New Delhi: The Pakistan cabinet on Wednesday approved a change that will allow more commodities to be imported from India. Pakistan agreed to a long-standing demand by India to shift to trade based on a so-called negative list rather than on a positive list.
The move is seen as a step closer to Pakistan granting most-favoured-nation (MFN) status to India. Towards this, Pakistan proposes to first shift from the positive list to the negative list and eventually abolish this as well by the end of this year.
Pakistan’s Prime Minister Yousuf Raza Gilani.
“Federal cabinet that met under the chairmanship of Prime Minister Syed Yousuf Raza Gilani unanimously approved the phasing out of the negative list existing between Pakistan and India by December 2012,” said a release from the Pakistan Prime Minister’s Office on Wednesday. “After that the process of trade normalization between the two countries will be completed.”
The Pakistan cabinet approved the introduction of a negative list with slightly more than 1,200 items that cannot be traded with India, PTI reported from Islamabad citing people it didn’t name. The move will allow Pakistan to import about 6,800 items, PTI said. Currently, Pakistan allows the import of about 1,900 items on the positive list.
The Pakistan commerce ministry had finalized a smaller negative list of 636 items but this met with opposition from several stakeholders, including the textiles and industries ministries, which wanted greater protection from Indian imports. Following further consultations since the previous cabinet meeting a fortnight ago, the commerce ministry expanded the negative list to slightly more than 1,200 items.
While India has accorded Pakistan MFN status under World Trade Organization rules since 1996, Pakistan was yet to reciprocate the gesture because of domestic political sensitivities.
India’s trade minister Anand Sharma welcomed the Pakistan government’s decision.
“This development reaffirms the commitment of both governments for trade normalization as per the road map drawn during the visit of the Pakistani commerce minister from 26 September to 2 October, 2011,” he said in a release. “There is reiteration of commitment that the negative list will be phased out by the end of this year. This will mark a dramatic shift in the lines that can be traded as now almost 90% items can be traded with Pakistan as opposed to 17% earlier.”
“We believe that strengthening economic engagement between India and Pakistan lies at the heart of building enduring peace and stability in this region. Flourishing trade is the biggest confidence building measure among any two nations,” Sharma added.
Following a series of measures announced by the two sides during a visit by commerce secretary Rahul Khullar to Pakistan in April last year, Pakistan’s cabinet cleared a proposal empowering its commerce ministry to grant MFN status to India in November.
Sharma visited Pakistan with a business delegation on 13-16 February at the invitation of his counterpart Makhdoom Mohammad Amin Fahim.
Though the negative list was supposed to be announced during Sharma’s visit to Pakistan, the first by an Indian trade minister on a bilateral tour, it was delayed due to differences among the Pakistan ministries on the size of the negative list.
Official bilateral trade between India and Pakistan stands at $2.7 billion, while indirect trade between the two through West Asian countries is many times that. India expects to double its official trade with Pakistan in the next three years.
Rajiv Kumar, secretary general at the industry lobby Federation of Indian Chambers of Commerce and Industry, said Pakistan’s decision “will not only normalize India-Pakistan bilateral trade but also paves (the) way for much higher intra-regional trade within the South Asian Association for Regional Cooperation region.”