Daily Times, Pakistan

India, Pakistan to start discussions on import duties cut

1 April 2012

NEW DELHI: India and Pakistan will soon begin discussions on a preferential trading arrangement to lower import duties on an array of goods. The talks will be held under ambit of South Asia Free Trade Agreement (SAFTA) signed eight years ago between member states of South Asian Association for Regional Cooperation (SAARC), a senior Indian official said on Saturday.

“Our Commerce Minister had agreed earlier this year when Pakistan notifies its negative list (for trade with India), we will start discussions on reducing the sensitive lists under SAFTA,” official told Economic Times on condition of anonymity. “Since Pakistan has already delivered its side of bargain, preferential trading discussions would begin soon.” India has not given significant benefits to Pakistan under SAFTA, which mandates members to bring down tariffs by up to 5 percent, as its neighbour continued to ban import of most Indian products. It has not provided any preferential access to as many as 865 items from Pakistan included in a sensitive list.

For least developed countries, sensitive list consists about 25 items and for Sri Lanka it has around 400. “India’s sensitive list for Pakistan includes almost all items of interest to the country like textiles, surgical instruments and farm products,” a Pakistani official told Economic Times. “SAFTA, therefore, does not offer Pakistani business any significant access to Indian markets.” Since Pakistan allowed just 1,967 items from India and banned more than 4,000 products, it automatically did not have to extend tariff preferences to the country under SAFTA, report said.

India had promised it would consider lowering tariffs for Pakistan on about 30 percent of items in sensitive list within four months of implementation of negative list, official said.
“We have to start work on that now so that further liberalisation of trade under SAFTA for both countries can take place once Pakistan allows free flow of imports from India by dismantling negative list by the year-end,” he added. Last week, Pakistan decided to end its discriminatory trade regime with India by giving up its positive list of imports for the country in favour of a negative list, which allows imports of all products except those included in the list. This would lead to an almost three-fold increase in India’s exportable items immediately and by end of year, when negative list is phased out, all 7,000 items will be allowed.