India will at a high-level meeting on Thursday review the most-favoured nation (MFN) status it extended unilaterally to Pakistan two decades ago. Prime Minister Narendra Modi is likely to chair the meeting that is being held in response to the recent attacks on the Uri military camp.
“The Prime Minister’s Office has called a meeting to review the MFN status given by India to Pakistan. It will be on the lines of the meeting held to review the Indus Water Treaty,” a government official told BusinessLine.
New Delhi extended MFN status to Pakistan to meet its obligation under the World Trade Organisation (WTO) rules. It means that Pakistan is treated at par with all other countries India trades with and is not discriminated against.
While Pakistan has not yet given MFN status to India, in the last few years it has lifted the ban on most Indian items barring some 1,209 products (including textiles, automobiles and agriculture produce) contained in a negative list. “In the meeting, the government has to decide what it actually wants to do. Does it also want to have a negative list like Pakistan and ban import of specific items, or does it want to ban all trade with the country,” the official said.
New Delhi will be flouting WTO norms if it withdraws MFN from Pakistan, pointed out Nisha Taneja, a trade expert from ICRIER. “The decision on trade with Pakistan should be on the lines of the decision taken by India on the Indus Water Treaty where it has looked at maximising the country’s gain without violating the agreement,” said Taneja.
A complete ban on trade with Pakistan could hurt Indian interests more as India’s exports to the country at $2.17 billion in 2015-16 far exceeded its imports at less than $500 million.
“Other options, besides a complete ban on trade, include banning trade through the land route or through both land and air routes while allowing it to continue through the sea route,” the official said.
A ban would also hit the trade happening across the Line of Control between small traders. “My greatest worry is that a ban of LoC trade could create a lot of unemployment across both sides of the border which could add to the unrest,” Taneja said.