Pakistan committed to India that the negative list will be converted into positive list by the end of 2012 but hidden hands may have blocked trade normalization process, said an official on condition of anonymity. A number of agriculture bodies, pharmaceutical sector, auto sector and even textile sector are opposing this process. Jammat-ut-Dawa, headed by Hafiz Muhammad Saeed has also staged a demonstration against trade normalization with India.
The Cabinet in its decision of November 2, 2011 mandated the Ministry of Commerce to fully normalise trade relations with India. In its subsequent meeting held on February 29 this year, the Cabinet gave approval in principle to phase out the negative list subject to further negotiations with India.
A Negative List of 1,209 items for trade with India has been notified vide Commerce Ministry''s SRO No280 dated March 20 this year. The negative list would become a part of Import Policy Order as Appendix ''G'' replacing the previous positive list of items for India. Indian goods specified in the Appendix ''G'' (negative list) will not be importable from India. This negative list will have to be phased out by December 31, 2012 after approval by the Cabinet.
Commerce Secretary Munir Qureshi, who was promoted to grade 22 on Wednesday, confirmed that the phasing out of the negative list will be little delayed as the Ministry is yet to submit the case to the federal cabinet. "I don''t think negative list will be phased out by December 31 this year, as there is no cabinet meeting scheduled for this week," he added.
Initially, trade tries with India were part of composite dialogue but at a later stage, former Commerce Secretary Zafar Mahmood expedited the process, however, critics accuse him of not taking all stakeholders on board. Indian High Commissioner Sharat Sabharwal personally went to different chambers to lobby with the objective of minimising opposition by Pakistani textile sector. He was quoted as saying that Pakistan had promised to open Wagha border for all kinds of imported goods from India by October 2012 but this decision has not been implemented so far. "India has implemented the agreed decisions but Pakistan has yet to fulfil commitments it made at the meeting," said an official who is aware of all developments.
According to the agreement, in the first phase, India had promised to reduce SAFTA sensitive list by 30 per cent before October 2012, in lieu of opening of Wagha border. In the second phase, India agreed to reduce SAFTA sensitive list by additional 30 per cent by November this year after which Pakistan will be required to phase out negative list by December 31 this year. India has to eliminate entire sensitive list in five years.
President of Basmati Growers Association Chaudhry Hamid Malhi told this scribe that agriculture community had not been taken into confidence prior to the agreement with India. India and Pakistan were major trading partners after independence. In 1948-49, 56% of Pakistan''s total exports were destined to India and 32% of Pakistan''s imports were from India.
Till 1965 the normal trading relations continued. Between 1966 and 1974, no formal trade took place. Based on Simla Agreement of 1972 which contained provisions for resumption of trade relations, trade resumed but it was restricted to public sectors of both countries for few goods like cotton, engineering goods, jute, railway equipment, rice and tea. Later, trade by private sector was allowed and a number of goods traded gradually increased.
In 1995, both India and Pakistan became members of the WTO. In 1996, India allowed MFN status to Pakistan. However, Pakistan continued with the Positive List strategy i.e. allowing only few items for import from India. The composite dialogue between India and Pakistan started in 1998. Besides Kashmir, regional security, Wullar Barrage, Siachin, Sir Creek and terrorism, economic and commercial cooperation was initiated to enhance bilateral trade. Six rounds of Talks on Economic and Commercial Cooperation have been held so far: (i) First Round (8 August, 2004, Islamabad);(ii) second Round (9-10 August 2005, New Delhi);(iii) third round (March 28-29, 2006, Islamabad) and ;(iv) fourth round (July 31-August 1, 2007, New Delhi)
The dialogue process came to a standstill due to Mumbai attack. The process resumed in April 2011 and following rounds were held: (i) fifth round (April 27-28 2011, Islamabad) and ;(ii) sixth round (November 14-15, New Delhi) In continuation of the previous rounds of meetings under the composite dialogue, the 5th round of Commerce Secretary level talks on commercial and economic cooperation was held on April 27-28, 2011 at Islamabad. The joint statement issued at the end of the talks contains significant decisions on consultation with the stakeholders for a switch from positive to negative list, addressing the issues of trade through 3rd country and tariff and non-tariff barriers to trade between the two countries.
Subsequent to the Commerce Secretary level talks held in April 2011, Anand Sharma, the Indian Commerce Minister invited Makhdoom Muhammad Amin Fahim, Federal Minister for Commerce to India along with a business delegation. A 72 member delegation visited India under the leadership of Commerce Minister from September 26 to October 3, 2011. India dropped its opposition in WTO to the concessionary package provided by EU to Pakistan. The occasion not only provided political ownership to the bilateral economic and commercial relationship but was also helpful in creating linkages between the leading chambers of commerce of the two countries.
The 6th round of India-Pakistan talks on commercial and economic co-operation was held during 14th - 16th November 2011 at New Delhi between Commerce Secretaries of India and Pakistan under the dialogue process which started in 2004. To take forward the decisions taken during the 5th round of talks in April 2011, many bilateral Groups/ Sub-groups were set up. Almost all of these groups/ sub-groups have met and worked on their specific designated tasks. Both sides agreed that the momentum of work and the determination to move forward had transmitted positive signals about advancing the bilateral trade agenda. In this context, India welcomed the decision taken by Pakistan to completely normalise the trade relations with India.
On an invitation by Makhdoom M Amin Fahim, Federal Commerce Minister for Commerce, Anand Sharma, Indian Commerce Minister along with strong business delegation visited Pakistan from February 13-16 this year. During the visit the two sides initialled three agreements i.e. Cooperation and Mutual Assistance in Customs Matters Agreement, Bilateral Cooperation Agreement on Mutual Recognition between PSQCA and BIS and Agreement on Redressal of Trade Grievances to address issues related to NTBs. The Agreements will be signed after competition of legal formalities on both sides.
In the sixth round of Commerce Secretary level talks held from November 14 to 15, 2011 at New Delhi, both sides discussed the process of trade normalisation further. In order to address the issue of Non Tariff Barriers and to allay the concerns of the businessmen, the two sides agreed to conclude three agreements i.e. Cooperation and Mutual Assistance in Customs Matters Agreement, Bilateral Cooperation Agreement on Mutual Recognition between PSQCA and BIS and Agreement on Redressal of Trade Grievances.
Pakistan and India are members of the Agreement on South Asian Free Trade Area (SAFTA). By January 2013, the applicable tariff under SAFTA for all the items except those included in the SAFTA sensitive list will be reduced to 0-5% by both India and Pakistan.
However, whereas Pakistan has only one sensitive list, India has separate lists for LDC including Afghanistan, Bangladesh, Bhutan, Maldives and Nepal and NLDC including Pakistan and Sri Lanka. Recently, it has reduced its sensitive list for LDC substantially maintaining only 25 tariff lines. It also has bilateral preferential arrangements with Sri Lanka whereby majority of tariff lines in India''s sensitive list are covered under the India-Sri Lanka FTA, thus attracting concessional tariff rather than the MFN tariff.
Through these arrangements Pakistan is discriminated against all the other countries in the region and a level playing field is denied through higher tariffs imposed on imports from Pakistan by India. In its further negotiations Pakistan will emphasise this point and seek concessions on textile, agriculture and food items through reduction in India''s sensitive list. Pakistan expects substantial reduction in India''s sensitive list as has been done in the case of LDCs.