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Pakistan will gain amply by giving MFN status to India, says expert

Pakistan stands to gain from trade with India by conferring it Most Favoured Nation (MFN) status, according to research analyst at Economic Growth Unit of Sustainable Development Policy Institute.

Islamabad: Pakistan stands to gain a lot from trade with India by conferring it the Most Favoured Nation (MFN) status, according to a research analyst at the Economic Growth Unit of the Sustainable Development Policy Institute.
The conferring of the MFN status to India has raised a number of questions concerning the effect it would have on Pakistan’s economy.

But according to experts, Pakistani consumers would gain amply by trading with India, reports The Express Tribune.

Trade as per the MFN agreement was expected to start in January 2013, whereby Pakistan would trade with India on the basis of a negative list approach.

This would mean trade possibilities would be expanded to all items that are not on the limited negative list - the list of untradeable items.

Although Pakistan has earned a bad name due to the delay in reciprocating the granting of MFN status to Pakistan by India in 1996, the fact of the matter remains that the former still imports more from the latter than vice versa, the analyst said.

If trade is to increase between the two South Asian economies and greater economic integration is to take place, India will have to substantially reduce non-tariff barriers, the expert said.

Recent studies estimate that, by the next couple of decades, India’s large population will become a net importer of agricultural food products.

This presents a golden opportunity to Pakistan, since India would obviously look to its neighbour as the cheapest import market.

However, farming policies would have to change in Pakistan to increase output, the room for which is plentiful, the expert further said.

Another sector that could benefit from more trade with India is the leather industry - one of the largest export sectors of Pakistan.

While Pakistan does export leather to India for its footwear market, the chemicals used for the processing of these hides are currently being imported from Germany, since they are not on the list of goods allowed to be imported from India.

If trade opens up, the leather sector of Pakistan could earn a huge cost advantage by importing these chemicals from its neighbour.

India’s huge middle class would not only act as an important export market for Pakistan, but cheaper raw materials and machinery could also be imported from India once trade opens up, the expert said.