Pakistan may grant India MFN status on Friday

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ISLAMABAD: Pakistan will grant on Friday Most-Favoured Nation (MFN) status to India with a condition of receiving a substantial concessions in trade from New Delhi.

The decision is expected to be announced after a special cabinet briefing to be headed by Prime Minister Nawaz Sharif, a well-placed source in the ministry of commerce told Dawn on Monday. Commerce Minister Khurram Dastagir Khan had made a conditional offer for granting MFN status to India in January, and had sought access for 250 to 300 items at lowered duties.

At the time of the MFN offer, the commerce ministry has not linked the trade liberalisation with the resumption of suspended talks, which raised questions from other stakeholders for ignoring their issues while given the concession to India.

As a result, the decision was delayed which was scheduled to be announced in the middle of February during the proposed visit of Indian Commerce Minister Anand Sharma. However, delay in decision led to postponement of the Indian minister visit to Pakistan.

Earlier, the granting of MFN status to India was part of the composite dialogue, which was suspended since January 2013.

A high-powered committee headed by Finance Minister Ishaq Dar had been constituted to handle the issue and opposing groups.

Mr Dar will brief the cabinet about the offers from India before the cabinet approves the recommendation of granting MFN to India.

The cabinet decision, according to the source, will be conditional that Pakistan will allow import of all commodities from India via Wagah border and will abolish the negative list of 1,209 items in one go.

After the cabinet approval, these decisions will be announced through a statutory regulatory order (SRO).

Items placed on the negative list are not allowed for import from India. At the same time, currently only 137 items are importable from India via Wagah border.

The source said that India has offered to lower its duties to 7.5pc in a period of six months after Pakistanís announcement of the MFN for India, which will be further lowered to 5pc in a period of one year. India is not willing to remove NTBs and customs duties.

Major beneficiary of the concession in tariff will be textile sector, based in Punjab.

Similarly, India will reduce its list of sensitive products to 100 items immediately after the announcement of the decision, while Pakistan reciprocates the decision in a period of five years.

At the same time, the cabinet will also approve the decision like opening of Wagah border for 24 hours and shifting of cargos from trucks to containers.

The ministry of commerce, however, said that India would not be given transit facility to Afghanistan and Central Asian Republics through Wagah route. This will be done in the second phase in future, the source said.

Ahead of the announcement, the ministry of commerce has started intense consultations with media persons to brief them about the positive aspects of decision. The last round of consultation with opposing stakeholders has also started and will conclude in the next couple of days.

The ministry of commerce has come up with a lot of excuses and explanation in a brief for media to defend the decision of giving MFN status to India, apparently criticising the previous governments in denying this right to India.

The brief has calculated nine advantages of granting MFN to India including potential export gains for some product group--- textile ($1 billion), cement ($300 billion), chemicals ($200 million), agricultural products ($300 million), mineral products ($100 million) etc.

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