Bringing down barriers: Phased expansion of India trade from February

Pakistan agrees to switch from ‘positive’ to ‘negative’ trading list.

NEW DELHI: Politicians continued to play to the gallery while bureaucrats worked hard, converting wishful rhetoric into a tangible roadmap.

In what may be construed as small but significant gains, commerce secretaries of Pakistan and India on Tuesday, fleshed out a sequential plan towards liberalisation of trade between the neighbouring countries.

A joint statement issued by Commerce Secretary Zafar Mahmood and his Indian counterpart Rahul Khullar, at the conclusion of the two-day talks between them in New Delhi, set a timeline for the operationalisation of Most Favoured Nation (MFN) status for India and the obliteration of trading lists, positive or negative.

The joint statement came as Indian Defence Minister AK Anthony warned not to expect too much from the ongoing dialogue.

Path to free trade

Currently, Pakistan maintains a ‘positive’ list, comprising about 2,000 items that it trades with India. In the first stage, according to the statement, Pakistan will switch to a ‘negative’ list approach, with the list finalised and ratified by February 2012. Thereafter, the countries will be able to freely trade all items other than those on the negative list.

In the second stage, the negative list shall be phased out, the statement adds. The timing for this phasing out will be announced in February 2012, when the list is notified. It is expected that the phasing out of negative list will be completed before the end of 2012.

Mahmood said that as a member of the World Trading Organisation (WTO), Pakistan was committed to granting MFN status to India.

“Under WTO, members are to grant MFN to each other. That obligation stands and will be completed when there is no list (positive or negative),” Mahmood told reporters, adding that MFN would be given once the progress on the lists is reviewed.

Khullar said the removal of the positive and negative lists and the gradual phasing out will give a significant boost to trade between the two countries.

Other steps

At the conclusion of talks today, both sides decided to increase trade through the Attari-Wagah land route by the end of February 2012 by increasing the number of trading hours and allowing for movement of containers into each other’s territories.

A committee set up to examine electricity trade will meet in Islamabad by the first week of December. Grid connectivity between Amristar and Lahore to enable trading of up to 500MW of power will be examined at the meeting, the joint communiqué said.

The two countries also discussed the initiation of trade in petroleum products and agreed upon slashing duties on a specified number of items in a phased manner. They reiterated the need to increase bilateral trade from the current $2.6 billion to $6 billion by 2014.

Both sides also decided to encourage outreach programmes between business communities of the two countries. A delegation comprising officers from various regulatory bodies will visit Lahore and Karachi in the first quarter of 2012 to apprise them of India’s trading standards and regulations.

To allow for this and subsequent such exchanges, secretaries from the Indian Home Ministry and Pakistan’s Interior Ministry will meet in December to finalise a deal on creating a liberal business visa regime.

Progress on all these fronts will be reviewed by the commerce secretaries during April-May in Islamabad. Meanwhile, the Indian minister for commerce, industry and textiles, Anand Sharma, is likely to visit Pakistan by February 2012 to meet his Pakistani counterpart Makhdoom Amin Fahim.

Both sides also agreed to institute a mechanism for redressing grievances arising from clearance of trade consignments at land, sea and airports, read the joint statement.

‘Don’t expect miracles’

The Indian defence minister, meanwhile, struck a cautious note: “Don’t expect miracles,” Antony said on the sidelines of a conference organised by the Indian Institute of Defence Studies and Analyses, a government-funded defence think tank. “At the moment, we find a positive sign in relations with Pakistan in the area of economic cooperation. It is a good beginning [and] a positive signal. But we cannot expect miracles. Beyond that we cannot say,” Antony said.

“There are already clear signs that India-Pakistan trade relations might improve and expand. The expansion in cooperation has created an atmosphere to expand the dialogue on security cooperation,” he said.

(Read: Pakistan-India trade)

Published in The Express Tribune, November 16^th, 2011.

Correction: An earlier version of this article carried an incorrect caption with the image.