India, Pakistan May Drop Import Tariffs

India and Pakistan on April 28, 2011 decided to examine the feasibility of trading in electricity, petroleum products, Bt cotton seeds, and reduce non-tariff barriers that are blocking trade between the South-Asian countries. Pakistan has also recognised that grant of most-favoured nation (MFN) status to India "would help in expansion of bilateral trade." Both the countries have decided to explore the possibility of inking a "preferential trade agreement" to promote bilateral trade by bringing down import tariffs.

"Both sides also agreed to remove the non-tariff barriers and all other restrictive practices which hamper bilateral trade," an official said after the conclusion of the two-day confabulations between commerce secretaries of both the countries in Islamabad. Pakistan is the only country in South Asia that has refused to grant the MFN status to India which would establish equality of trading opportunity.

India's official trade negotiators said not granting of MFN status violated the World Trade Organisation (WTO) norms and also primarily responsible for delaying the operationalisation of Saarc Free Trade Area.

In the past, Islamabad had linked MFN with the vexed Kashmir issue. This was the first round of discussions between the commerce secretaries-- Rahul Khullar of India and Zafar Mehmood of Pakistan— after the November 26, 2008 terrorist attacks in Mumbai halted bilateral official talks.

The two sides had last met in 2007. Islamabad also said that it would replace the "positive list" with a "negative list" by October this year.