Pakistan To Declare India ‘Most Favored Nation’

Society Pakistan & World Affairs
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Looks like Pakistan would be flooded with Indian goods. Pakistan would not have to import from far off countries like Kenya. India has already offered MFN status to Pak.

Pakistan Moves To Declare India ‘Most Favored Nation’

Pakistan’s decision will enable hundreds of thousands of divided families to reunite

By Asif Farooqi, IOL Pakistan Correspondent

ISLAMABAD, May 7 (IslamOnline.net) - Pakistan on Wednesday, May 7, set the ball rolling on the way to normalization of trade and diplomatic relations with arch rival India by asking its flag carrying airline to prepare schedule to fly to India.

The Jamali government also sought views from the Foreign Affairs and Commerce ministry on the proposals of awarding a Most Favored Nation (MFN) status to India.

“We plan to start flights to India in a week to 10 days as instructed by the federal government,” a Pakistan International Airlines (PIA) official told Islamonline.net from Karachi in a telephone interview.

In response to Indian Prime Minister’s April 18 call for normalization of relations with Pakistan, Prime Minister Zafarullah Jamali of Pakistan announced on Tuesday, May 6, the resumption of the road, rail and air links with India and proposed other steps to increase trade.

PIA official said the airline was issued instruction Wednesday morning by the federal government to prepare a flight schedule to resume air links instantly. But the officials said it will take at least a week or ten days before they could fly to destinations in India.

He said two flights would be operated from Karachi to New Delhi, two from Karachi to Mumbai and two from Lahore to New Delhi. The official said he expects Indian airlines would also get permission to start flights to Pakistan soon.

The PIA official said the resumption of flights to India would be followed by Pie’s service to Katmandu, Nepal’s capital, and destinations in Southeast Asia.

India and Pakistan banned flights more than a year ago at the height of tensions when India blamed Pakistan-backed militant groups for launching a terrorist attack on the Indian parliament. Pakistan denied it was involved in the attack.

Though India lifted the ban from Pakistan flights over the Indian territory, Pakistan kept a decision pending on accepting the offer for a “suitable time”.

Sources in the federal government also confirmed the announcement of the Jamali government’s decision to award the “Most Favored Nation” status to India was on the way.

“Prime Minister has made up his mind on the issue of declaring Indian MFN and formal views from the two ministries has been sought,” sources in the Prime Minister’s office said.

Prospects of Pak-India trade would get a boost with the declaration of MFN to India. The two countries would be liable to give preference to the businessmen from each others country in terms of duty relaxations and awarding of trade related contracts. India has already declared Pakistan the MFN but it could not be implemented as Pakistan refused to do the same.

Pakistan and India have very big potential in the trade area. Some analyst put the prospected trade figures between the two countries up to $4 billion annually. Presently volume of trade is only $206 million.

Pakistan’s decision to lift travel sanctions against India will enable hundreds of thousands of divided families to reunite. Thousands of Pakistani and Indian families were divided in 1947 during the demarcation of border between the two nations.

More than 150,000 people from thousands of divided families travel by train between India and Pakistan every year. The Samjhota Express train, the only passenger train between Pakistan and India would also be on track very soon, official confirmed.

While such positive developments were taking place, U.S. deputy secretary of state Richard Armitage was on his way to Pakistan. Known as the U.S. administration’s top troubleshooter for South Asia, Armitage is due in Islamabad late Wednesday night. He will be having discussions with Pakistani leadership Thursday, May 8, before flying to India.

The U.S. Deputy Secretary of State’s visit comes almost one year after he swung through both capitals at the head of an international diplomatic offensive to avert war between Pakistan and India. His shuttle diplomacy was credited with pulling the hostile neighbors back from the brink of a conflict many feared would turn nuclear.

According to the diplomatic sources, the U.S. diplomat would also visit Afghanistan where recent attacks against the government and U.S. forces have made the security and political situation more fragile ahead of the beginning of a political process wherein the transitional government of Hamid Karzai is to start the process of general election and adaptation of a constitution.

In Pakistan, Armitage is likely to call on the leaders to keep their promises to reduce alleged infiltration by militants across the Line of Control. In India, his goal would be to bring the leadership around the negotiating table so that the two nuclear neighbors could start talking, diplomatic sources said.

Pakistan Moves To Declare India ‘Most Favored Nation’

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If thats so, it would be one of the biggest blunders made by any rulers in Pakistan's history...

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[QUOTE]
*Originally posted by zaavia: *
If thats so, it would be one of the biggest blunders made by any rulers in Pakistan's history...
[/QUOTE]

do you want to buy tea from kenya instead of india and pay more
price? how about life saving medicines? rabies vaccine can save lot of life.

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I dont want Pakistani markets flooded by cheap Indian goods...this is the best way the Indians can achieve the 'AKHAND BHARAT' dream...by killing the snake and keeping the stick intact...there are many other places where this stuff can be bought...besides, if we were to trade with the Indians, Chinese goods are better and cheaper...why shouldnt we go for them? the whole world is loaded with Chinese stuff. Why doesnt India instead declare China MFN, and start importing that stuff from them. ;)

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Already Pakistan is flooded with Indian silk, fabrics, steel, raw material, toys, bicycles etc. Thousands of bicycles and other Indian goods are imported under the Afghan Transit Trade (ATT) every month and later smuggled back into Pakistan. In fact Samjhauta Express is mainly used to smuggle goods from India to Pakistan and Pakistani govt. does not benefit from smuggled goods. Now with MFN status Pakistan can get some tax benefits.

Indian goods are not sold with their original trade names. New stickers are put on them in Afghanistan so that they seem like Pakistani names. In fact most consumer items used by Pakistanis are in fact Indian items smuggled from India via some other country.

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What ever the case might be, by declaring India as the MFN it will be given legality. Due to smuggling things enter Pakistan, but they are not that much, limited to a few items, this way, we ourselves will legalize things and start giving our assets in India's hands. Like the package seems to be suggesting joint partnerships, and bla bla...and considering that the core issue of dispute between Pakistan and India remains it would be a very stupid decision. We need to protect our economy, and not live under Indian shadow, like Canada versus USA.

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this article describes benefits of trade between the two

It is no use arguing we are a small country compared to India, and so can’t compete with India. How are small countries like Belgium, the Netherlands and Denmark living in the neighbourhood of France and Germany, and thriving with Industries known for their excellence? They are focusing on their core areas of competence and competitiveness, and improving their capabilities all the time through research and market surveys. Our industries and exporters have to learn to accept lower profits and spend more money on research and market surveys

http://www.dawn.com/2003/05/08/op.htm#3

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Ok, give me one reason why India doesnt declare China the Most Favored Nation?

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There may be a danger of Pakistan's economy becoming like that of Bangladesh.

As my cousin who lived in Dhaka commented....

"Everything is made in India and the eggs are laid in India".

The disadvantages to Pakistan of this deal are chiefly concerned with being flooded with cheap Indian goods (note that for the same reason, Pakistan tightly controls the import of Chinese goods that threaten domestic companies)

What does Pakistan stand to gain? What can be exported back to India, besides electricity and onions? The balance of trade between the two countries must be closely examined to ensure that Pakistani does not in the long tern accrue a large negative deficit in the balance of trade.

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Once free trade is established, its rest assured that the Pakistani products will be replaced by the Indian ones, and due to joint ventures, Indians will be the owner of Pakistani companies. And then automatically there wouldnt even be the need for a separate country.

On one hand Indians want to do free trade with Pakistan, since they know they will easily penetrate the market, and on the other hand they dont want to do the same with China, although they produce better products as compared to the Indians as well as cheaper.

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If Chinese products are better and Cheaper than Indian Products, then establish a Free Trade agreement with the Chinese and use the better and cheaper products. After all India is not stopping Pakistan from doing business with china. May be Pakistan should withdraw the MFN status from India and give it to China.

India wants to do free trade with China or not is India's business, Why do you want to control India-China business ?

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Should India withdraw the MFN status given to Pakistan? Pakistan has failed to reciprocate to India's in principle grant of MFN status to Pakistan . Pakistan has not extended normal GATT\WTO rights or the MFN principle to India.

India also does not have any list of permitted or forbidden products while Pakistan maintains a "permissible list" of 600 items which can be legally imported to India.

India has also favoured liberalising of visa regime to facilitate easy movement of businessmen of both countries.

Right now bilateral trade between India and Pakistan has suffered as goods between the two countries moved through third channels.

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Pakistan hasent given India the MFN status, and I hope we dont. We need to look after our interests not India's.

[QUOTE]
Originally posted by Asif_k: *
If Chinese products are better and Cheaper than Indian Products, then establish a Free Trade agreement with the Chinese and use the better and cheaper products. After all India is not stopping Pakistan from doing business with china. **May be Pakistan should withdraw the MFN status from India and give it to China.*
[/QUOTE]

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[QUOTE]
*Originally posted by durango: *
Should India withdraw the MFN status given to Pakistan? Pakistan has failed to reciprocate to India's in principle grant of MFN status to Pakistan . Pakistan has not extended normal GATT\WTO rights or the MFN principle to India.
[/QUOTE]

Yes, India should also revoke the MFN from Pakistan. There's no need to have free trade between the two countries.

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Good for you, btw what are you whinning about then ? Go ahead and look at your own interest and let us look at ours and stop cribbing about how India is not giving MFN status to China. That is India’s business not yours.

Btw - Here is some food for thought. :slight_smile:

*"..Let us take the second aspect first. In the full financial year of 2000-1 ( after which 9.11 and 13.12 incidents completely disrupted the trade between the two countries), Pakistan’s total export to India was no more than $55.34 million and imports from India were $235.86 million. So despite enjoying the MFN status Pakistan suffered from a trade gap of more than $180 million and India despite being a non-MFN state earned that much more from its exports to Pakistan. Even during the first nine months of the disrupted year, Indian exports to Pakistan went up to $141 million and exports from Pakistan to India were no more than $41 million , showing a big gap of $100 million.

And what does Pakistan, the MFN state, export to India rather more frequently and in reasonable quantities? Green beans, Kishmish, fresh and dry fruit, rock salt, leather products, cotton yarn and mulahti. And what does India, a non-MFN state, export to Pakistan? Black tea, manganese ore and concentrates, iron ore agglomerates, betel leaves, plant for perfume pharma, xylene, terephthalic acid and its salts, tyres and tubes, sugar, cardamom, oil cake and residue of soyabean.

Clearly, despite being a MFN state Pakistan is not exporting to India anything of significance other than dry fruit. On the other hand India despite being a non-MFN country is exporting to Pakistan items which are essential industrial raw material and intermediaries. .."*

http://www.dawn.com/2003/02/03/ebr6.htm

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Thats exactly the reason, I dont think any sane person in Pakistan will want our government to give MFN to India. The trade deficit at the moment is sustainable. Pakistani industrial base is up and running, once we give the Indians with the MFN our markets will be filled by cheap Indian items, hence causing a great damage to our industry, and in the long run turning Pakistan into wasteland of Indian goods. With joint ventures we might see Indians as chief executives in Pakistani companies which would be unacceptable to many. The gap between imports and exports will further widen in India's favor.

Its in India's interest for Pakistan to give them the MFN status, not ours. I dont care whether Indians give China the MFN or not, what I know is that we shouldnt give the Indians the MFN status.

[QUOTE]
*Originally posted by Asif_k: *

Pakistan's total export to India was no more than $55.34 million and imports from India were $235.86 million. So despite enjoying the MFN status Pakistan suffered from a trade gap of more than $180 million and India despite being a non-MFN state earned that much more from its exports to Pakistan.

[/QUOTE]

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Actually, Pakistan should not do any business with India at all - MFN or No MFN. They should have their trade relations with China at least they can get the QUALITY chinese products. That will really boost their Industry bases in Pakistan and must be in Pakistan's interest. ;)

PS :- Please Read the full Article, It will tell you more about the MFN. :)

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Trade May Yet Be The Key to Peace

Ranjit Devraj

Trade may yet prove to be the cement with which feuding South Asian neighbours India and Pakistan can fix a see-saw relationship that has often erupted into open warfare over the past half a century.

NEW DELHI, May 8 (IPS) - Trade may yet prove to be the cement with which feuding South Asian neighbours India and Pakistan can fix a see-saw relationship that has often erupted into open warfare over the past half a century.

Left to themselves, the members of the India-Pakistan Chambers of Commerce and Industry, set up in 1999, would quickly move to mutually accord Most Favoured Nation (MFN) trade status to each other’s country.

The two countries are now gingerly trying to restore diplomatic ties and air links disrupted by an attack on India’s Parliament house in December 2001, which also nearly triggered off yet another war between the countries that went nuclear in 1998.

Last week, Indian Prime Minister Atal Bihari Vajpayee said he planned to make a third and final attempt at making peace with Pakistan and once again proffered a formula that would place trade and bilateral issues ahead of the contentious Kashmir issue.

Soon after that, Pakistan’s Foreign Minister Khursheed Mehmood Kasuri told an interviewer from the British Broadcasting Corp’s (BBC) Hindi service that his country was prepared to go along with Vajpayee’s idea.

‘‘India has always said that it wanted to talk about trade issues and we have insisted that Kashmir should be discussed firstàNow we accept India’s argument and would like India to take the first step,’’ Kasuri told the BBC.

But it is not only the militants bent on mischief that move across the 1,000-kilometre long ‘live’ border between the two countries, but also an estimated five billion dollars worth of contraband each year.

‘‘Obviously if there is peace, the beneficiaries of formalising that unofficial trade would be the governments of the two countries,’’ says Amit Mitra, secretary general of the power Federation of Indian Chambers of Commerce and Industry (FICCI).

Trade between the two countries, partitioned on the grounds of religion in 1947 and warring ever since over the disputed territory of Kashmir, was placed at a paltry 204 million U.S. dollars in the 2001-2002 financial year.

Kasuri also suggested that India and Pakistan talk about the Turkmenistan, Afghanistan and Iran gas pipelines which could benefit countries in the entire region from production, consumption or transit, but has been held up by conflicts in South Asia.

In April, delegations from Turkmenistan, Afghanistan and Pakistan met under the aegis of the Asian Development Bank (AsDB), which is expected to produce a positive feasibility report by September – provided India joins in.

The end of the Afghan war and the installation in Kabul of the pro-U.S. Hamid Karzai government meant that it would only be a matter of time before a decades-old plan to pump Central Asian gas through Afghanistan and Pakistan to India would be revived. Iran has already been negotiating to sell gas to India through an overland pipeline across Pakistan, but New Delhi has insisted ‘‘for obvious security reasons’’ that it preferred an undersea pipeline bypassing its rival altogether – even if the costs would go up by several hundred million dollars.

Following discussions with visiting Iranian President Mohammed Khatami, India’s Petroleum Minister Ram Naik announced in February that the pipeline would bypass Pakistan. ‘We are not going to talk to Pakistan on this,’’ Naik said.

The new thaw in India-Pakistan relations could change that decision into a ‘‘win-win’’ situation for all three concerned parties.

There are other trade anomalies waiting to be ironed out.

Pakistan, the world’s second largest consumer of tea, hardly buys any from India, which is the world’s biggest producer, and instead imports the beverage leaf from Kenya and Sri Lanka at greater cost.

Pakistan also imports its iron ore from Australia and Brazil rather than India, ignoring cheaper commodity costs and lower freight charges.

India could buy cotton from its neighbour Pakistan for its textile mills and export machinery.

Recently, a cotton mill in Karachi that was undergoing renovation imported major components from a textile machinery manufacturer in southern India through Dubai – which regularly skims off middleman profits because of a lack of direct trade relations between India and Pakistan.

One of the best-known truck tyre brands in Pakistan is the Indian-made ‘Apollo’, which is imported through what is officially called the ‘‘circular trade’’ through the free ports of Dubai and Singapore or simply smuggled across the porous border.

Apart from political reasons, there are fears in Pakistan that increased trade with India would overwhelm its local industry. When New Delhi accorded MFN status to its neighbour in 1996, that move was never reciprocated.

But Nagesh Kumar, director general of the Research and Information System for Non-aligned and Developing Countries (RISC), a New Delhi-based economic think-tank, thinks that the Pakistani fears are misplaced.

Kumar said India has already been improving economic ties with other countries in the region and that it was only in the case of India and Pakistan that political expediency has overtaken simple economic rationality.

He pointed to estimates made by the Human Development Report, brought out by the United Nations, which indicate that Pakistani consumers could reduce their food bills by up to 30 percent through increased trade with India.

‘‘Global experience has shown that trade can be used as a prelude to political reconciliation and building mutual confidence, as China and the United States have demonstrated,’’ Kumar said.

http://www.ipsnews.net/interna.asp?idnews=18045

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So all those opposing giving MFN status to India, oppose the gas pipeline from Central Asian states to India via Pakistan?. Why is Pakistan so desperate to have India included in this pipeline project. Pakistan tends to gain a lot from this pipeline and without India it would not be feasible.

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Anyways, what I have heard from our media...Pakistani's are moving forward to add 70 items into the positive list, which would take the total of positive items bought from India upto 90 or so. There hasent been any suggestion of the MFN, and I hope there wouldnt be too.