Negative List of Pakistan on India Pakistan Trade

Pakistan has declared to trade in its positive list of imports from India in favor of a negative list which allows import of all items except those mentioned in the negative list.

Pakistan has finalized the trade list for the import of items from India. A total of 1,209 items can be imported from India to Pakistan. The decision is finalized by the Pakistan Government to protect its domestic industry. This is positively expected to start trade between the two countries, benefiting traders from both the counties. Phasing out the negative items list is also expected, which will positively grant the Most Favored Nation status to India.

Earlier, Pakistan was trading with India under a positive regime, allowing the import of less than 2000 products. Currently, the Pakistan Government has issued a notification banning the import of 1,209 items from India. 137 items are declared as importable and can be exported from India through the Wagah land border crossing. Major items importable through Wagah would be livestock, newsprint in rolls and sheets, and vegetables.

Formerly, Pakistan was complaining about many of the non-tariff barriers India levied on its imports. Stringent tests, complex import licensing procedures, intricate codes, and mandatory special labeling were a few to name. Under the SAFTA (South Asian Free Trade Area), India did not give preferential access to import almost 865 items from Pakistan. Major items included in the sensitive list for Pakistan include textiles, farm products, and surgical instruments. Hence Pakistan believed that the SAFTA did not offer any significant business for them into the Indian markets. Once Pakistan finalized the items in the negative list, it is expected that discussions would be held regarding reducing the items listed under SAFTA.

78 textile and apparel products from India are included in Pakistan's negative list of 1,209 items banned for exports from India. More than 50% of the textile items include man-made fiber and filament-based products, 20 items are of knit fabrics, knitted and woven garments. The Hindu Business Line quotes Pakistan's Commerce Secretary, Mr. Zafar Mahmood saying, "This (the negative list) is only to give assurance to the Pakistan business sectors which feel threatened by Indian imports that the Government of Pakistan is making an interim arrangement where the goods they fear would destroy the industry would not be importable from India for a period of time. But we have told them very clearly that this is not a permanent arrangement."

Will this enhance bilateral relations between the two countries?

Direct trade between the two countries is lesser comprising less than 1% of their global trade. But trade through a third country such as Singapore, or Dubai is approximately 10 times more than direct trade. Importing Indian items through other countries will actually increase the cost of those products in Pakistan's markets. Currently with the Pakistan Government finalizing the list of items that can be directly imported from India, trade is expected to start between the two countries. The decision is taken with an intention to create bilateral trade relations.

However, Pakistan feels that bilateral trade relations will materialize only after completing a few legal procedures. The country also feels that India should minimize its tariffs for textile imports from Pakistan.

Pakistan's negative list is expected to be phased out by December 31^st 2012. Positive hopes prevail, that after this, the trade activities between the two countries would be much more normalized.

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