Pakistan moves closer to granting MFN status to India
India and Pakistan are working towards a resolution and, if all goes well, Pakistan may award the MFN status to India by this year end. However, the Kashmir dispute remains a major roadblock.
Bidhu Bhushan Palo | @TheDollarBiz
Pakistan’s plan to award the Most Favoured Status (MFN) to India, as a part of World Trade Organisation (WTO) obligations, is likely to materialise by this year-end due to efforts from both sides led by crucial stakeholders including industry representatives. This, provided, talks resume between the two countries. Under the WTO non-discrimination principle known as Most Favoured Nation (MFN), members are not allowed to discriminate between their trading partners. India granted the MFN status to Pakistan in 1996, but Pakistan has not done so due to several reasons including the Kashmir dispute, political turmoil and opposition from certain sectors such as rice, textiles and automobiles. Rice is a cash crop in Pakistan and does not get government support unlike in India where rice is a staple. Farmers in Pakistan say that allowing free trade with India may make Pakistani rice uncompetitive and have called for rationalisation of duties to protect the local industry. Choudhry Hamid Malhi, President, Basmati Growers Association and CEO, Livestock Farmers & Breeders Association in Pakistan, told The Dollar Business, “Farmers are not opposed to trade but have reservations regarding the level playing field due to enormous subsidies by India to its agriculture sector, whether WTO compliant or not. Under WTO rules, trade not only has to be free but also has to be fair. The financial constraints in matching the Indian size of subsidies to its agriculture sector can in no way be considered as a permission to give unfair competition to Pakistan’s agri products.” However, the move to involve industry representatives to resolve concerns is likely to help achieve a breakthrough. Recently, Syed Yawar Ali, Pakistan Co-Chair of the India Pakistan Joint Business Forum (IPJBF) had said in New Delhi that all formalities about MFN for India have been completed and it’s only a question of time now. "However, the position will be clearer after the two foreign secretaries meet,” Ali had added. According to Ch. Malhi, the concerns are now being taken up on a sectoral basis with counterparts in India through the India Chamber of Industries and the recent meetings held in Delhi (7-8 August, 2014) have been quite fruitful in this regard. “The next (5th) round of these meetings is planned to be held at Lahore in November 2014. Both sides are treading the path with great caution and would ultimately achieve the desired goal,” he told The Dollar Business. However, trade ties are closely linked to bilateral ties between the two countries which suffered a setback with India’s Foreign Ministry cancelling talks with Pakistan slated for next week after Pakistan’s envoy to New Delhi met with separatist leaders from Kashmir.
This article was published on August 20, 2014.
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