Opening New Doors
The quest for a thaw in relations between India and Pakistan, which has so far turned out to be nothing more than an elusive dream, has received a shot in the arm with the announcement by Pakistan that it will grant MFN status to India. It would be worthwhile to remember that India had extended a similar status to Pakistan some 15 years back. The reciprocal decision from Pakistan was apparently delayed for so long as there was disagreement on various non-tariff and tariff barriers. Pakistan was also said to have not granted MFN status to India as it had been accused of violating certain trade guidelines laid down by the World Trade Organisation.
In international economic relations, the most favoured nation (MFN) status comes into play when a country receives equal trade advantages as the “most favoured nation” by the country granting such benefits. Such trade advantages can include low tariffs or high import quotas. The country accorded MFN status is, as such, not treated less advantageously than any other country given MFN status by the granting country.
In the recent past, Islamabad has extended concessions to imports from India by adding items to the existing ‘positive’ list of trade items. It needs to be emphasized, however, that every country has its own interests to protect and Pakistan also has a negative list of items that cannot be imported from India in order to protect domestic trade interests, such as textile goods. It is commendable that in its best economic interests, Pakistan’s granting the Most Favoured Nation status to India will greatly enhance bilateral trade, which is about $2.7 billion per annum currently and has the potential of being greatly expanded in the near future.
It is understood that India is willing to not oppose tariff concessions for Pakistani exporters in the European market. It is this new approach of give-and-take that seems to have also encouraged Pakistani businessmen to soften their old position on the MFN status for India. It is being said though that the negative list being prepared by the Pakistani Commerce Ministry on imports from India could prove to be a hurdle in the newly developing trade relationship. The time has come for Pakistan to realize that in today’s competitive and pragmatic economic scenario, old mindsets need to change and a more realistic and proactive approach adopted if the nation desires to make its economic presence felt on a regional and global scale.
It is also gratifying that while announcing the new development, Foreign Minister Hina Rabbani Khar has sought to de-link the subject of MFN status for India from some other long-standing issues between the two countries. She has reiterated Pakistan`s stance on holding a plebiscite in Kashmir. It is hoped that after years of going around in circles, the two nations will now seriously move towards building a relationship based on mutual economic interests and that the latest move on part of Pakistan will open doors to other areas of mutual and constructive cooperation