Providing Most Favored Nation Status (MFN) status to India will adversely affect Pakistan’s economy and so, India should increase imports from Pakistan to obtain MFN status. Pakistan cannot make a back step in Kashmir issue and move on with other issues. this mutual distrust between the countries is not allowing Pakistan to expand its trade with India beyond limit.
By Sai Nikesh D
Pakistan on February 3, 2015, said that the uneven trade prevailing between India and Pakistan is affecting Pakistan’s economy on a larger scale and the balance of trade is heavily in favour of Indian economy.
Pakistan’s high Commissioner to India Abdul Basit said, “Providing Most Favored Nation Status (MFN) to India will adversely affect Pakistan’s economy because of the uneven trade. So, India should take adequate measures to increase imports from Pakistan to get MFN status.”
Abdul Basit was speaking at a conference on Enhancing India-Pakistan trade, organized by the Indian Council for Research on International Economic Relations (ICRIER), in New Delhi on Monday.
Highlighting the number of non-tariff barriers imposed by India on imports from Pakistan, Abdul Basit was quoted to have said, “We expect our neighbor not to apply non-tariff barriers across the board and show some exemption to Pakistan.”
Stating that the trade has improved between India and Pakistan, but not the relation, Abdul Basit said, “Whenever there was a rise in trade between India and Pakistan, India hardened its position over Jammu and Kashmir issue- as evident in cancellation of foreign secretary-level talks in Islamabad which was scheduled for August 25, 2014.”
He, however, said that Pakistan cannot make a back step in Kashmir issue and move on with other issues, adding that, this mutual distrust between the countries is not allowing Pakistan to expand its trade with India beyond limit. As a solution to address Pakistan’s concerns, the official suggested India to rethink over enhancing imports and remove stringent measures on certain products from Pakistan.
Earlier Choudhry Hamid Malhi, President, Basmati Growers Association and CEO, Livestock Farmers & Breeders Association in Pakistan, had told The Dollar Business, “Farmers in Pakistan are not opposed to trade, but have reservations regarding the level playing field due to enormous subsidies by India to its agriculture sector, whether WTO compliant or not.”
Under WTO rules, trade not only has to be free, but also has to be fair. The financial constraints in matching the Indian size of subsidies to its agriculture sector can in no way be considered as a permission to give unfair competition to Pakistan’s agri products,” he added.
Even after India gave Most Favored Nation (MFN) status to Pakistan in 1996 under a WTO agreement, Pakistan has not reciprocated so far. Lastly, it was in 2012 that Pakistan promised to give the MFN status, but failed to do so till date.
According to Ministry of Commerce, Government of India, bilateral trade between India and Pakistan stood at around $2.7 billion in FY2013-14, compared to around $6.5 billion between India and Bangladesh. Currently, bilateral trade between India and Pakistan stands at around $2.7 billion.
The Federation of Indian Exporters Organization (FIEO) says that bilateral trade between India and Pakistan has the potential to grow almost four times to over $10 billion if Pakistan grants the Most Favored Nation (MFN) status to India.
This article was published in The Dollar Business on February 3, 2015.