Wednesday, February 18, 2009

Pak stubborn on MFN

Despite the frequently-held CBMs between India and Pakistan, the issues between the two neighbours remain where they are -- be it Kashmir, Wullar barrage or the recently-raked up MFN status to India. The Indian government, last week, had challenged Islamabad's decision of not granting it MFN status under SAFTA agreement effective from July 1. But, Pakistan being Pakistan, remains tenacious. It says the agreement does not bind it to grant MFN status to India. "SAFTA does not say that trade relations between Pakistan and India would function on the MFN basis," a Pakistan Commerce Ministry release clarifies.

It also says that it will counter New Delhi's charges that Pakistan failed to implement the agreement, through the provisions of SAFTA itself. Definitely, Commerce Minister Kamal Nath's letter to SAARC Secretary-General Chenkyab Dorji asking him to convene a ministerial council meeting to resolve trade related issues has not been welcomed in Pakistan and is being seen more or less as a "complaint". "The issue is a typical example of how Indians twist things to suit their designs and present a distorted picture to malign Pakistan.

They have been using the issue of MFN to propagate that Pakistan was not fulfilling its obligations and also not reciprocating Indian moves on the subject," says leading daily Pakistan Observer. Pakistan has continuously denied granting MFN status to India. This despite the recent ratification of the South Asia Free Trade Agreement (SAFTA). India had assumed that the ratification would automatically lead to the extension of MFN, as the agreement envisages a duty-free trading area within SAARC countries (Bangladesh, Nepal, Maldives, Sri Lanka, India, Pakistan and Bhutan) by 2018. "The fact remains that India has one of the most protected economy and despite grant of MFN status Pakistani products and goods do not get access to the Indian market," the Observer reasons out.

"Despite the fact that Pakistan has not granted MFN status to India, bilateral trade both formal and informal is heavily tilted in favour of India and there is no upward trend in Pakistani exports to that country," it adds. A no MFN status to India means it gets preferential access only on the 773 items, which are presently mentioned in the positive list. Since Pakistan trades with India on the basis of a positive list, it disallows import of all items that are not on the list. While, India actively pursues trading and commercial relations vis-à-vis other nations, Pakistan sees it as another attempt by New Delhi to be the hegemon in the South Asian region.

Also, at the bottom of all the issues that crop up between India and Pakistan, is Kashmir. Islamabad, unlike its neighbour, is more keen to solve that first. "Pakistan believes that normal trading relations between the two countries would not be feasible until satisfactory resolution of the Jammu and Kashmir dispute. This is the consensus view of the Pakistani nation and no government can afford to ignore it,” the Observer concludes.

(Written for Hindustan Times on July 10, 2006)

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