Building upon the highly promising trade talks with India in Mumbai late last month, the government of Pakistan has announced that it has agreed “in principle” to grant Most Favoured Nation (MFN) status to India, one of New Delhi’s longest standing demands on trade talks. Given the fact that India has already granted MFN status to Pakistan and that Islamabad is required to reciprocate under its treaty obligations to the World Trade Organisation (WTO), we support this measure by the government and hope that the decision is implemented as soon as possible.
Pakistan’s proposed measure has come after India has shown itself to be flexible in removing the many non-tariff barriers to trade that Pakistani exporters face when supplying goods to India and in particular after it ended its objection to a the European Union granting concessions to 75 Pakistani items of import. At trade talks in Mumbai last month, the Indian government arranged for direct talks between Pakistani businessmen and Indian officials, a process that is expected to help remove some of the non-tariff barriers. While welcome unto itself, we hope that this dialogue results in an ease in the regulatory burden on Pakistani exporters. We hope that New Delhi will come to view the removal of those barriers as contributing to its own economic benefit. The cement industry is a prime example of an area where greater trade might help. Pakistan has a surplus of production capacity and India has a shortage. Yet rather than buying cheaper Pakistani cement, India ends up importing from Africa — paying higher shipping charges — simply because of the regulatory restrictions on importing goods from Pakistan.
India is harming its own economic interests and would be well served by removing many of these barriers. Imagine the political and economic dividends India could reap by allowing Pakistani cement in: lowering the cost of housing construction in its own country and making a constituency within Pakistan that has an economic interest in maintaining good relations with India. For its part, Pakistan’s primary tool of preventing trade is the use of old-fashioned tariffs (Islamabad uses relatively few non-tariff barriers). The move on the part of the government to reduce tariffs on more than 200 goods is an encouraging one. Both sides need to do their part to open up the region to trade and unlock its full economic potential.
Published in The Express Tribune, October 14th, 2011.
COMMENTS (12)
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@ToH - Only military rule can make Pakistan civilised. Ironically, Under military rule Pakistan prospered and India was jealous. Terrorism could not raise its ugly head under military rule. You know very well the reasons for it!!!
@Pundit - Security angle . . . along with Indian businessmen will come the notorious RAW goons. Let there be proof of trust and goodwill first.
@EoH: You can visit India but guys from India & even from any civilized world will not even dream to visit Pakistan. You know very well reasons for it!!!
This is betrayal to the martyrs who sacrifices there life for Pakistan. Those who are with this agreement are against the Prophet(SAW) and Allah. I am against such acts O Allah be witness.
@ EoH...thank you Sir, please dont bother to come again to my dirty country...lolz...be in your own and keep dreaming...we are better off without you.
@Pundit: dude relaxx,aren't they already coming? lets try to keep business separate from security for once.
India is magnanimous enough in droping it's objections to EU trade concessions Pakistan is adamant enough in still not granting MFN status even after 17 years of WTO Now Pakistan Railways needs locomotives from India on lease basis not on outright purchase. Hope trade and commerce begin on a high note.
"For its part, Pakistan’s primary tool of preventing trade is the use of old-fashioned tariffs (Islamabad uses relatively few non-tariff barriers). "
Factually correct as it applies to other countries but not with regards to India. Under WTO most countries are allowed to give a set of items on negative lists that will not be imported. By definition everything else can be imported.
with respect to India, Pakistan used to operate on the basis of a positive list i.e. only the things on a fairly small positive list could be iported from India - nothing else could be. Not allowing most things to be imported from India was one of the biggest non-tarriff barrier you can imagine.
There is also the security angle: along with Paki businessmen will come notorious ISI goons.