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Why Indo-Pak trade ties are delayed

December 28, 2012 13:53 IST

Indian flagThe trade relations between Pakistan and India seems to be delayed, as Islamabad has not decided it yet to implement its decision of granting Most Favoured Nations status to India.

Islamabad is scheduled to abolish its negative list of tradable goods by the end of 2012 but according to the foreign office, Pakistan is still going through the internal process of granting the status of MFN to the neighboring country.

On Thursday, when spokesperson of foreign ministry was asked about the MFN status he did not give exact timeline.

"As far as the MFN status is concerned, the government has already decided to grant this status to India.

"In fact, we had initiated the process and currently we are going through some internal processes and, hopefully, these will be completed soon", said foreign office spokesperson Moazzam Khan.

Under the agreement Pakistan is scheduled to abolish its negative list of tradable goods before the start of 2013.

The list contains 1,209 items that cannot be imported from India.

New Delhi has agreed to implement its decision by December 31, 2012 that will eventually allow Islamabad to move ahead with granting it MFN status.

Islamabad's reluctance to give specific timeframe on MFN is reportedly due to the strong resistance by various lobbies and right wing groups.

At the same the government's decision in principle to grant MFN status is also conditional to India's willingness to reduce its Pakistan specific-sensitive list by 30 per cent maintained under the South Asian Free Trade Area agreement.

The granting of MFN status to India is not expected in time, as it is to be granted by the cabinet.

After vetting of the proposal by the Law Ministry the Commerce Ministry will notify the MFN status to India.

Since, next possible cabinet meeting will be held on January 2, 2013, so the issue of granting MFN status to India in not on the agenda.

Some experts are also of the view that due to the resistance from the lobbies, the government would not be able to announce any such thing before the general elections in Pakistan to avoid strong criticism.

Iftikhar A Malik, SAARC Chamber of Commerce and Industry's Vice President said, "It is a well-known fact that regional trade is the key to growth but the countries of South Asia have repeatedly been failing to pave way for enhanced regional trade as a result the gap and need is filled by smugglers.

"We should honour our commitments and the continuity of policies to give a positive name of the country world over."

The farming community has also shown its reservations over granting of MFN status to India issue.

According to farming community, both agriculture and food are highly subsidised in India while in Pakistan the farmers are slapped with taxes that make 'inputs costlier'.

Thus the Pakistani farmers are at double disadvantage-the subsidy amount that makes inputs cheaper in India than their international prices, but the Pakistani farmers are paying more than the international prices.

The farmers assert that the policies of each country around the world are designed to: ensure sustainable growth; keep their standard of living at a relatively acceptable social level; to take benefit of comparative advantages in production of agricultural and food items.

Under these circumstances Pakistani farmers ask the policy makers to keep their reservations in mind before going to open border for trade with India and giving MFN status to that country.

Apart from the agriculturalists, right wing groups are also spearheading the campaign against granting MFN status to India, and the Jamaat-ud-Dawa leaders at a recent protest rally in federal capital announced that they would not accept granting special status to India.

On Thursday, the World Pasbaan Khatam-e-Nabuwat, staged a protest and said that India had killed thousands of innocent Muslims in Kashmir so it should not be awarded the status of MFN.

The WPKN protesters gathered outside the Lahore Press Club and chanted slogans against the federal government's proposed decision of awarding the MFN status to India by the end of December 2012.

They said the government instead of hanging Indian terrorist Sarabjit Singh was ready to award the MFN status to India which could not be tolerated at any cost.

They said India did not qualify to have any kind of friendship with Pakistan.

Tahil Ali in Islamabad