Indo-Pak: Limitations of Peace Talks
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Issue Net Edition | Date : 17 Nov , 2011

One always has a lot of emotional attachment with his or her place of birth. Therefore it is understandable why Prime Minister Manmohan Singh has a very soft corner for Pakistan. He once had sympathised with Pakistan by describing it as the biggest victim of terror. He had overlooked the virtual global consensus that “Pakistan is the epicenter of global terror”. And last fortnight, on the sidelines of the just concluded SAARC summit in Maldives, Singh described his Pakistani counterpart Yusuf Raza Gilani as “a man of peace.” Of course, for a rising power like India, it is desirable that we have a stable and peaceful neighbourhood. In fact, good and enduring relationship between India and Pakistan is beneficial to the Indian subcontinent or South Asia as a whole.

Any amount of  unilateral concessions that India may provide to Pakistan, and this is exactly what the Manmohan Singh government is doing, is not going to change the situation”¦

Viewed in an emotional framework, it is understandable why on its part, the Manmohan Singh government has taken a series of measures in favour of Pakistan recently. It helped Pakistan in what is said to be a very tightly fought elections to get into the United Nations Security Council as a non-permanent member.  Pakistan secured a bare minimum two-thirds majority of 129 votes from the 193 members of the UN General Assembly in a straight contest with Kyrgyzstan for the single Asian seat. India’s vote in favour of Pakistan has surprised many analysts considering the fact  that on issues such as terrorism, disarmament, nuclear proliferation , Afghanistan and expanding the list of permanent members to accommodate India – and these are the priority issues for the Security Council – Delhi and Islamabad have diametrically opposite views.

Similarly, many observers just could not believe last month that India did not veto at the World Trade Organisation (WTO) the European Union’s special trade concessions for Pakistan. The offer from the European Union (EU) would allow the import of 75 Pakistani items earning the country more than 300 millions of dollars for a three-year period. The WTO works by consensus and the EU required all WTO members to consent to the EU proposal. Earlier India had objected to this EU move as it flouted the WTO rules for a level-playing field among trading partners. After all, the items on which Pakistan will be deriving concessions compete against the similar items from India, mainly textiles. But on November 7, India withdrew its objections. If Bangladesh and Sri Lanka do likewise, Pakistan will have a free entry into the European market.

Less than 1% of Pakistans population pays direct taxes. Under such circumstances, it is easier for Pakistans ruling establishment to open trade with India country rather than attempting any reforms at home.

I have come across some arguments that Indian concessions or help to Pakistan did have the intended impact on Pakistan as it reciprocated by granting India “Most Favoured Decision” (MFN) status. However, the comparison is odd, to say the least.  “MFN” is a misnomer. Contrary to the literal meaning, MFN status does not provide for special treatment. Rather, MFN simply means non-discrimination among trading partners sharing the status. That is why in the US and the EU, MFN status is also referred to as normal or third-country trading status. Therefore, Pakistan’s granting of MFN status to India will not confer any special trading rights or privileges on India, though it will give to Indian imports the same treatment as imports from Pakistan’s other trading partners.

In any case, MFN treatment is an obligation in the multilateral trading system put in place by the WTO. Every WTO member-country is bound not to discriminate against other members in terms of both tariff and non-tariff measures. Hence, if Pakistan gives MFN treatment to India, it will not be doing any favour to us but will simply fulfill a basic WTO obligation it had evaded so far. Pakistan has done this by maintaining a positive list for imports from India. The list comprises about 2,000 products, out of the nearly 10,000 products the country imports. Only products on the positive list are importable from India.

Trading on the basis of a negative list means that all products are importable save those on the list. But if the negative list for India contains some 1,000 products or more, it will again deny India the MFN status, because no such list exists for the other trading partners of Pakistan. If India is to have MFN status, imports from India must not be discriminated against in any manner. Therefore it remains to be seen what exactly is following Pakistan’s MFN-decision. If Pakistani media reports are any indication, nothing is clear as yet.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Prakash Nanda

is a journalist and editorial consultant for Indian Defence Review. He is also the author of “Rediscovering Asia: Evolution of India’s Look-East Policy.”

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