Pakistan puts off US visit to fast forward MFN, trade deal with India
10 March, 2014
ISLAMABAD: In a major development, Pakistan will extend MFN status to India by the end of March and in return India has agreed to reduce tariffs for Pakistani exporters on up to 300 items and to eliminate non-tariff barriers.
Top functionaries of the Nawaz government are vigorously working day and night to carve out a plan and an important visit by Commerce Minister Khurram Dastagir to Washington has been put off in view of these fast moving developments.
Pakistan would get maximum tariff concessions for its export-oriented industry and in return will extend MFN status or non-discriminatory market access (NDMA) to India when this agreement is announced.
Under it the existing negative list of 1,209 items will be abolished and trade at the Wagah border will be opened round the clock, senior officials of various economic ministries involved in the working for trade concession on various items from India.
India has agreed to provide a level playing field to Pakistani traders for which it will relax its restrictive tariff regime for Pakistani products and will give tariff concession on various products pertaining to Pakistan's strong sectors such as textile, cement, surgical instruments, and sports.
The importance and urgency of the impending deal with India on trade liberalisation can be gauged by the fact that Commerce Minister Khurram Dastagir, his secretary Wasim Niaz and other high ranking officials have postponed the visit to the US which was scheduled on March 12, 13 and 14 where both sides were to hold crucial talks under TIFA (the Trade Investment Facilitation Agreement).
The Pak-US Business Council was also scheduled to meet in Washington, but the Nawaz government preferred to enter into a deal with India on trade liberalisation as it attaches more importance to trade with India which is why the crucial visit to US has been postponed.
So much so, the officials disclosed that the World Bank is also on board for trade liberalisation between the two countries and will extend grants which are to be used to develop infrastructure on both sides of the Wagah border with the aim to facilitate trade.
To a question, the top officials said that the GHQ is on board and under the deal India will not be given transit facility for its goods to have access to markets in Afghanistan and other Central Asian States.
The concerned officials said that after the trade deal gets done, both the countries would trade 8,000 items in total. Pakistan is strong on textiles and on textile exports, India's existing tariff stands at 60-120 percent which is why Pakistan exports in textile are not increasing as expected. India has indicated to bring down the tariff on textile product to 5 percent.
Mr Zafar Mahmood, former Commerce Secretary and incumbent Chairman of the Punjab Public Service Commission is also playing a pivotal role as per the desire of the Nawaz government in clinching the trade deal with India.
If the deal is inked, the officials argued, then Pakistan will easily reach out to the biggest market of over 1 billion people and India will have access to 200 million people. Pakistan's existing exports to India stand at $350 million which will surge in one year up to $1 billion and if Pakistani entrepreneurs play smartly, then Pakistan' export will go up to close to $2 billion in one year soon after the tariff concession and abolition of NTB (non-tariff barriers) under the MFN deal.
The teams of the Nawaz government are also working to safeguard the interests of various industries. "We will ensure the protection of industries that includes automobiles too but they will be asked to import parts of the vehicles from India rather than importing from distant countries," the official said.
They said the import of auto parts, from India will help reduce the cost of the vehicles in the country. The reduction in freight for the auto parts to be imported will be passed on to consumers of vehicles.
For the pharmaceutical industry, the raw material that is used in the production of medicines will be imported from India. In Pakistan, the prices of medicines are touching the sky whereas in India prices are very low and if the raw material gets imported then Pakistanis will get relief in terms of price of medicines.
Pakistan will also import steel at cheaper rates from India that is produced in furnace units in cities like Daska, Gujranwala and others. Since the said furnace units consume a lot of gas and electricity, the cost of steel products in the country is very high. However, the big steel mills in Pakistan are already working efficiently, and include Tuwairqi and Iteffaq foundries. Steel will be imported from India keeping in view the steel industries' interest in Pakistan.