MANDI BAHAUDDIN: The decision by Pakistan to grant India ‘Most-Favoured Nation’ (MFN) status is much in the news these days.
However, certain misconceptions seem to have arisen in the media about it and this has made the whole issue quite controversial. The very first thing is that the term is a misnomer. It does not mean that India will become a more favoured country in terms of imports. It only implies that Pakistan will give the same treatment to imports from India as it does to imports from the United States, China, Sri Lanka or Thailand, and so on. Hence, granting of MFN status would not mean that India will have preferential treatment over any other country
Presently, Pakistan maintains a so-called ‘positive’ list of around 1,100 items, which can be imported from India. All items not on this list cannot be imported. However, once MFN status comes into effect, this ‘positive’ list will be replaced by a ‘negative’ list. All items on this new list will not be imported but all others not on it will be eligible for import into Pakistan.
The notion that India will be the main beneficiary, while Pakistan, with its smaller economy, will lose out is also misplaced. Simple economics and history suggests that trade with reduced barriers is a ‘win-win’ situation for both sides. Smaller economies, in fact, have benefitted greatly. Take the case of Mexico, whose exports more than quadrupled after the North American Free Trade Agreement went into effect in 1994. This was good not only Mexico’s producers but also its consumers. They had a greater variety of goods to choose from and at reduced prices because the influx of imports increased competition.
Yes, Bangladesh’s exports to India have not increased substantially after SAFTA, but the latter’s economy has been doing much better, growing at over six per cent per year. Above all, it can obtain cheaper raw materials and export more competitive goods to the US and to EU member states. To dispel yet another myth, India does not have barriers specific to Pakistan. Yes, it does have non-tariff barriers but so does Pakistan.
As for the Kashmir dispute and it being linked to Pakistan granting India MFN status, what has that achieved? Compare this to Bangladesh which gave MFN status to India and has prospered, and in due course of time was able to resolve its border dispute with India.
Tassawar Bosal
Published in The Express Tribune, November 23rd, 2011.
