‘Under Pressure’ Pak Industries Ministry Moves To Slow Down Pace Of Trade With India

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ISLAMABAD – After fierce resistance from farmers’ lobbies and the textile ministry, Pakistan’s Ministry of Industries is also gearing up to slow down moves to open up trade with India.

The ministry believes it will hurt the infant domestic industry and has proposed a gradual phase-out of negative trade list over a period of five years.

Pakistan is planning to grant most-favoured nation (MFN) status to India by the end of December and start free trade in January, the Express Tribune reports.

The Ministry of Textile and farmers’ lobbies like the Farmers Associates Pakistan are opposing free trade with India on fears that it will swallow up Pakistan’s economy, the report said.

According to officials, the Ministry of Industries has recommended to the government to link the opening up of trade with reciprocal measures by India to ease the non-tariff barriers that stand in the way of Pakistan’s exporters.

It said that in case India stops removing the barriers during a period of time, the phase-out of negative trade list should be stopped by Pakistan for the same period, the report said.

The ministry said that the commerce ministry has identified 636 items for trade with India after consultation with the industry and a study conducted by IBA Karachi.

The industry said that while trade liberalisation is welcome, it will only benefit both sides if undertaken in a structured manner, providing space to the industry in the backdrop of the energy crunch, floods, law and order situation and high interest rates, the report added.

According to the South Asia Free Trade Area (SAFTA) accord, except for the items placed in the sensitive list, the rest of the tariff lines will come down to 0-5% by January next year.

“This will not only allow a huge quantum of tariff lines to be opened up for trade, the tariff will also be reduced drastically, for example, from as high as 35% to 5% in January 2013, which may have a huge cost impact on the local industry faced with a plethora of domestic supply-side constraints,” the ministry said.

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