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As Pak finally relents, MFN to boost India ties

Hindustan Times, India

As Pak finally relents, MFN to boost India ties

2 November 2011

Pakistan on Wednesday approved a proposal granting India the status of “most favoured nation” which would pave the way for direct import and export of goods and services. Textile, automobile and auto component trade through the land route with easier tariffs and quota restrictions are a distinct possibility.

“The federal cabinet has unanimously approved India as the most-favoured nation,” Information Minister Firdous Ashiq Awan told a news conference in Islamabad.

MFN is status where countries agree to offer equal treatment to each other in terms of tariffs and quotas in international trade.

The members of the World Trade Organisation (WTO) have agreed to accord MFN status to each other.

Pakistan was the only country in South Asia that had denied India MFN status, violating WTO norms and holding up the Saarc Free Trade Area from becoming operational.

In the past, Islamabad had linked the issue of MFN for India with the Kashmir dispute, although technically it is a pure trade related matter.

“The prime minister reviewed all the objections and took the cabinet into confidence that it will not hurt our national security and then they unanimously approved this summary sent by the ministry of commerce,” Awan said.

In September, India and Pakistan agreed to more than double bilateral trade within three years, from current levels of $2.7 billion dollars to about $6 billion dollars

“The ministers mandated their commerce secretaries to pursue with vigour the task of fully normalising bilateral trade relations. They agreed that their countries would cooperate for a high ambition of preferential trade relations under the framework of the South Asia Free Trade Agreement (SAFTA),” commerce and industry minister Anand Sharma and Pakistan’s trade minister Makhdoom Amin Faheem, who was on a five-day visit to India in September, had said in a joint statement at that time.

Pakistan is expected to make an announcement replacing its “positive list” with a “negative list”. There are around 2,000 items on Pakistan’s “positive list”. It imports only those items on that list from India, contrary to normal bilateral trade relations.

(With agency inputs)