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Sunday, 30 December 2012

Pakistan puts MFN status for India on backburner


Pakistan puts MFN status for India on backburner

Pakistan is set to miss the target of granting India the Most Favoured Nation (MFN) status by December 31, 2012 due to vested interests, officials alleged.
The next possible cabinet meeting will be held on January 2, 2013 and the issue of granting MFN status to India is not on the agenda, the officials conceded. They further added that Pakistan has also missed the deadline of December 15, 2012 to abolish the negative list.

However, officials believe that right wing groups, backed by the agriculturist lobby, were opposing the MFN status to India. If the process is delayed by another month, there was delay of another six months due to elections and the settling down of the new government, the officials added.

As the year end nears, right wing groups have spearheaded their campaign against granting MFN status to India, and foremost among them is the Jamaatud Dawa. The leaders of this are holding protest rallies and issuing statements almost daily across the country, maintaining that ‘granting MFN status to India was not beneficial for Pakistan’. Their concerns are related to religious differences and strategic issues between the two countries.

Pakistan announced in October 2011 that it will grant MFN status to India from January 1, 2013. Meanwhile, trade relations improved significantly between the two countries.

India had granted MFN status to Pakistan in 1996. However, non- tariff barriers remained intact on exports from Pakistan and both sides did not make much of progress towards trade liberalisation.

While all mainstream political parties are on board for enhanced and free trade with India, incidentally the move to delay granting MFN status to India is being spearheaded by the parliamentarians belonging to the ruling Pakistan People’s Party (PPP).

“Now when everything was in place for final approval, Senator Sughra Imam and MNA Noor Alam Khan both belonging to PPP have approached the top leadership of the country to delay the process,” said a senior commerce ministry official.

The agriculturalists have complained that after granting MFN status to India the local markets would be flooded with Indian goods which are cheap because of low input cost in India.

Meanwhile, experts and independent analysts have discounted concerns by both groups on the grounds that most matters have already been discussed during the past 2-3 years and also resulted in a relaxed visa regime between the two countries.

“The agriculturalists and right wingers are not being realistic – free trade is a reality of coming years,” said Dr Abid Sulehri, Executive Director, Sustainable Development Institute of Pakistan (SDIP).

He said that if Pakistan can survive after signing free trade agreement with China, than there is nothing to fear. Regarding the concerns of the right wing, he said: “They are in small numbers and have their own point of view which should not influence trade and commerce.”

However, the business community has reacted sharply to the visible delay and expressed concern.

“We have been working for more than two years continuously over the matter and huge investments have been made by both the countries in this regard – the delay is like falling back on the commitment,” said Iftikhar A Malik, Vice President Saarc Chamber of Commerce and Industry.

While objections raised by right wing groups are beyond its reach, the commerce ministry is holding meetings with the stakeholders in order to woo the agriculturalists.

“They are asking for more subsidies to make the sector competitive with India,” said Secretary Commerce Munir Qureshi.

“But we need to assess it thoroughly as there are three main branches of agriculture sector – fresh fruits and vegetables, commodities and the dairy,” he added.

It is important to note that the MFN status is to be granted by the Cabinet – the approval would be vetted by the law ministry and finally the commerce ministry will notify India in this regard.

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