‘Positive’ move: Cabinet okays India trade liberalisation

Negative list approved; complete removal of barriers by December.

ISLAMABAD:

Aiming at complete trade normalisation by the end of this year, the federal cabinet not only approved a negative list of 1,209 banned items, which will allow trade in all other goods with India, but also sanctioned the phasing out of the negative list in the next ten months.

At present, Pakistan maintains a positive list of 1,945 items that are allowed to be traded between the two countries. The switch from a positive to a negative list has long been a hurdle to freeing up trade between the two.

“On recommendations of coalition partners and cabinet members, Prime Minister Syed Yousaf Raza Gilani has approved the negative list,” said Information Minister Firdous Ashiq Awan while briefing the media.

The cabinet also decided in principle to phase out the negative list by December 31, 2012, which will complete the trade normalisation process, the minister said.

Larger than expected

The negative list approved by the cabinet, however, is comparatively larger than the understanding arrived at with India. The commerce ministry, in a policy statement earlier, had vowed to restrict it to 636 items.

After consultations with the industry, it was proposed to add 573 items into the commerce ministry’s list, said a spokesperson of the ministry of industries.

The ministry’s recommendation to phase out the negative list in 3 to 5 years was not accepted by the cabinet though, he added. The commerce ministry will determine the timeframe for gradual phasing out of the negative list in the next ten months, in consultations with stakeholders, the minister said.

The abolition of the negative list would automatically confer the ‘Most-Favoured Nation’ status to India, but an official from the textiles ministry disagreed, saying the cabinet would have to prepare a fresh summary in this regard.

Under the World Trade Organisation rules, no state can restrict trade with any other state, but Pakistan has added Annexure G in its trade policy that allows trade with India in limited items. India too has banned investment by Pakistani firms.

Indian Commerce Minister Anand Sharma, during his recent visit to Islamabad, had said his country would relax the ban once the process of trade normalisation is completed.

Addressing concerns

Awan said the Ministries of Industries, Production and Textiles raised concerns over the proposed negative list but the commerce minister assured the cabinet that the government would protect the interests of the local industries through effective implementation of safeguard laws.

In the next 10 months, the local industries would be ready to compete with their Indian counterparts, Awan said.

To a question on the security establishment’s opposition to trade normalisation, Awan said the commerce ministry has consulted all stakeholders, including the military. The process of trade normalisation is not a betrayal to the Kashmir cause, the minister said.

“The prime minister told the cabinet that since trade began between Azad Kashmir and Jammu Kashmir, as many as 14,000 trucks have crossed the Line of Control, involving Rs 14 to 15 billion in trade transactions.”

“If direct stakeholders [in the Kashmir conflict] can trade, then the government has every reason to protect the interests of the rest of Pakistan”, Awan said while quoting the premier.

Published in The Express Tribune, March 1^st, 2012.