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Pak unlikely to meet Jan deadline for MFN status

Despite several indications, Pakistan's promise of granting the most favoured nation (MFN) status to India before year-end hangs in uncertainty. Jayanth Jacob reports. The obstacles

delhi Updated: Dec 31, 2012 02:03 IST
Jayanth Jacob

Despite several indications, Pakistan's promise of granting the most favoured nation (MFN) status to India before year-end hangs in uncertainty.

Islamabad, it seems, is under tremendous pressure from domestic industry lobbies to desist from taking any such step.

Pakistan granting MFN status to India has been touted as a major tangible outcome of the resume dialogue process, along with the new visa agreement that has been put in place.

Though India granted the MFN status to Pakistan in 1996, political issues and mutual mistrust between the neighbours resulted in trade remaining below par. It had an adverse affect on intra-regional trade too.

Promising MFN status, Islamabad had announced in October that it will grant it to India by January 1, 2013 - turning the negative list 'positive' by the end of 2012.

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Sources said India "has been walking the extra mile" to improve trade ties with Pakistan. For example, while Pakistan would have to reduce its 'sensitive list' to 100 items by 2017, India would bring its list down to the same number under the South Asia Free Trade Agreement (SAFTA) from 2013 itself.

The rationale behind the move was to give Pakistani businessmen additional time to face competition from India. However, influential trading lobbies in Pakistan continue to resist the move. These bodies believe that as India has a comparative advantage in most sectors, including pharmaceutical, automobiles and agriculture, such a move could hit the interests of Pakistan businessmen.

The Pakistan cabinet is yet to clear the MFN proposal, which their commerce ministry has finalised. The fact that the country is going in for elections soon is another issue that factors in the complications.

"We are awaiting the announcement from Pakistan. They had said they would do it by year-end," said an Indian official.

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