MFN status: Pakistan should negotiate mutually 'barrierless' trade regime with India

Pakistan should not give up its secure position under GATT Article XXIV to negotiate market access with India on the basis of reciprocal access to each others' markets unhindered by Indian Non Tariff Barriers (NTBs) that are presently erected as impregnable protectionist measures. De-linking with the above special India-Pakistan WTO provision would be unwise for Pakistan and leave it in an economically vulnerable position.
This was stated by Sayed A S Shah, Consultant in International Trade Law and advocate Lahore High Court in an interview with Business Recorder. He said Pakistan had decided to grant MFN status to India to boost its trade and diplomatic ties in the region though the business community had expressed its strong reservation against the government's move and demanded ample protection while fair access to Indian market as response of Pakistan's gesture.
Replying to a question as to how did he see Pakistan's legal strength to protect its local market despite granting Most Favoured Nation (MFN) status to India?, he referred to a statement of the Commerce Minister that accord of MFN to India would be a New Year gift from Pakistan to India. The removal of the negative list at the end of December 2012, if done as an MFN gesture rather than as a quid pro quo for reciprocal access to Indian markets would defeat the very intent of unhindered trade with India and will make permanent the iniquitous India-Pakistan trade relationship where there is free flow of goods from India and restricted movement of Pakistani goods to India.
Member countries of the WTO conduct trade among themselves in accordance with general WTO disciplines that apply uniformly to all countries on a non-discriminatory basis. Such disciplines include the Technical Barriers to Trade (TBT) and Sanitary & Phyto-Sanitary (SPS) Agreements that enable the erection of NTBs to trade between WTO Member countries.
Countries that are not members of the WTO are free to conduct their trade relations with one another on the basis of arrangements and rules worked out mutually. However, exceptions to the rule that WTO Members are obligated to abide by WTO disciplines have been made in GATT Article XXIV of the WTO Agreement itself for Regional imports.
On the scope of business growth of Pakistani exporters through big market of India, Shah said: Pakistani exporters would have little to gain wading through the complex maze of elaborate Indian standards, measures, specifications and its other NTBs. There is no doubt that open trade between India and Pakistan is something desirable. However, it is also necessary that the trade be fair and free. Instead of devising ways around Indian NTBs, a clear straightforward 'No-NTB' India-Pakistan trade regime with reduced tariffs and non ad valorem tariffs is the answer. Pakistan should negotiate a mutually barrier-less regime where the international NTBs of both sides become non-applicable to India-Pakistan trade.
Indian NTBs cannot be removed on a selective basis for Pakistan only if both the countries agree to conduct their trade relations on MFN basis. It would, therefore, be naive for Pakistan to do away with the negative list without an Indian quid pro quo, on the basis of the expectation that once it has done so, India would be forthcoming and would, for the sake of Pakistan, dismantle the protection barrier of NTBs that it has so painstakingly created on MFN basis against the whole world. However, if India-Pakistan trade is conducted on the basis of an exclusive India-Pakistan trade agreement under GATT Article XXIV, all Indian NTBs become negotiable for Pakistan.
Pakistan has committed to end the negative list at the end of the year, it could be done with the explicit proviso that it is in anticipation of declaration of non-application of Indian NTBs to Pakistan, failing which there would be revival of the negative list. Notifying the abolishment of the negative list as an MFN gesture whereby Pakistan de-links with GATT Article XXIV would commit Pakistan in perpetuity to an iniquitous arrangement where India would retain the right to impose NTBs to exports from Pakistan on an MFN basis where-after Pakistan would lose all leverage to negotiate Indian NTBs.
The rest of the world could contend with mere grudges against Indian NTBs but in case of Pakistan the gushing onslaught of imports from India and impedances in the way of Pakistani goods going to India would place Pakistan in a position of perpetual disadvantage. Indian NTBs applied evenly to all WTO members remain theoretical barriers for dormant traders with India and become acute and specific barriers for an active trading partner like Pakistan. Even non-ad valorem duties of India that are theoretically applicable to all WTO members have a Pakistan-specific dimension and are a big irritant for Pakistan's exports to India. They are however negotiable under an exclusive India-Pakistan trade dispensation.
Further, continuous application of Indian NTBs to Pakistani goods to frustrate Pakistan's exports to India would vitiate relations between the two countries and as the imbalance in trade grows, be a cause for much acrimony in the years to come, he said.