Bracing up for a showdown with New Delhi over implementation of the South Asian Free Trade Area (SAFTA) benefits, Pakistan has said the agreement does not bind it to grant the Most Favoured Nation (MFN) status to India.
It also said that it would counter New Delhi's charges that Pakistan failed to implement the agreement, through the provisions of SAFTA itself.
SAFTA does not say that trade relations between Pakistan and India would function on the MFN basis, the Pakistan Commerce Ministry here said in a press release late on Friday night.
Quoting press reports about Commerce Minister Kamal Nath's letter to the SAARC Secretary General complaining about Pakistan's decision to limit trade to a few items under SAFTA, it said Islamabad has notified the "first tranche of tariff" reductions on July 1, the day SAFTA came into force.
"The Government of Pakistan in the Ministry of Commerce has responded that after ratification of SAFTA Agreement, Pakistan had notified the first tranche of tariff reductions on time ie on July 1, 2006 on all items except those indicated in the sensitive list," the release said.
"The tariff reductions have also been allowed on those goods which are presently importable from India," it said, without specifically mentioning that unlike other SAARC countries, Pakistan's tariff concessions under SAFTA would be confined only to the 'positive list' of 773 items under which the two countries were conducting trade on the basis of a bilateral arrangement.