Normalisation of Pakistan-India trade ties: non-issues causing delay in evolving sectoral strategy

Will the issues relating to evolving sectoral strategies in the wake of normalisation of Pakistan-India trade ties, particularly textile sector be resolved in the foreseeable future, appears to be a "matter of tossing a coin." From the documents available here, it seems that Ministry of Commerce and Ministry of Textile Industry are entangled in non-issues which may cause delay in evolving the strategy.
Ministry of Textile Industry wants that the Ministry of Commerce ensure level playing field before elimination of negative list and has proposed several measures in this respect, particularly development of one window operation at border for smooth clearance of goods.
Joint Secretary (Policy), Ministry of Textile Industry, Kanwar M Usman in a letter sent on May 18 to the Additional Secretary - 1, Ministry of Commerce on the subject "sectoral meeting on textile sector vis-à-vis Pakistan-India level playing field for trade" while acknowledging Ministry of Commerce's letter of May 14 on the subject and meeting held on May 16 in Ministry of Commerce, expressing dismay said: " The Ministry of Textile Industry is astonished to know that a sectoral meeting was held on textiles on April 30, 2012; however, the Ministry of Textile Industry was not invited despite being member of sectoral committee."
"It is also a matter of disappointment that convenor of the meeting was unaware of the fact that the Ministry of Textile Industry was not invited to the earlier meeting." He further pointed out that during the meeting Joint Secretary, Ministry of Commerce informed the participants that under the Safta agreement, India is not applying non-ad-valorem duties on products which are not in the sensitive list whereas Deputy Secretary, Ministry of Commerce informed that although that it is not being currently implemented but India has although agreed to apply only ad-valorem rate from January 2013. The convenor of the meeting advised the officer to share the relevant documents so that actual situation is clarified. "You are requested to share the relevant documents as early as possible," he said.
He further mentioned that as far as reduction of sensitive list is concerned, it should be noted that Pakistan will not have any discriminatory trade policy amongst Safta members after December 2012, whereas, India has kept variant sensitive list for LDCs and non-LDC members. As informed earlier by Ministry of Commerce that India has abolished sensitive list for LDCs, same may be proposed for non-LDC members. In case India is only planning to reduce the list by 30 percent, a list will be sent "to your ministry" within a week.
The letter sent by the Ministry of Textile Industry on May 8, on the subject was referred during the meeting, however, Ministry of Commerce informed that the response will be sent in written and it may not be discussed during this meeting. "The Ministry of Textile Industry looks forward an early response in anticipation that it would be a move for creation of a level playing field and an industrial-friendly trade policy regime," he said.
Earlier Secretary, Ministry of Textile Industry, Shahid Rashid, in his letter sent on May 8 to the Secretary, Ministry of Commerce, Zafar Mahmood, referring to Ministry of Commerce letter of March 21 said that the sector strategy meeting for textiles sector was scheduled by the Ministry of Commerce on April 9, in Trade Development Authority of Pakistan office at Karachi and Additional Secretary-1 was convenor of all the meetings. However, there was no representation from the Ministry of Commerce at the meeting which was chaired by Tipu Sultan, Consultant TDAP.
The minutes of the above meeting, he said were received in the Ministry of Textile Industry on May 3 only after the Ministry of Commerce was requested to do so. "The minutes received do not accurately reflect the proceedings of the meeting that was also not conducted in accordance with the Terms of Reference (ToRs) circulated by the Ministry of Commerce.
He recalled that ToRs of the committee were discussed in the ministerial meeting, chaired by Additional Secretary-1, Ministry of Commerce, held on March 16. It was then agreed that a separate meeting would be held with Ministry of Textile Industry to review the ToRs. However, no such meeting was convened by the Ministry of Commerce.
The present Terms of Reference of the special committee on textile and clothing need to be modified keeping in view that Indian textiles industry as a whole is more competitive and over protected than Pakistan. In particular, the following aspects require consideration:
---- Non-advalorem duties and multilayer tariffs at import stage.
---- High level of subsidies eg duty entitlement pass book (depb) scheme, subsidised infra-structure schemes, lower interest rates and taxes, huge duty draw-back system.
---- S large government owned textile sector.
---- Second largest producer and exporter of cotton.
---- Strong man-made fibre industry starting from Naptha Cracker Plant.
---- Subsidised agriculture sector.
---- Government control on cotton trade.
---- An annual budget of more than Indian Rs 50 billion per annum for Ministry of Textile Industry for development projects (other than duty entitlement pass book (depb) scheme, drawback scheme).
He further reminded that as approved by the cabinet, meeting held on February 29, the Ministry of Commerce is to ensure level playing field before elimination of negative list. The Ministry of Textile Industry would like to propose the following measures to seek a level playing field as far as the textiles and clothing sector is concerned:
---- Provide protection to the local industry not less than India through imposition of appropriate duties.
---- Ensure enough number of lines in the SAFTA sensitive list, which are not less than India sensitive list for SAFTA.
---- Provide duty-drawback on imports and on deem basis not less than Indian rates and in an efficient manner.
---- Provide concessionary finance for exports on rate not more than India.
---- Conduct a professional study on Indian subsidy programs.
---- Prepare a single document containing all procedures, duties and time lines for imports and exports for each product for awareness of the sector.
---- Necessary legislation and infra-structure for setting standards, inspections and certification of imports be put in place.
---- Develop one window operation at border for smooth clearance of goods.
In the end Secretary, Ministry of Textile Industry said: The Ministry of Textile Industry looks forward to the creation of a level playing field and an industrial-friendly trade policy regime.