Pakistan’s proposed move to grant India the most favoured nation status and allow all trade through the land route is being strongly resisted by the country’s agriculture sector, an Indian official has said.

This has made it difficult for the Pervez Ashraf government facing elections early this year to bite the bullet, but India has said the trade liberalisation process would move ahead only after its neighbour fulfils its promises.

“We are in dialogue with Pakistan to convince it that the agriculture sector did not face any threat from India as it could impose penal import duties whenever there is an import surge. It has to realise that we can give concessions to more Pakistani products only when it keeps its end of the bargain,” a senior Commerce Department official told Business Line .

Pakistan has breached the December 31, 2012 deadline set by the two sides for grant of MFN status to India by removing ban on all Indian products. Although Pakistan trebled the number of items it imports from India earlier this year by dismantling the small positive list of imports, it continues to maintain a negative list of 1,209 banned products.

Islamabad had also agreed to allow all Indian products from the Wagah-Attari land route which would cut down transaction costs sharply. At present all Indian goods, except 137 items, have to be sent through the sea route linking Mumbai with Karachi which is an expensive option.

Agriculture is an area that all countries want to protect, but everything has to be done within the World Trade Organisation’s framework, argues Indo-Pak trade expert Nisha Taneja from Icrier.

“There are mechanisms allowed by the WTO such as safeguard duties to check import surges that Pakistan can take recourse to if there is flooding. It cannot use its apprehensions as an excuse to continue export bans,” Taneja said.

India had accorded MFN status to Pakistan way back in 1994. The WTO makes it compulsory for all members to give MFN treatment to each other which essentially means that all countries would be treated equally.

“We understand that Pakistan is facing general elections and MFN is a sensitive area. But the ruling government has to realise that the trade liberalisation process is also opening doors for Pakistani businesses which goes strongly in its favour,” the official said.

Both India and Pakistan have taken a number of decisions over the past two years to strengthen trade ties. Pakistan has almost trebled the list of permitted Indian items while India has taken on time-bound commitment to lower duties on 264 products from Pakistan.

India also now allows investments to and from Pakistan and the two sides have liberalised the business visa regime.

Pakistan expects India to be more generous in the trade liberalisation process as India’s exports to Pakistan at $1.53 billion in 2011-12 was more than three times its imports from the country at $422 million.

amiti.sen@thehindu.co.in

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