Summary A USAID study says that trade with India will affect the local industry.
ISLAMABAD: A study conducted by US Agency for International Development has said that opening of free trade with India under Most Favorite Nation Status (MFN) will be onslaught on local industry by Indians and agriculture sector will suffer.
The study recommended that tariff quota method should be adopted for import of steel, iron, pharmaceutical and agriculture sector goods from India under MFN status regime.
The report further revealed that in global scenario, Pakistan’s export to India will grow. In 8 digit items of trade with India, Pakistan is more liberalized than India.
The report revealed that though India has not been given Most Favorite Nation (MFN) status, Pakistan has already operated it by liberalizing 97 per cent trade for Indian goods.
Commerce Ministry was required to conduct study regarding impact of liberalizing trade with India before taking decision to grant MFN status to India. It had got the approval of Cabinet to grant MFN status to India by December end 2012.
“But the study has been conducted in January 2013 which exposed the flawed plan of commerce ministry to grant MFN status to India without going through any comparative analysis,” official said adding that USAID study has confirmed that concerns raised by all stakeholders including textile, industry and agriculture sectors were genuine.
According to a study conducted with the technical assistance of USAID to assess the impact of linearization trade with India following MFN status, Indian trade regime is more restricted for Pakistani exports. The study noted that Pakistan had given much more to India in allowing items to export to Pakistan.
“However, India has liberalized only 43 per cent trade for Pakistani goods and our major exports are not being given preferential treatment by the former,” the renowned economist Hafeez Pasha said in a report. The study recommends that Pakistan should not discontinue negative list at all. It said that the complete phase out of negative list should be avoided to protect the local industry and agriculture sector.
The report observed that agriculture sector was real issue for Pakistan to open for trade with India under MFN status and recommended that sensitive list on agricultural goods should be expanded to protect the major crops.
It noted that tariff on cotton import from India is zero but India has tariff restriction in this regard. The study also accepted that cotton was genuine issue and recommended that quota system for Indian cotton exports to Pakistan should be introduced to protect the farmer community.
It said that there should have been parity in textile. The report revealed that India was giving subsidy of $ 297 per hector whereas Pakistan gave $ 188 per hector. India is giving subsidy almost on all items including fertilizer and power.
The opening of trade for Indian industry will be onslaught by Indian Industry and therefore study recommended that “we should give chance to industry to survive under MFN status with India”.
