Senate body briefed on MFN status to India
By Mubarak Zeb Khan
23 December 2011
ISLAMABAD, Dec 22: Trade liberalisation with India has partially been linked to signing of four agreements to remove all tariff and non-tariff barriers that hinder Pakistani exports to Indian market.
“We have demanded signing of bilateral agreements on Customs Cooperation Agreement, Mutual Recognition Agreement, Redressal of Grievances Agreement and Preferential Tariff under Safta,” said Secretary Commerce Zafar Memood, while briefing senators here on Thursday.
Indian Commerce Minister Shri Anand Sharma is scheduled to visit Pakistan in February next year. “We asked Indian government to get prior approval from relevant departments for signing these agreements during the minister visit,” Mr Mehmood said.
Though the secretary pleaded on behalf of the Indian government for having no Pakistan’s specific barriers to trade, but claimed at the same time that the singing of these four agreements will provide level playing field to Pakistani exporters.
Briefing the Senate Standing Committee on Commerce on one-point agenda of giving the status of Most Favoured Nation (MFN) status to India, the secretary said Pakistan was going to change its trade regime with India from ‘positive list’ to ‘negative list’.
The items in the negative list, however, will not be allowed for trade with India. Local industries have initially proposed 1,000 items for placement in the negative list, the secretary said.
Currently, Pakistan has 1,958 items in the ‘positive list’ for trade with India. The secretary said the negative list would be trimmed to a reasonable level.
The committee headed by Ilays Bilour said that he personally supported the granting of MFN status to India. He said that the move would provide Pakistan a market of over a billion people.
Asked about delay in finalising the negative list with India, the secretary said that the federal cabinet was the appropriate forum to decide the issue. However, he assured that sufficient level of protection would be ensured to local industries before completion of trade liberalisation with India to culminate on granting full MFN status to India.
And the secretary outright rejected the impression that there was a pressure on Pakistan for granting MFN status to India.
Though India demanded granting of MFN in one go but he said the ministry of commerce sequenced it. “The ministry of commerce will give a transparent presentation to the cabinet in February on MFN to make final decision,” Mr Zafar said.
“The federal cabinet has already empowered commerce ministry to normalise trade relations with India on non-discrimination basis which means MFN status”, the secretary said.
Mr Zafar informed the legislators that at present many products are coming to Pakistan from India via Dubai with different brand names. “This cost additional amount of $300 million to $700 million annually”, the secretary claimed.
He said the direct import of such raw materials and machinery from India would reduce its cost for the local industries.
However, the secretary admitted that after granting MFN status, the trade balance would remain in favour of India.
Currently, Indian exports to Pakistan stood at $1.6 billion while Pakistan’s exports to India stood at around $500 million.
The secretary said a full fledge campaign would be launched soon to abreast local industries of the challenges and opportunities in the post-MFN trade regime with India.
Ishaq Dar of PML-N suggested ministry of commerce to probe the issue of state subsidy to Indian exporters. This he said could hurt interest of local industries. He also mentioned that cost of production in Pakistan was much higher than India.
Haroon Akhtar Khan said the trade liberalisation would only benefit India. He questioned the government’s move for de-linking trade liberalisation with India from other core political issues. He said Pakistani products would face tough competition from Indian subsidised products.
Abdul Razzaq also said that giving MFN status to India would lead to flooding of local markets with Indian goods.