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what are the conciquences of granting INDIA as Most Favoured Nation?

I think MFN status will bring growth in industrial sector and both countries will progress and major issue like Kashmir ....may be resolved .

2nd imp thing is what steps to take? or On which policies Pakistan shall give this status to India?.........or what should be Pakistan forgien policy?

granting MFN is just to please america or is it really benificent for Pakistan?

regards

MFN status to India would not go useless if both countries "really" mean it.Ofcourse it's great chance to develop good relations with India.

• There should be proper homework for its implementation.
• There should be an effective infrastructure
• Negative list should be devised beforehand.
• Investments in Pakistan would stable our economy.
• Via Trade sector,both countries may soften eachother's hearts( ) and it would help in solving Kashmir Issue.
• Visas(without obstruction) should be issued for business tours from both sides.
• Security and safety should be assured.

Most importantly we first need to build a positive image of Pakistan so that people may not hesitate to invest here.

• Media can play an effective role like as it propagated "Aman ki aasha"
• Official meetings should be arranged for better understanding.
• People to people communication should be appreciated.

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By Dr Kamal Monnoo

January 04, 2012

The announcement by the Government of Pakistan to grant the Most Favoured Nation (MFN) status to India continues to draw mixed reaction from all quarters, industrialists, business community at large, agriculturists and security analysts. While, on the one hand, there is this lobby, which argues that by doing so not only do we get access to a robust market of more than a billion people, but, more importantly, the free trade dynamics will unleash a future of mutual dependence, in turn, minimising cross-border security concerns; on the other hand, is a large cross section of nervous manufacturers, struggling farmers and sceptical security personnel, who all remain equally fearful of India’s regional designs in particular, and its poor track record on bilateral trade in general.
Amidst these conflicting views, the average Pakistanis stand quite confused, whether their government is doing the right thing by granting the MFN status to its arch rival or else, given the growing global free trade dynamics, what the correct policy on this should really be. To answer this properly, perhaps a good approach would be to first analyse the existing realities in each of the areas of concern and then try to determine the effects once MFN becomes a reality post-February 2012.
i The total trade volume between Pakistan and India in 2009-10 was about $1.45 billion, out of which Pakistan’s exports to India accounted for only $275 million (19 percent of the total bilateral trade); whereas, the Indian exports to Pakistan stood at more than $1.20 billion (81percent). In the current year, the trade is said to have crossed the $2 billion mark, but the balance of trade has tilted further in favour of India. In addition, experts believe that Pakistan absorbs about $3 to 4 billion of Indian imports through unofficial channels, like smuggling and routing through countries like Dubai, Singapore, Thailand, etc. The pro-MFN lobby argues that not only can the Government of Pakistan earn crucial revenue by bringing the illegal trade into the official fold, but also reduce its import burden by sourcing cheaper Indian products closer to home and tapping into the huge trade potential of up to $42 billion (KCCI estimates) that exists between the two neighbouring countries. However, the reality is that although India granted the MFN status to Pakistan way back in 1996, the gesture did not help Pakistan in any way, because it was followed by the imposition of a number of non-tariff barriers by the Indian side, which ironically further crippled the access of the Pakistani products to the Indian market. Now with such a significant existing imbalance of trade between the two countries and this despite not having granted India the MFN status, no rocket science is required to gauge the gravity of the impact if the anticipated status is bestowed.
i The number of importable products, which India allows from Pakistan, consists of 850 items, while Pakistan already allows non-MFN India 1,945 items. According to a World Bank report, by allowing India the MFN status, Pakistan will be restricted to the following three options: Gradually expanding the positive list, replacing a positive list with a short negative list, or completely eliminating the positive list. However, from our perspective, this liberalisation of imports couldn’t have come at a worst possible time. As March 2012 nears so does the testing time when Pakistan’s repayments to the IMF start kicking in. The current account balance has become a serious concern in recent months, Foreign Direct Investment (FDI) reduced to a mere $359 million (six months ending November 2011) from $7 billion in 2006-07 and exports, which only a few months back were nearly 75 percent of imports have been reduced to virtually half that of the total import bill. Under the circumstances, the first measures the policymakers would be contemplating is to review and somehow restrict the import regime. So the question then that one may dare ask here is: Wouldn’t at this stage granting the MFN status to India be in effect counterproductive to our needs and that should not the move for the time being be postponed?
i The Pakistan Pharmaceutical Manufacturers Association (PPMA) has expressed serious concern on granting the MFN to India. According to them, the move will significantly affect the home industry, possibly forcing it to close down altogether. It strongly feels that all medicines should be on the negative list, as the industry forms the second line of defence in case of war, natural disasters, or epidemics – the PPMA meets around 90 percent of the country’s demand of finished medicine. According to them, the Indians already have very solid non-tariff barriers in place to protect their home industry and the size of the Indian pharmaceutical market is 10 times larger than the Pakistani market, which has allowed the Indians by now to become global players, and therefore the Pakistani pharmaceutical industry will stand no chance, unless it can either compete on a level playing field or get similar State support and protection.
i If one makes a comparative analysis of the agriculture sectors of both the countries, one can assess the huge difference between both sides due to the asymmetry of subsidies extended to the farmers and the unequal availability of water resources. Further, Pakistan is far behind India when it comes to supporting its farmers by way of comparative prices of fertilisers, availability of modern machinery, energy resources for electric tube wells and the sheer allocation of budgetary funds for the agriculture sector. The existing scarcity of water and an alarming pace at which its availability continues to shrink further compounds the disadvantage for the Pakistani farmer. Regrettably, India continues to play games on this vital issue of concern to Pakistan by blaming environmental developments for the reduction of water flows in the Indus Basin, but we all know that the main reason for this are new water diversions created by India through construction of dams on the rivers in Pakistan’s share.
i Finally, as a consequence of the MFN, aside from the concerns on an absence of or a rather compromised Pakistan’s internal defence mechanism in the spheres of health, seed development, yields and export competitiveness, there prevails a sense of scepticism over the Indian double game. We hear about the underlying potential of the flow of goods across the borders, but not a word is said about the necessity of creating long-term important linkages, such as technology transfer, joint resource management mechanism, cross-border investments, financial connectivity, regional anti-trust treaties, equal opportunity amongst SAARC nations, and devising joint regional legislations on rules of doing business. Also, on the one side India talks about cementing mutual ties through the instrument of trade, while on the other their political moves tend to exacerbate the longstanding security issues between the two countries. Bilateral issues continue to be viewed by them under a unilateral light and recently, the Indo-Afghan Agreement, which covers a wide ambit from humanitarian assistance to education to capacity development to the development of natural resources to security, can easily be interpreted to portray an India that still remains more focused on isolating or encircling Pakistan than to become its vibrant economic partner. As always, we see an India eager to gain direct access to Central Asia and Europe, but not willing to offer any such reciprocal accessibility to Pakistan on its eastern and northern sides.
There is no denying the fact that bilateral trade on equal terms will surely be very beneficial to both Pakistan and India. The dynamics of smooth bilateral trade cannot only play a pivotal role in strengthening the economies of both the countries, but also unleash a soft process, which over time can be the key to resolving longstanding sticky issues between the two sides. However, Pakistan needs to be careful and do its homework properly before granting such a status. In doing so, it needs to grapple with the elements of reciprocity and fair play to provide a level playing field to its own people. Only a carefully thought-out process of negotiations and a comprehensive package of agreements addressing the concerns on both sides, can be a win-win for both countries and, in all likelihood, the window between now and February 2012 presents too short a time to do all that is required!
The writer is an entrepreneur and economic analyst.

Courtesy The Nation

MFN status is related to trade and trade can certainly not solve all the tensions together with Kashmir issue between Pakistan and India as they are typical rivals. Optimistically speaking, this agreement can positively reduce anxiety between two nations.

Media can play an effective role like as it propagated "Aman ki aasha"
will this Aman is only responsiblity of Pakistan?.....what steps India is taking for it? Is just comon cultural programes is enough for it?

Official meetings should be arranged for better understanding.

i agree with it ...........before meeting paper work of Pakistan forign policy is also needed ........what paper work done till now?

People to people communication should be appreciated.

people are meeting with each other before this status also...........1 example is shoiab sania marriage

my Q is that as India is voilating Indus water taretry.........we are dificent of energy which is base of industry ..........are we in position to stand in front of India large industry? are we able to compete with their growth?

and i think we are forgeting our culture and adopting indian culture .........it is not concern with MFN.....

regards

yup this the main point ........that without solving Kashmir issue and water issue and India more involvment in Afghanistan .................Amercan more inclination and support to India.........are we at equal status for trade?

India give MFN status to Pakistan in 1996.............what benefits we take from this status?

regards

Two useful readings for the topic under discussions.


CSS Forums - View Single Post - My Words Published in today's Express Tribune.

CSS Forums - View Single Post - How MFN status to India benefits Pakistani business.

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Can we prepare papers from past 10 years papers ?

In my opinion The fact is WAR is not in the interest of both NATIONS. We have to be optimistic, MFN status has been granted to INDIA, it might be minimized the tensions between the two historic rivals as we have the example of EU and Association of South-East Asian Nations (Asean) where economic integration has been influential in the resolution of political conflicts.

But it doesn’t mean to neglect the ground reality that from the day one STRONG Pakistan is not in the interest of INDIA. No doubt India has been granted MFN status to Pakistan since 1996 but never appreciated increased number of exports. India has a huge market and resultantly, holds a significant cost advantage over its neighbors. India seeks market access to Pakistan for its finished products; it must ensure equal access / opportunity to its own market.

Pakistan’s tariffs, on the other hand, are comparatively stumpy. Its market is largely open and products are not subject to particular standards conformity. If Pakistan’s trade deficit by now to the tune of one billion dollars goes up significantly after the grant of MFN status to India, and the two countries’ bilateral relations may obnoxious. We already have the example of the United States and China. More than any other factor, the growing US trade deficit with China has had an unfavorable bang on Sino-American dealings. Consequently, though better economic relations between Islamabad and New Delhi are likely to bring the two countries closer politically, that this will happen is by no means certain.

South-Asian region is in dire need of long-lasting peace and stability for development and prosperity.And this can only be achieved when two giants of this region i.e India and Pakistan shun their hardcore stance and work together.
We are living in an inter-dependent world.There are no permanent enemies and friends.Each and every nation has its own interest.Pakistan must also pursue its own national interest and do what is in its favour.Friendly relations with neighboring countries always have positive impact and it is the need of the hour.

Granting MFN status to India can help in improving relations between the two and may pave the way for the resolve of pending issues like Kashmir.It can help boost our economy as well.

Every thing has its positive and negative aspects but it is not a prudent approach to drop a brilliant idea because it can have side effects as well.

MFN status has been granted to Indian via a proper documentation process and thorough a proper channel i.e WTO(via SAARC).
Pakistan has been reluctant to grant the status since India granted it to Pakistan in 1996 due to its strategic interests.Now this positive step taken by the government of Pakistan as it has realized that it is the need of the hour.

By granting MFN status to India both countries can have following economic and social benefits:

1)It will expand the market size.
2)Increase the growth rate of both economies.(Stimulate boht domestic and foreign investments).
3)Benefits for consumers,producers and workers.
4)Help curbing informal trade
5)Can save cost of third party/indirect trade.
6)Help building trust and resolving issues

as a result of all this peace will be inevitable.

There are some insecurities and misconceptions regarding this status.
Though above mentioned objectives cannot be achieved in one day,they can certainly lead us to a better future.

1)A fear is that indian goods will flood pakistani markets.
Yes,it is true to some extent because they have large economy than us but instead of totally ruining the local products they will infuse a sense of competition between local producers which in turn will benefit our economy and consumer.

2)As we have done this agreement through WTO so its provisions allow members to impose safegurad restriction imports (for a temporary period) if such imports seriously injure domestic producers.

3)The government invited suggestions from federation of Pakistan chambers of commerce and industry (FPCCI),regional chambers and other stake holders before awarding MFN status to India so if they had felt any such danger to local products,they would not have given their consent.

4)Skeptics say that long pending issues can never be resolved by this trade agreement.It is true,that only this agreement can not assure this but it will smooth the political tension which can lead to some king of solution.
History suggest that old enmities can be overcome by trade example (china-taiwan:US-Vietnam)

To get more and more benefits of this agreement both governments must take these steps:

1)Improve infrastructure.
2)Ease restrictions.
3)Liberalize the visa regime for businessmen.
4)Build public support for trade relations between the two countries.

Trade relations cannot be built overnight and both countries have to go a long way to achieve the objectives.It certainly reflects enthusiasm and keenness to build peaceful and productive relations in the region but India must also pay heed to pending conflicts.

(your feedback,comments and suggestions are highly encouraged )

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