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Neighbourly considerations

Amiti Sen | Updated on January 16, 2018

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Withdrawing MFN status to Pakistan could be self-defeating

Commerce and Industry Minister Nirmala Sitharaman’s recent statement that there has been no meeting yet on withdrawal of Most Favoured Nation (MFN) status given to Pakistan in 1996 indicates that the Centre may not be in a hurry to ban trade with its neighbour. Refraining from a knee-jerk reaction on the economic front following the killing of Indian soldiers by militants in Uri last month is a wise step. The violence and loss of life of soldiers at the border is reason for pain and indignation, but misdirected anger could worsen things. The call from some for withdrawal of MFN status to Pakistan results from ignorance of ground realities. Many making the demand have no clue that MFN status — a requirement under WTO norms — does not result in special favours for the recipient country; it means that it will be treated as other WTO member countries, without discrimination.

If India withdraws MFN and bans all imports from Pakistan (there is no point banning just a few items), there’s no doubt our neighbour would do the same. Although Pakistan has not extended MFN status to India, it allows more than 6,000 items to be imported and disallows only 1,206. Since India exports $2.17 billion worth compared to less than $500 million worth imports, banning bilateral trade would hit Indians more than Pakistanis. Although compared to India’s total export volume of over $300 billion, its exports to Pakistan are minuscule , blocking trade could affect vulnerable sections such as traders, drivers and other labour, causing huge misery and distress. There are many reasons for youngsters joining militant groups, and unemployment is certainly one of them.

One must support one’s country in times of war, but no country can afford to be at constant war with its neighbour. There are no better emissaries of peace than traders and exporters in both countries who know they can thrive only if bilateral relations are robust.

Deputy Editor

Published on October 23, 2016

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