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MFN status for India on the cards

Islamabad: The PML-N government sprung a surprise at the recent trade talks with India by offering New Delhi the most-favoured nation (MFN) status from next month — with a condition. Pakistan sought access for 250-300 of its items at lowered duties.

After getting an assurance for market access, MFN status will be granted to India through the issuance of a statutory regulatory order (SRO). The MFN status means abolishing the negative list of 1,209 items.

In 2012, the PPP-led government opened up the Pakistani market for Indian products, but the deal could not be closed fully in view of the general elections scheduled for May last year. Now that India itself is going for elections in May, the PML-N government thinks it is a good time for closing a deal with the incumbent Congress-led government.

New Delhi may well opt for the deal because Islamabad has reduced the roadmap for granting of complete MFN status from three years to 45 days, a major political concession for the Congress party. Now, any progress depends on New Delhi’s response to Islamabad’s open offer by the end of the current month, the official added.

The NDMA has been suggested as a new name for MFN in an attempt to reduce the political fallout.

The change of heart in the PML-N government towards India came mostly because of domestic factors, especially the ‘Punjab factor’ (although there was also an IMF demand for opening of trade with India).

On the domestic side, Punjab Chief Minister Mian Shahbaz Sharif visited Indian Punjab and New Delhi in December to pave the way for the much-awaited trade deal. He was accompanied by Mr Khan, then minister of state for commerce.

During the visit, Indian Prime Minister Manmohan Singh agreed to Mr Sharif’s proposal of holding a special meeting for giving final shape to the suspended yet agreed-upon timeline for the opening of border trade.

The recent meeting held in New Delhi was not part of the composite dialogue because India categorically conveyed to Pakistan that there would be no new round on trade liberalisation.

It was a review meeting to implement the already agreed-upon timeline for trade liberalisation. Composite dialogue is still suspended in its true spirit.

The importance of the meeting was clear from the fact that Prime Minister Nawaz Sharif not only elevated Mr Khan to the status of federal minister on Jan 16, one day ahead of the meeting in Delhi, but also sent him to India on a special plane.

Mr Khan got a clear mandate from the prime minister before meeting his Indian counterpart Anand Sharma in New Delhi on Jan 17 to offer the granting of MFN status to India in a shorter time. This visit was a follow-up to that of the prime minister’s adviser on foreign affairs, Sartaj Aziz, who visited India in November.

Commerce Minister Khurram Dastagir Khan said that the Wagah border will be declared a dry port by the end of next month. As a result, the containerisation of cargo will be started next month as well. “We are ready for container cargo at the Wagah border,” Mr Khan said.

On the other hand, the Sindh government has repeatedly asked the federal government to allow trade on Khokhrapar-Monabao border on the pattern of Wagah-Attari. However, the federal government is not willing to start development on the Pakistan side. The revival of the Khokhrapar-Monabao station for trade between Sindh and India’s Rajasthan is not visible in the near future.

But the commerce minister said that the government intends to set up land-port authorities at major exit points, including Khokhrapar-Monabao, for trade with India. Before 1965, Pakistan and India used 11 land routes for bilateral trade, eight in Punjab and three in Sindh.

The enhancement of trade at Wagah-Attari will certainly benefit land-owning elites that have invested in real estate. The price of land has started moving up on both sides, a person who deals in real estate in Lahore told Dawn.

A commerce ministry official said that the National Bank of Pakistan, United Bank and Muslim Commercial Bank got the green signal to open branches in India. However, three issues — including money-laundering — needed to be sorted out before licences for opening branches could be issued.

From the Indian side, the State Bank of India and the Bank of India will operate branches in Pakistan. The minister said that banks can file applications for opening branches in either country.

Until 1965, there were nine branches of six Indian banks in Pakistan, while Pakistan’s Habib Bank had one branch in Mumbai. Banks in both countries were seized as enemy properties.

 

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