The Indian Government will hold a review meeting on Thursday to discuss the Most Favoured Nation (MFN) status given to Pakistan in 1996 under World Trade Organisation’s General Agreement on Tariffs and Trade (GATT).
The decision to review the MFN status comes in the wake of the Uri terror attack. On Monday, Prime Minister Narendra Modi held a review meeting on the Indus Waters Treaty to explore ways of use its rights to the fullest under the treaty to “exploit to the maximum” waters of the rivers flowing to Pakistan.
Being signatories to GATT, both India and Pakistan are expected to treat each other and rest of WTO member countries as favoured trading partners without any discrimination. By giving MFN status, a country is granted special favours by lowering trade barriers like customs duty rate, etc, and opening up of the market for its products.
However, while India unilaterally accorded MFN status to Pakistan as a goodwill gesture in 1996, Islamabad has not reciprocated the same and often imposes direct or indirect trade barriers.
According to Assocham, out of India’s total merchandise trade of $641 billion in 2015-16, Pakistan accounted for a meagre $2.67 billion. Most of India’s trade to Pakistan goes through third countries and the figures of that are believed to be much higher than direct trade. India’s exports to Pakistan worked out to $2.17 billion, or 0.83 per cent, of the total Indian outward shipments while imports were less than $500 million, or 0.13 per cent, of the total inward shipments.
Meanwhile, the Parliamentary Standing Committee on External Affairs has included ‘Indo-Pak relations’ as one of its subjects for examination. Besides this, the panel will also discuss One-Belt One-Road (OBOR) initiative of China and its strategic and economic ramifications for India.
The panel headed by Congress leader Shashi Tharoor has decided to deliberate upon a host of issues such as India’s Soft Power Diplomacy including role of Indian Council for Cultural Relations (ICCR) and Indian diaspora, performance of passport issuance system including issuance of e-passports.
The committee will also look at the South China Sea dispute and United Nations Convention on the law of the Sea (UNClOS), voting rights to NRIs, crisis in European Union in the wake of Brexit and its implications for India, India and international security regime: claim for candidature, negotiating strategies and challenges ahead and India and the new US Administration.