The Nation | March 02, 2012
Pak opens door to all Indian products
By: Our Staff Reporter
LAHORE - SALMAN ABDUHU — The Federal government’s decision to liberalise trade with India and cabinet approval to eliminate negative list by year end are going to open country’s doors to Indian products whereas Pakistan has nothing significant to export India except raw gypsum, salt and dry fruits.
As per Federal Board of Revenue, Pakistan would face revenue loss of Rs3 billion per annum after normalisation of trade with Indian especially when South Asian Free Trade Area (Safta) tariffs become operative from January 2013.
On the other hand, the Commerce Ministry argues that WTO trading arrangements are based on the principle of MFN, which implies non-discriminatory treatment among the member countries in terms of tariff.
The negative list will block free import of just 1,209 items from India of a total of more than 8,000 Indian major items. This will pave the way for the implementation of South Asian Free Trade Area (SAFTA) from January 1, 2013 that would allow import of Indian products at a concessional tariff of five percent.
Pakistan has been trading with India on the basis of positive list for the last several years even though New Delhi granted MFN status to Islamabad in 1996.
Pakistan’s stance was that the non-tariff barriers on Indian side hampered Pakistani exports as evident from marginal increase in exports even after MFN status. India agreed last year to remove all non-tariff barriers provided Pakistan granted it MFN status and ended the positive list approach.
In line with WTO trade arrangement, the cabinet unanimously approved to move from positive and negative list of items for trade with India. The cabinet also decided to phase out the negative list between Pakistan and India by December 31, 2012. After that, process of trade normalisation between the two countries will be completed.
Officials said that an extensive consultation process was carried out by the Ministry of Commerce both with public and private sectors of Pakistan.
The ministry requested all the stakeholders including industry, chambers of commerce and trade associations of Pakistan to recommend items with justification to be included in the negative list.
Manufacturers of automobiles and their parts lost their last hope when the cabinet approved a negative list for trade with India which will be phased out by the end of this year, believing this will massively hurt the country’s auto industry.
After months of deliberations with different industries and inter-ministerial dialogue, the government finally gave the go-ahead to the negative list containing 1,209 items, replacing the positive list, in an attempt to boost trade between the two countries.
The government had been facing strong resistance from different sectors which believed that the negative list should be phased out gradually over a number of years so that it would not hurt the domestic manufacturing industry. Among top advocates of the go-slow policy was the automobile industry.
Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Syed Nabeel Hashmi told that the government’s decision to phase out the negative list in just a few months was going to badly hurt the automobile industry.
All Pakistan Cement Manufacturers chairman commented the country has already had MFN status since 1995 but due to non-tariff barriers created by Indian bureaucracy, the Pakistani exporters could not get access to Indian markets due to various reasons.
He continued that cement and textile sectors are the best examples where Pakistani cement manufacturers have been demanding removal of non-tariff barriers but even the Pakistani government, contemplating MFN status for India, could not persuade the Indian government for the same.
The Pakistani textile, he mentioned, was deliberately stopped by the Indian authorities due to of being superior quality.
Industry experts said that if government, by granting MFN status to India, is eager to enhance its imports from the nuclear rival state, firstly it should import cheaper fertilisers, diesel and electricity from there, as our manufacturers are looting the masses by selling their products at much higher rates, experts said.
“Diesel is Rs94 per liter in Pakistan while in India it is available for Rs77 per liter. Electricity is being provided to Indian growers at Re1 per unit and in Pakistan it is not less than Rs8.38 per unit,” they said.
The rate of agriculture produce is much higher in India than Pakistan while their cost of production is very low, as the Pakistani farmers spend Rs321.33 billon more on agri inputs as compared to Indian growers.