Pakistan to Grant MFN Status to India This Year.

ISLAMABAD: Pakistan on Wednesday agreed to liberalize trade with India and conceded to put in place a small negative list of goods by the end of the month where imports will be restricted. By the year-end, even this negative list is expected to be phased out, a joint statement issued after bilateral talks between commerce ministers Anand Sharma and Makhdoom Mohammad Amin Fahim said.

New Delhi and Islamabad will adhere to a roadmap of full normalization of trade relations, the statement issued on Wednesday evening said. The timing of the phasing out of the negative list would be announced in February 2012 when the list is notified. This is a climbdown from the situation just 24 hours ago when the Pakistani cabinet deferred a decision.

The neighbours had earlier agreed that Pakistan will grant MFN status to India by October. The tone seems to have undergone a change. "It is expected that the phasing out will be completed before the end of 2012," the joint statement said. "We are ready to write a new chapter in our trade relations," Sharma said after the talks that concluded in agreements on customs cooperation and redressal of trade grievances as well as a Mutual Recognition Agreement. The implementation of these agreements by the two neighbours will address the issues related to non-tariff barriers to trade.

Sharma said India had taken on board the concerns regarding allowing investments from Pakistan and issue was discussed and would be looked into and the government would take an "appropriate and correct view". India does not allow FDI from Pakistan but there have been demands to relax the rules to allow investments. TOI had reported on Tuesday that the home ministry has agreed to the relaxation. But the government will only announce it formally if it gets a good deal in return.

The resolve to stick to the deadline of phasing out negative list comes against the backdrop of opposition from sections of Pakistani industry that is apprehensive that opening of trade would lead to Indian goods swamping Pakistani market. Current bilateral trade stands at $2.7 billion, while informal trade through third countries is estimated at $10 billion. Normal trade ties are expected to shut out the informal trade and help boost regional trade. "The two commerce secretaries are discussing the positive and negative list," Fahim said.

The joint statement said when the transition to MFN is undertaken, all items other those in the Safta sensitive list would get preferential access at peak tariff levels of 5% by the end of 2012. It was also agreed that the first meeting of the Expert Group on Trade in petroleum products would be held in the first week of March in New Delhi. Regarding the issue of opening bank branches of both countries, the central banks of both countries are expected to meet in Mumbai in early March. "We are keen that Indian banks open branches here," Sharma said.

Sharma led one of the largest business delegations to Pakistan - the first-ever bilateral visit by an Indian trade minister. He met his counterpart and other officials and business leaders to encourage Islamabad to take concrete steps towards deepening of economic and trade ties. The joint statement also said that the joint working group of Pakistan interior ministry and the Indian home ministry was working on a agreement on visa facilitation for movement of businessmen across the border. Officials said the liberal visa regime would largely deal with business visas but would also include other citizens.

Regarding opening of new trade routes, it was agreed that opening of Munabao/Kokhrapar route for trade would be explored in consultation with the stakeholders. A joint working group would be set up and it will submit its report before the next round of talks between the two commerce secretaries. The joint statement also said the second meeting of the expert group on electricity would be held to finalise the modalities for electricity trade between the two countries and the two sides would meet again in March.

Source : timesofindia.indiatimes.com