Pak to introduce negative list for trade with India

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Pakistan Cabinet on Wednesday unanimously approved a proposal to switch over to a negative list regime for trade with India and phase it out by the year end as part of measures to fully normalise bilateral economic ties.

A meeting of the Cabinet chaired by Prime Minister Yousuf Raza Gilani 'unanimously approved the phasing out of the negative list' regime between Pakistan and India by December, said a brief statement issued by the Premier's office.

"After that (phasing out of the negative list), the process of trade normalisation between the two countries will be completed," the statement said.

Sources told PTI that the Cabinet had approved the introduction of a negative list with slightly more than 1,200 items that cannot be traded with India.

The move will allow Pakistan to import some 6,800 items from India, they said. Pakistan currently allows the import from India of a little more than 1,950 items that are included in a positive list.

The Commerce Ministry had finalised a smaller negative list of 636 items but this list was abandoned due to opposition from several stakeholders, including the Textiles and Industries Ministries, which wanted greater protection from Indian imports.

Following further consultations since the last Cabinet meeting a fortnight ago, the Commerce Ministry expanded the negative list to slightly over 1,200 items.

The Commerce Ministry has said it intends to phase out the negative list in three phases. Direct trade between India and Pakistan constitutes less than one per cent of their respective global trade.
India exported goods worth USD 2.33 billion to Pakistan last year while its imports were USD 330 million.

Following several rounds of talks between the Commerce Secretaries and Commerce Ministers, the two sides approved several steps to dismantle hurdles in the way of increasing official trade to USD six billion by 2014.

However, Pakistan has consciously chosen not to play up the fact that the phasing out of the negative list would lead to giving India Most Favoured Nation status due to opposition from several quarters, including the Defa-e-Pakistan Council, a conglomerate of hardline and extremist groups.

Lashkar-e-Toiba founder Hafiz Mohammad Saeed, who played a key role in cobbling together the Defa-e-Pakistan Council, has said the grouping will oppose any move to give India MFN status and to open up Pakistani markets.