Indian Minister for Commerce, Industry and Textile, Anand Sharma is said to have dropped a bombshell on Pakistani government on Valentine's Day (February 14), that he is wrapping up his visit from Karachi subsequent to learning that the Federal Cabinet did not approve the negative list, well-informed sources told Business Recorder.
Sharma is visiting Pakistan from February 13 to 17 on the invitation of Commerce Minister Makhdoom Amin Fahim. "As he (Anand Sharma) received information during his visit to Karachi that Pakistani cabinet had not cleared the negative list, he was shocked. He conveyed to Islamabad that he had no other option but to cancel the high profile visit," the sources added.
However, his Pakistani counterpart Makhdoom Amin Fahim, once a candidate for the office of the Prime Minister, took up the issue with Prime Minister Syed Yousaf Raza Gilani, who directed the stakeholders including Minister for Textile Industry Makhdoom Shahab-ud-Din to sit and resolve differences on the negative list to guarantee its approval shortly.
"Amin Fahim, Rehman Malik, Shahab-ud-Din and other stakeholders held a five-hour marathon meeting on Wednesday to scrutinise the withheld negative list and evolve a consensus so that a negative message should not be sent across the border," the sources added.
Giving details of Cabinet meeting, sources said, as Commerce Secretary Zafar Mahmood, a confident and seasoned bureaucrat, started reading from the first slide, Textile Minister Makhdoom Shahab-ud-Din took on the Secretary by challenging, "Is this a forum to consult stakeholders on a very sensitive issue? Why were the real stakeholders being ignored?"
"As the Textile Minister started criticising Secretary Commerce, his other colleagues also supported him in the same tone which put the Secretary on the defensive," the sources continued.
As consultations had successfully been completed at the ministers' level, a new summary was being prepared for the Cabinet's approval, the sources said. According to the Rules of Business, 1973, every Ministry/ Division is bound to hold consultations with other Ministries/ Divisions concerned. However, required consultation with relevant stakeholders has not been done in this case.
The Cabinet was informed that the WTO trading arrangement is based on the principle of MFN, which implies non-discriminatory treatment among the member countries in terms of tariff as well as the number of tariff lines traded between the countries. Pakistan being a signatory to WTO is obliged to observe this principle. However, the trading arrangement with India is still discriminatory. Although the tariff applied on imports from India is the same as for any other WTO member state yet Pakistan has India specific goods restriction to the Import Policy Order 2010-11 and allows import of only 1963 tariff lines from India.
It was further revealed that the Cabinet in its meeting held on 2nd November 2011 endorsed the efforts for full normalisation of trade relations with India and directed to complete the process of trade normalisation for grant of Most Favoured Nation (MFN) status to India.
During the sixth round of Secretary level talks held from 14-16 November 2011 at New Delhi, Pakistan and India agreed that a move to full normalisation of trade relations would be sequenced. First, the negative list would be announced by February 2012 and then it would be phased-out after approval by the Cabinet.
The Cabinet was further apprised that a consultation process was carried out with both public and private sectors. All the stakeholders including the Industry, held meetings with the Chambers of Commerce and Trade Associations across the country to get their inputs to recommend items to be included in the negative list.
Although the cutoff date for recommending items for the negative list was October 15, 2011, the stakeholders kept on sending items for inclusion in the negative list till January 26, 2012 culminating in 1335 tariff lines in total. The list was internally examined and analysed by the Ministry of Commerce.
For the sake of academic neutrality and transparency, Institute of Business Administration (IBA), Karachi was assigned the task to examine the wish list/tariff lines recommended by the stakeholders and propose a final negative list of items for India. After critical examination of all tariff lines IBA examined the wish list given by the stakeholders, held extensive discussions with them and did not recommend the inclusion of 699 tariff lines.
The Cabinet was further informed that for normalisation of trade, the proposed negative list must be ultimately phased out. It, therefore, proposed that the: (i) Ministry of Commerce be allowed to replace the positive list of the Import Policy Order 2010-11 by a negative list for imports from India comprising 636 tariff lines;(ii) Ministry of Commerce be allowed to progressively phase out the negative list in three instalments on quarterly basis after approval of the Cabinet with quarters ending on 30th June, 30th September and 31st December 2012. This exercise would be conducted in consultation with IBA and all other stakeholders;(iii) Ministry of Commerce be allowed in principle, to make appropriate changes in the trade defence laws in consultation with the stakeholders to allay apprehensions of the industrial sector for using these laws more effectively against any unfair practices or industry by Indian imports.
After heated debate, the Cabinet decided that since all relevant stakeholders had not been consulted on the issue of formulation of the Negative List, they must be taken on board, and the summary resubmitted to the Cabinet for approval after carrying out due consultation.
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