Leap forward: India agrees to shorten restrictive trade list by 30%

Move seen as major concession to Pakistan’s demands.

ISLAMABAD:

In a major breakthrough, India has agreed to further shorten its Pakistan-specific restrictive trade list by 30%, removing a major obstacle to complete trade normalisation between the two countries, expected to take place by the end of this year.

Besides signing three agreements, which will largely address Islamabad’s concerns regarding non-tariff barriers (NTBs), both nations also explored a proposal set forth by an Indian firm for setting up power plants of up to 2,000 megawatts generation capacity in Pakistan.

Furthermore, at the conclusion of round seven of bilateral talks between Islamabad and New Delhi, significant progress has been reported on all issues: including trade through land routes; connecting New Delhi and Islamabad via an air route; removal of NTBs; and cooperation in the telecommunication sector. The next round of talks will be held in New Delhi in April next year.

Customs officials from India and Pakistan signed the Redressal of Trade Grievances Agreement, the Mutual Recognitions Agreement, and the Customs Cooperation Agreement.

“The talks are progressing according to Pakistan’s needs and programme, which is manifested in the gradual removal of trade bottlenecks,” said Commerce Minister Makhdoom Amin Fahim, who witnessed the signing ceremony of the three trade pacts.

Commerce secretaries of India and Pakistan also signed the joint declaration, setting up a clear road map for the implementation of all decisions taken during the two-day parleys.

While addressing a press conference, Pakistan’s Commerce Secretary Munir Qureshi said that to provide a level playing field to Pakistani exporters, India has agreed to bring down its Sensitive List - maintained under the South Asia Free Trade Agreement - by 30%. He said the decision will be implemented before the end of this year, and will pave the way for Islamabad to confer the Most Favoured Nation (MFN) status to India. He stressed that India will exclude all restricted items in consultation with Pakistan.

India recently reduced its Pakistan-specific sensitive list by 30%, but Pakistani officials had complained that products where the country enjoyed a competitive advantage were not omitted from the list.

Under Safta, India has maintained a 614 item list of goods Pakistan cannot export across its eastern border. After the negotiations, India will now bring down the list to only 100 items by April next year. Pakistan has also maintained a sensitive list comprising 936 tariff lines, which it will bring down to 100 in the next five years, according to the joint statement.

However, according to the joint declaration, India will reduce the list by 30% only after Pakistan notifies the removal of all restrictions on trade through the Wagah-Attari land route.

Indian Commerce Secretary SR Rao has said that “India has been assured that by the end of October, Pakistan will significantly expand the list of goods that can be traded across the Wagah border.” He said both countries have also decided that Wagah route will remain operational for seven days a week, as against six days a week at present.

Both sides have emphasised that the logistics infrastructure be strengthened further to facilitate trading activity. India and Pakistan have also agreed that a meeting of a joint working group be held towards the end of October in New Delhi, to review the possibility of opening the Munabhao-Khokhrapar land trading route.

Published in The Express Tribune, September 22^nd, 2012.