Pak approves switch over to negative list for trade with India

The Pakistan government today approved the switch-over to a negative list regime for trade with India, paving the way for granting Most Favoured Nation status.

But Islamabad also said there would be no compromise on any "core issue" like the Kashmir dispute.

A meeting of the cabinet chaired by Prime Minister Yousuf Raza Gilani approved introduction of a negative list of 1,209 items that cannot be exported from India.

This would mean India can export 6,800 items against 1,950 at present.

It also "unanimously approved the phasing out of the negative list" by December, said a statement issued by the premier’s office.

"After that (phasing out of the negative list), the process of trade normalisation between the two countries will be completed," the statement said.

Information Minister Firdous Ashiq Awan told a news briefing that all requirements for giving India MFN-status would be met once decisions made by the cabinet today are implemented.

"I can assure you that the move to progress towards MFN has been given final shape today,” Awan said in response to questions.

She referred to concerns about the "core issue" of Kashmir being affected by trade with India and said: "This perception should be dispelled that the Kashmir cause will in any way be compromised".

At the same time, Awan pointed out that the Prime Minister himself had briefed the cabinet and that trade between either sides of Kashmir was worth about 14 to 15 billion rupees.

Over 14,000 trucks of goods had crossed the Line of Control since trade between either sides of Kashmir began, she quoted Gilani as saying.

"When the direct stakeholders (in the Kashmir issue) are conducting trade, then we must protect the interests of the whole of Pakistan," she said.

Under the measures approved by the cabinet, the import of 1,209 items included in the negative list will be banned from India to protect domestic industries, Awan said. This negative list will be phased out in steps by December 31 for complete normalisation of trade with India, she said.

Prime Minister Gilani approved the negative list proposed by the Commerce Ministry after considering suggestions made by cabinet members and partners of the ruling coalition led by the Pakistan People’s Party, she said.

Awan dismissed reports about opposition to trade liberalisation from the security establishment, saying the measure would not have come before the cabinet if all stakeholders were not "on board".

Commerce Secretary Zafar Mahmood and Commerce Minister Makhdoom Amin Fahim assured the cabinet that "improving bilateral trade with India is in the best interest of Pakistan", Awan said. They further assured the cabinet that the interests of Pakistani industries will not be compromised under any circumstances, she added.

Pakistan will use several international laws – including those related to trade defence law, national tariffs, anti-dumping, countervailing duties and safeguards – to strengthen bilateral trade and to ensure that there is no unfair competition between Indian and Pakistani industries, she said.

Today’s decision will allow Pakistan to import some 6,800 items from India, sources said. Pakistan currently allows the import of a little more than 1,950 items that are included in a positive list.

The Pakistan Commerce Ministry had finalised a smaller negative list of 636 items but this was abandoned due to opposition from several stakeholders, including the Textiles and Industries Ministries, who wanted greater protection from Indian imports.

Direct trade between India and Pakistan constitutes less than one per cent of their respective global trade. India exported goods worth 2.33 billion dollars to Pakistan last year while its imports were 330 million dollars.

Following several rounds of talks between the Commerce Secretaries and Commerce Ministers, the two sides approved several steps to dismantle hurdles in the way of increasing official trade to USD 6 billion by 2014.

However, Pakistan has consciously chosen not to play up the fact that the phasing out of the negative list would lead to giving India Most Favoured Nation-status, due to opposition from several quarters, including the Defa-e-Pakistan Council, a conglomerate of hardline and extremist groups.

Lashkar-e-Taiba founder Hafiz Mohammad Saeed, who played a key role in cobbling together the Defa-e-Pakistan Council, has said the grouping will oppose any move to give India MFN-status and to open up Pakistani markets.