Pakistan commerce secy visit may boost trade ties

Business Standard, November 13, 2011
As Pakistan commerce secretary Zafar Mahmood arrived in New Delhi this evening, hopes of enhancement of bilateral trade got boosted. While no further movement on granting most-favoured nation (MFN) status is expected, the visit would examine the progress made since the last meeting of the commerce secretaries.

On Monday, Mahmood will meet his counterpart Rahul Khullar and scrutinise the advancement of the decisions jointly made during their meeting in Islamabad in April, which was seen as a path-breaking one between the two countries as far as bilateral trade is concerned.

“We have got mandate from our political leadership, there is ownership by the political leadership. They are very supportive of whatever is going on, and hopefully you will hear good news after two days. You can’t fully normalise trade relationship without invoking the mfn principle because pak and india both are signatory of WTO and WTO obligates all members to observe the mfn principle. So we will working on that,” said Mahmood on his arrival.

“We started a process six month ago. We will take stock where we have moved forward,: said Khullar.

While Mahmood is expected to reiterate the position taken by the Pakistan government on the MFN issue, there are good chances of significant progress in other areas. Both sides are expected to finalise the issue concerning multiple-entry visas for businessmen, officials in the ministry of commerce and industry told Business Standard. At present, the ministry of home is examining the issue.

“Certainly, there would not be any earth-shattering announcement. The main purpose of the visit would be to get some traction on issues like the negative and positive list, reduction of non-tariff barriers, visa liberalisation and so on. They know it very well that on MFN, India has crossed the penultimate stage. It is a matter of time before they officially grant MFN status to us,” said Pradeep Mehta, secretary general of Jaipur-based non-governmental organisation CUTS International.

Besides MFN, both sides have decided to establish a preferential trade agreement that would see tariff reduction on a number of items that are traded between the two and, in larger quantities, reduction of sector-specific tariff and non-tariff barriers.

“What had happened in April was a major step, but the level of implementation has become a drag. Nevertheless, there is forward movement despite fluctuations and volatilities. At least both sides are now talking, which is important,” said Ram Upendra Das, fellow, Research and Information System for Developing Countries.

Both sides have also agreed to expand trade in all types of petroleum products and electricity. During the meeting of the joint task force in August, the Pakistani side raised issues concerning the export of cement, fruits and vegetables, processed food items, textiles and leather.

India has been urging for the MFN status from Pakistan under the South Asia Free Trade Agreement since 1996. Under World Trade Organisation rules, it is the fundamental right for all members to get the MFN status if they have an agreement among themselves.

On the one hand, by not giving MFN status to India, Pakistan is violating that law and, on the other, a large chunk of trade through the indirect route is taking place, which is double the size of the formal trade.

In 2010-11, India-Pakistan trade stood at $2.6 billion. Both sides have set a target of $6 billion worth of bilateral trade in the next three years. At present, more than 12,000 items are there on Pakistan’s negative list while 1,948 items come under the positive list. Pakistan is expected to prune their negative list of items soon. India will now be able to export its textiles, engineering goods, chemicals, raw materials, spices and other such materials to Pakistan.

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