MFN status to India

There are vested interests, both within India and Pakistan, who don't want free trade and friendly, even normal, relationship between the two countries because of obvious reasons. Hamid Malhi, President of Basmati Growers Association (BGA), also joined the chorus on 30th January, 2013 when he declared that with huge hidden and budgeted subsidies to the tune of $99 billion to the agriculture sector in India, it is next to impossible to expect Pakistan to fully open its doors to Indian agricultural products, adding that India is bound to reduce agriculture subsidies before expecting the MFN status from Pakistan.
It is not a level playing field for the farmers of Pakistan who are subjected to a 16 percent GST on all inputs plus taxes to the tune of Rs 2 billion annually. Another advantage for India is that a market of 50 million people exists within a radius of 200-km in Gujranwala, Faisalabad, Multan and Rawalpindi besides a consumer base of 12.50 million people in the city of Lahore.
Complaining further, Malhi added that reciprocal gains to Pakistan were not visible. India has a 30 percent duty on imports of onions, tomatoes, potatoes etc while Pakistan has allowed imports of agricultural items at zero tariff for the last so many years. India has a Minimum Support Price mechanism for 25 crops while only wheat is procured by the government along with an indicative price of sugarcane, which is generally rigged by the millers through unjustified weight and variety deductions. India has gained over the years even without an MFN status and would gain further and rapidly if the so-called hotch potch trade liberalisation policy is implemented by Pakistan.
Though the arguments of the President of BGA are based on the same old and hackneyed points, yet his concerns need to be examined seriously and if there is a merit in his contention, granting of MFN status to India can be delayed till a level playing field for the exchange of goods and services is properly developed between the two countries. In fact, the genuine representatives of the agriculturists also need to be taken into confidence before a final decision was made in this regard. In particular, it needs to be thoroughly analysed why Pakistan's agricultural exports to India have not been able to grow after the grant of MFN status to these imports by India as far back as in 1996. In our view, India needs to be forcefully asked to drastically reduce agricultural subsidies and remove non-tariff barriers in letter and spirit before expecting that coveted trade status from Pakistan. Otherwise, such a step could prove disastrous for Pakistan's 20 million farming households and future agriculture production. It needs to be remembered that the Doha Round had failed because of huge agricultural subsidies of the exporting countries and the demand of importing developing countries to remove them for meaningful and result-oriented negotiations. It is true that the Federal Government has granted MFN status to India and has also agreed to the timing of the facility but some of the groups still believe that more analysis is needed to actualise the MFN status to India. Providence has perhaps provided another opportunity to Pakistan to do more homework and consult farmers and other interested parties/sectors to revisit its earlier commitment because of the delay in implementing the earlier decision due to tension on the Line of Control (Loc). According MFN status to India is fully justified on economic principles to promote the welfare of the two countries but such a framework can only work efficiently if rules of the game are properly observed and adhered to.