Pakistan regrets Indian review of trade concessions

Pakistan regrets Indian review of trade concessions

Tue Feb 27, 2007

By Augustine Anthony

ISLAMABAD (Reuters) — Pakistan regrets an Indian decision to review tariff concessions extended to Pakistan under a regional trade agreement but will not retaliate, a senior Pakistani government official said on Tuesday.

India announced at a regional ministerial meeting in Nepal on Monday that it was reviewing its tariff concessions to Pakistan, blaming it for not offering India the same concessions, the Commerce Ministry official said.

"It is sad, it should not happen. Any unilateral review of tariff concessions will be a violation of the SAFTA agreement," said ministry Secretary Syed Asif Shah, referring to the South Asian Free Trade Agreement (SAFTA) signed in January 2004.

Shah rejected the Indian accusation.

Pakistan’s trade with old rival India is restricted to a list of about 1,800 items. Trade ties were severed after a 1965 war but the number of items on the list has gradually built up.

"India’s trade regime is not transparent as it has enormous non-tariff trade barriers," Shah said.

Pakistan’s official exports to India stood at $300 million in the fiscal year 2005/06 (July-June), while it imported Indian goods worth $900 million. Unofficial trade by smugglers is believed to be several times higher, traders say.

Besides Pakistan and India, Bangladesh, Bhutan, the Maldives, Nepal and Sri Lanka are signatories to the SAFTA agreement, which came into force last July.

A range of products that members deem sensitive has been excluded from the free trade deal.

Shah said Pakistan would not take retaliatory measures to any Indian cut in tariff concessions.

"Pakistan has made it clear that its tariff concessions extended to all members, including India, will not be reviewed and that Pakistan remains committed to continue with the trade liberalisation programme under SAFTA."

Pakistan and India, the region’s largest economies, have fought three wars since independence in 1947 and came dangerously close to a fourth in 2002.

Relations have improved since a peace process began in early 2004, but there has not been any meaningful progress on trade or on their core dispute over the Himalayan region of Kashmir.

In 1996, India granted a Most-Favoured Nation (MFN) status to Pakistan, but Pakistan has yet to reciprocate, saying any progress on trade should be in tandem with progress on Kashmir.

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source: Reuters