Pakistan okays MFN status for India

Pakistan today decided to grant the Most Favoured Nation status to India to boost bilateral trade, but made it clear that the move would not in any way affect its stand on the Kashmir issue.

"After a lengthy discussion and a briefing by the Commerce Secretary, the Cabinet unanimously approved the Commerce Ministry's summary to grant Most Favoured Nation status to India," Information Minister Firdous Ashiq Awan told a news conference.

The MFN status, which means that Pakistan will give trade treatment to India at par with its other partners, is likely to boost the bilateral economic ties. India had granted the MFN status to Pakistan way back in 1996.

In 2010-11, India-Pakistan trade stood at USD 2.6 billion. Pakistan's move to grant MFN status to India comes ahead of the November 10-11 SAARC Summit in Maldives, where the Prime Ministers of the two countries are expected to meet.

All stakeholders in Pakistan, including the military, were "on board" for the decision to grant MFN status to India, Awan said.

"The decision will lead to economic benefits and it is in the national interest," she said.

During the meeting of the Cabinet chaired by Prime Minister Yousuf Raza Gilani, several ministers raised concerns on issues like Kashmir which were discussed at length, Awan said.

"Some Cabinet members had concerns about Kashmir, political issues and defence and strategic relations," she said in her opening remarks.

"Others raised issues related to national sovereignty and Pakistan's territorial integrity. The Cabinet's decision will cause no harm to the Kashmir cause," she said.

Awan, a senior leader of the ruling Pakistan People's Party, made it clear that the decision to give India MFN status was not linked in any way to Pakistan's support for the Kashmir issue.

"Trade (with India) is a separate issue. It is a most important priority for Pakistan to continue its support for the Kashmir issue and the movement (for the right to self-determination)," she said.

Awan pointed out that China, one of Pakistan's closest allies, had bolstered its trade relations with India despite territorial disputes between the two countries.

"We cannot live in regional isolation," she said.

Responding to a question on whether the Kashmiri leadership had been consulted on the decision to grant MFN status to India, Awan said the two parts of Kashmir were already conducting trade across the Line of Control.

Bus services too were operating across the LoC, she said.

Awan said Commerce Minister Makhdoom Amin Fahim had briefed the Cabinet about how he had engaged the Kashmiri leadership on the MFN issue.

Awan further sought to link the government's decision to steps taken by Pakistan's founder Mohammad Ali Jinnah immediately after the Partition to improve trade relations with India.

"The foundation for bilateral trade was laid by the Quaid-e-Azam in 1948 and what the Cabinet implemented today was in line with Jinnah's vision," she said.

In response to another question, Awan said the government would take the issue to Parliament.

However, official sources told PTI that the government's decision did not need to be ratified by Parliament.

Commerce Secretary Zafar Mahmood dismissed reports in the local media about the adverse impact of giving MFN status to India, saying there was a "knowledge gap" between the reports and the actual situation on the ground.

Some media reports had even suggested that Pakistan would not grant India MFN status before a scheduled meeting of the Commerce Secretaries of the two sides in New Delhi later this month.

Analysts expressed surprise at the speed with which the government had acted on the issue after it was raised in Commerce Secretary-level talks in Islamabad in April.

After India granted the MFN status to it in 1996, Pakistan had held out on reciprocating the move, largely due to opposition from religious groups and some political parties which felt that extending the MFN status to New Delhi would affect Pakistan's stand on the Kashmir issue.