Open Forum
New Delhi, 12 October 2011
Pak Gives MFN Status
A NEW RAY OF HOPE?
By Dr PK Vasudeva
(author
WTO, Implications on Indian Economy)
Finally, a ray
of hope in the now-on-now-off India-Pakistan relations. After 16 long years of
vacillating after New Delhi accorded Islamabad the Most Favoured Nation (MFN) status in 1995, Pakistan agreed
to reciprocate in matters of trade and commerce. Notwithstanding, the
contentious ‘core’ issue of Kashmir and
terrorism emitting from across the border.
Recall, India and Pakistan
resumed formal peace talks again in February three years after New
Delhi broke off ties post the 2008 Mumbai attacks under pressure from the US. This was followed by announcement of resuming cricket ties in April.
This is part of India’s
two-pronged strategy: Give no quarter on terror and simultaneously continue to
undertake confidence building measure (CBM)
Importantly, Pakistan’s
about-turn in granting India MFN status stems from the realisation that it would
be a gainer in doing so. Two factors are believed to have influenced the
Pakistani thinking on the issue.
One, Islamabad’s relations with Washington
has been under tremendous strain after the Taliban attack on the US Embassy in Kabul in which US sees the hand of Inter Services
Intelligence (ISI). In fact, Admiral Mike Mullen minced no words when he
accused Islamabad
of being hand in glove with the Haqqani network. Faced with Washington’s
tirade, the Jamiat-ul-Ulema’s Maulana Fazlur Rehman advocated that it was
imperative Islamabad soften its attitude vis-à-vis New Delhi in view of the changing regional
and global reality.
Two, Pakistan’s business community has made a strong
recommendation for MFN status to India, as it was confident of competing
with Indian business houses in the changed scenario. This new-found confidence
could be noticed during the current Indo-Pak trade talks at various forums.
The Pakistani
decision would most probably be announced next month when Commerce and Industry
Minister Anand Sharma visit’s Islamabad
to hold talks with his Pakistani counterpart. If this materialises the annual
bilateral trade would increase from the present $2.7 billion to $6 billion by
2014. Efforts are on-going to work out the modalities for trade in new areas
like the energy sector.
Besides, Pakistani
businessmen are happy that India
has not opposed Islamabad’s
efforts for tariff concessions from some European Union (EU) members. A new
climate is emerging in South Asia in which India
and Pakistan
appear to be heading towards a liberal business visa regime also.
Pertinently, since the World Trade
Organisation’s (WTO) inception on 1 January 1995, members according MFN status
to each other has been the corner-stone of WTO trade law. Whereby, nations
allow for preferential treatment of developing countries, regional free trade
areas and customs unions.
The clause stipulates: respect to
custom duties and charges of any kind imposed on, or in connection with,
importation or exportation, or imposed on the international transfer of payments
for import or exports, and with respect to the method of levying such duties
and charges, and with respect to all rules and formalities in connection with
the importation and exportation, any advantage, favour, privilege or immunity
granted by any contracting party to any product originating in, or destined
for, any other country shall be accorded immediately and conditionally to the
like product originating in, or destined for, the territories for all
contracting parties.”
India as a goodwill measure
gave Pakistan MFN status, but Islamabad refused
stating that unless the Kashmir problem was settled
it would not reciprocate. Moreover, New Delhi
declined to file a complaint against Islamabad
for not granting MFN status to New
Delhi in the WTO’s Dispute Settlement Body because
granting of MFN status to member countries was the major condition under the
WTO agreement. The reason being that India wanted Pakistan to do so without any
“external pressure.”
Indeed, this 15 years old
controversy over MFN status to India
has generated intense debate in many sections of Pakistan society. Those opposed to
granting MFN status have not only voiced religious, parochial, ethnic and
emotional arguments. Worse, by doing so it would tantamount to cuddling with
the enemy.
The anti-MFN lobby is of the belief
that liberalization of trade with India would open a flood-gate of
cheap Indian goods and that non-tariff products would play havoc with the local
industrial scene. They fear that the local industry would be gradually
eliminated if Indian goods are available in abundance. They also subscribe to
the theory that more trade means less emphasis on Kashmir.
Remember, former Prime Minister set
the ball rolling in creating bonhomie by undertaking a bus ride from Amritsar to Lahore
on 20 February 1999. He was received at the Wagah border by his Pakistani
counterpart Nawaz Sharif, along-with thousands of excited and cheering country-men.
The India Prime Minister was stepping on Pakistan soil after 21 years.
In a historic speech, Vajpayee asserted:
“I bring the goodwill and hopes of my fellow Indians, who seek abiding peace
and harmony with Pakistan.
I am conscious that, this is a defining moment in South Asian history, and I
hope we will be able to rise to the challenge.” Emphasised Sharif: “I have a
vision for South Asia. I believe that
countries, small and large, can live in harmony and work together for their
mutual prosperity.”
Further, in a joint statement issued
at the end of the historic visit in which the Lahore Declaration and a
Memorandum of Understanding were signed, the two leaders agreed, inter alia, “the two sides shall
undertake consultations on WTO related issues with a view to coordinating their
respective positions.”
In the ultimate
analysis against the backdrop of Islamabad
granting MFN status, India
and Pakistan
can now develop greater stake in economic growth. Furthermore, South Asian
Association for Regional Cooperation (SAARC) would also be in a better position
to realise its dream of growing into a grouping like the EU. The two countries
have wasted their energy considerably on issues like Kashmir.
Clearly, the
time has come for focussing on economic issues. People in South
Asia, home to a vast majority of the world’s poor, need the
availability of employment opportunities more than anything else. This is
essential so that no one takes interest in destructive activities like
terrorism. Better trade relations between India
and Pakistan
can also help the cause of peace in the region. ---- INFA
(Copyright, India
News and Feature Alliance)
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