr.A.K. Tewari:
    Please read science and biology properly before doing what you just did. ‘Exclusively’ is a very rarely used word in science. A can be B and B can be C under different circumstances. They are not a fixed rule..
    What you started of as a low blow move, you continue to defend the same with nonsense defenses.
    1) No human race ever started as an exclusive vegetarian group. It was the belief of the evolving tribes that made them veggie or not.
    2) And being a veggie or a non veggie have equal advantages and disadvantages. One does not super-cede the other. Its just a matter of one person being comfortable with a certain way of living and faith one believes whether it is right or wrong.
    3) What kind of a crap is it that because you do not want to kill some creature and take the karma attached with it that you would conspire to arrange it to be killed by another and put it on him/her and believe that you won’t punished for it if there ever is a punishment for it that is!!! In that case kshatriyas would not have existed..

    Recommend

  • Udaya Bose
    Nov 6, 2011 - 10:03AM

    @Dr.A.K. Tewari:
    What are you going on about? The topic on this page is about Pakistan granting MFN status to India.
    Find some other site to disseminate your evangelism.

    Recommend

More in Pakistan