MFN for India

DESPITE the bureaucratic mishandling of Wednesday`s announcement about the granting of Most Favoured Status nation to India no decisions have yet been taken, notwithstanding the information minister`s statement reports indicate that the government is seriously considering the move. If implemented, it would have a far-reaching impact on relations between the two countries.

Some political parties have expressed concerns over the consequences it would have on Pakistan`s security. Objections have also come from trade lobbies that fear Indian imports could hit domestic industry and add to unemployment. However, the issue is not so simple: the `Most Favoured Nation` tag is a misnomer, for it is actually a non-discriminatory regime that more or less all nations have to extend to each other as members of the World Trade Organisation. This would also strengthen Pakistan`s case for the removal of non-tariff barriers, which are a major source of the current imbalance in bilateral trade to Islamabad`s disadvantage.

It will take quite some time before the MFN process goes into effect. A number of issues will need to be ironed out before India can be brought in line with other countries Pakistan has granted MFN status to. The commerce ministry will also have to take up the issue with Indian officials for finalising a roadmap for freertrade. But as the commerce secretary said, `the entire trade liberalisation process is linked with the removal of non-tariff barriers` by India. If it does get going, the MFN regime would help reduce the considerable amount of informal trade between Pakistan and India and generate more revenue. Besides, stiff competition from imports would prompt Pakistani industry to improve the quality of its products and make its prices competitive.

The political advantages of mutual MFN treatment would outweigh the economic disadvantages that certain trade and industry groups are apprehensive about. The basic challenge is to move toward normalisation and make a success of the peace process that was so rudely broken by Mumbai-II. The 12-point statement issued by the two foreign secretaries in June and the satisfactory outcome of talks between Foreign Ministers Hina Rabbani Khar and S. M.

Krishna in Islamabad a month later have served to lower tensions and committed the sides to an `uninterruptible` peace process. The move towards freer trade, coming ahead of the Saarc summit meeting in the Maldives, should be seen in that spirit. One hopes that MFN status for India will eventually be granted and will prompt the two sides to make progress on other issues, especially the delayed visa liberalisation regime and India`s pledge to support Pakistan`s case for access to the EU market.