Pakistan Implements ‘Negative List’ for
India Trade
In Islamabad’s latest step toward
granting New Delhi most favoured nation status by year’s end, Pakistani
officials announced last week that India will now be able to export all
products into Pakistan, with the exception of a ‘negative list’ of 1,200 items.
The Statutory Regulatory Order issued
by Pakistan’s Commerce Ministry on Wednesday 21 March indicates that Pakistan
will now be able to import over 6,800 items from India under the new policy.
Previously, Pakistan traded with India under a ‘positive list’ structure that
allowed imports of fewer than 2,000 items.
The move follows Islamabad’s landmark
announcement last year that it was planning to grant its neighbour with most
favoured nation (MFN) status, a WTO requirement that mandates all members to
treat their trading partners equally.
While India granted Pakistan most
favoured nation status in 1996, Pakistan had previously refused to grant MFN
status to its neighbour due to the countries’ disagreements over the Kashmir
region.
Unsteady past trade relationship
After years of trade tensions, both
sides have been trying to foster better trade relations in recent months as a
way of improving political and economic ties.
“Pakistan is moving in the right
direction in terms of bringing economic content into the political
relationship,” India’s Foreign Minister S.M. Krishna told reporters in New
Delhi. “This would certainly help strengthen our bilateral ties.”
The two sides saw another breakthrough
in trade relations in recent months, when India dropped its long-standing
objections to an EU request for a WTO waiver that would allow Brussels to
temporarily grant trade concessions to Pakistan to help the country’s economy
recover from the floods in 2010.
Bilateral trade between the two
countries equalled approximately US$2.7 billion though
March 2011, though indirect trade via other Asian countries is estimated to be
much higher. Meanwhile, India’s trade with another Asian neighbour - China -
stands at more than US$60 billion annually.
According to India’s Associated
Chambers of Commerce and Industry, the move to normalise trade relations could
potentially increase cross-border trade by over US$6 billion by 2014.