The decision by Pakistan’s cabinet earlier this week to enhance trade ties with India by phasing out a negative list and implementing the most- favoured nation (MFN) status has earned mixed response.
Pakistan’s ministers of production, textiles and of industries had cautioned against going ahead with full normalisation of trade ties with India as according to them, the move would hurt local industry. Local industries, particularly the automobile and pharmaceutical industries, have already opposed the moves on the same grounds.
Despite the opposition from these quarters, on Monday the Pakistan cabinet approved a negative list of 1,209 banned items, which will allow trade in all other goods with India, but also sanctioned the phasing out of the negative list in the next ten months. At present, Pakistan maintains a positive list of 1,945 items that are allowed to be traded between the two countries.
Talking to the media in Islamabad information minister Ashiq Firdous Awan said that it was expected that in the next 10 months, the local industries would be ready to compete with their Indian counterparts. The local Pakistan Autombile Manufacturers Association, however, refuted this claim and said that local production will be affected by Indian imports.
The negative list approved by the cabinet, however, is comparatively larger than the understanding arrived at with India. The commerce ministry, in a policy statement earlier, had vowed to restrict it to 636 items. After consultations with industry bodies, it was proposed to add 573 items into the commerce ministry’s list, said a spokesperson of the ministry of industries.
The abolition of the negative list would automatically confer the MFN status to India, but an official from the textiles ministry disagreed, saying the cabinet would have to prepare a fresh summary in this regard. Under the World Trade Organisation rules, no state can restrict trade with any other state, but Pakistan has added Annexure G in its trade policy that allows trade with India in limited items. India too has banned investment by Pakistani firms.