No MFN status to India

KARACHI: Year 2012 has ended with Pakistan’s failure to grant the most favoured nation (MFN) status to India and dismantling of the negative list for strengthening trade with its neighbouring country, which was pledged earlier in the year in commerce secretaries-level talks for approving both the key issues by December 31, 2012.

However, the positive outcome of talks remained intact in 2013 as Commerce Minister Makhdoom Amin Fahim on December 29 said that the decision was deferred in consultation with the Indian commerce minister as some Pakistani manufacturing sectors have showed reservations. The minister without giving new date said that it would be decided soon.

Recently, the Indian side had made it clear that Pakistan should honour its commitments as the same was crucial for future course of action. “One deadline for removal of restrictions on trade through land route is passed, another deadline to dismantle the negative list is coming,” said Sharat Sabharwal, Indian high commissioner, was quoted as saying in a statement issued by the Karachi Chamber of Commerce and Industry.

On the condition of elimination of negative list and granting MFN status, India agreed to bring down its South Asian Free Trade Agreement’s (Safta) Sensitive List to 100 tariff lines at six-digit level by April 2013.

However during the year, key progress was made towards strengthening the trade relations between the two countries as two rounds of talks were held and three agreements were signed in September 2012 for cooperation in customs, redressal of trade grievances and conforming to the quality standards to further normalise economic relations.

Most recently, in December 2012, visa accord was signed between the two neighbouring countries during Rehman Malik, interior minister’s visit to India. Both the countries have agreed to make operational the liberalised visa agreement, which was signed in September 2012.

Indian Commerce Minister Anand Sharma visited Pakistan in February 2012 to strengthen bilateral trade. Sharma’s visit was to reciprocate visit of Makhdoom Amin Faheem, who visited India in September 2011.

The liberalised trade regime between the two countries has been considered as key to enhancing trade volume.

Experts said that the trade volume can be increased up to $10 billion in the next two to three years from the existing level of $2 billion.

Some of the major progress made during the year in talks, which included: the bilateral meetings and discussions of the trade and commerce ministers of the two countries (September 2011, February 2012 and April 2012) provided a strong political impetus to enhanced economic engagement.

Following the visit of Indian Commerce Minister Anand Sharma to Pakistan in February 2012, Pakistan notified its negative list on March 20, 2012.

Commerce ministers of India and Pakistan, as well as the chief ministers of Punjab on either side of the border had jointly participated in the inauguration ceremony of the new integrated check post (ICP) at Attari in April 2012.

In September 2012, commerce secretaries of the two countries agreed on the need for more trade traffic to be carried through Railways.

During the year on exploring the possibilities of opening new land routes for trade, Pakistan constituted a working group on Munabhao-Khokhrapar. India had already constituted the working group.

Both the sides signed the new liberalised bilateral visa regime in September 2012.

India allowed investment from Pakistan in August 2012.

In August 2012, India reduced its Safta sensitive list by 30 percent from 878 tariff lines to 614 tariff lines.

In September 2012, India agreed on the condition Pakistan’s approval of MFN status to India by December 2012. India would thereafter bring down its SAFTA Sensitive List to 100 tariff lines at six-digit level by April 2013.

During the year, an Indian company Bhel made an offer to cooperate with the Pakistani side in setting up 500 to 2,000MW capacity in coal / hydro or gas power plants, as per their requirements. India also made an offer to meet the requirements of Pakistan Railways for up to 100 locomotives.

An agreement was reached for forming a joint working group that would work out more liberalised regime of reciprocal bilateral rights for commercial flights, to ensure economic viability of this air route.

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