Key Pak ministries oppose liberal trade with India

The Pakistan government's effort to normalise trade relations with India is being opposed by two ministries, including the key textiles ministry that wants trade liberalisation to be put off for five years, according to a media report on Wednesday.

The commerce ministry recently announced that it intends to switch over to a small negative list for trade with India by the end of February and to phase out this regime by the end of the year.

However, the ministry of industries and the textiles ministry, which have a crucial say in framing strategies to protect domestic manufacturers, have opposed the move.

The ministry of industries wants the negative list to be increased from 636 items to 1,297 items, while the more important textiles ministry says that there should be "no liberalisation for five years with India", the Dawn newspaper quoted its sources as saying.

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The two ministries do not agree with the negative list regime and its phasing out over a period of nine months that the commerce ministry has proposed for completely opening the Pakistani market to India, the sources said.

The federal cabinet will take a final decision on the issue, and it is expected this week.

However, the two key ministries are not in agreement on the complete phasing out of the negative list by end of this year.

An unnamed senior official in the textile industry said the textiles ministry, which is the custodian of more than 50 per cent export-led industries of Pakistan, had not provided any input when the negative list of 636 items was drawn up by the commerce ministry.

The commerce ministry has included 77 textiles items in the negative list, while there are 921 items which needed protection, the official contended.

"We have not been taken on board even before the commerce ministry made a commitment with the Indian government," the official said.

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The roadmap for trade liberalisation with India was approved by the cabinet in October last year.

However, the official said this approval was given on the basis of a presentation by the commerce ministry for which relevant stakeholders were not consulted.

According to the rules, the cabinet can give approval to a formal "summary" or proposal and not to a presentation, the official said.

Such a summary should be prepared after consulting relevant stakeholders 15 days before its submission to the cabinet.

Contrary to this, the official contended, the commerce ministry had committed itself to reducing customs duty to zero and five per cent for most importable items from South Asian countries, including India, under the South Asia Free Trade Agreement from January next year.

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If the government approves the shorter negative list for trade with India, it could mean that 80 per cent items would be imported to Pakistan on zero to five per cent duty, the official claimed.

This could lead to a "deindustrialisation in Pakistan as there were shortages of energy for the industrial sector, along with high cost of doing business", he claimed.

The commerce ministry is working on a new summary or proposal for trade liberalisation with India to be presented to the cabinet but the official claimed that a summary on important issues should be shared with stakeholders at least a week before being submitted to the cabinet.

It would not be possible for the textile industry to be part of any decision that is made without proper consultation, the official said.

On the other hand, the ministry of industries has finalised a negative list of 1,297 items.

It said that despite this negative list, an additional 3,575 items would be importable from India.

Pakistan currently allows the import from India of a little more than 1,900 items that are included in a positive list.