Wednesday, 14 December 2011

GRANTING MFN STATUS TO INDIA

GRANTING MFN STATUS TO INDIA

Syed Asad Hussain is a leading economist of Pakistan and currently serving as Director SZABIST Islamabad. I had a discussion with him on what benefits Pakistan could achieve but giving India the status of most favourite nation or MFN. Here are some excerpts from the conversation.

  No country in the world is self-sufficient in natural and technical resources. To share these resources it’s important that countries trade with each other and get rid of unnecessary trade barriers. Trade between regional economic blocs such as ASEAN and NAFTA have proven to be successful. The volume of trade between Far East Asian countries is almost 193 billion dollars annually. The trade between countries in European Union is approximately 2000 billion dollars annually. The trade among countries in South Asia is only 9 billion dollars. Mexico and Canada are both one of the biggest trading partners of U.S. Despite being neighbour of China and India, Pakistan because of its poor policies and tense relations with India has not benefitted. China and India being economic and military rivals have a trade volume of more than 60 billion dollars. To break the shackles, Pakistan has given status of MFN to India. India already had given us this status in 1996. So what benefits can Pakistan achieve from this step. Firstly, the trade would open for Pakistan for the first time the door to an economy catering to one billion people. Under this agreement Pakistan can export leather goods, fruits and vegetables and pharmaceuticals to India. Not only this, Pakistan has a huge vendor industry that supports the automobile industry in Pakistan. These vendors can now gain huge economic benefits as they have potential to facilitate the India automobile industry. Secondly, India cannot export steel, pharmaceutical an automobile industrial products to Pakistan. This should encourage the local traders of these industries to be not afraid of MFN. According to a survey by SDPI, after granting India MFN status, the consumers in India could save 4 billion dollars annually and Pakistani consumers could save more than 280 million dollars annually. If this is true it definitely shows that Pakistan would benefit more. Another suggestion could be in long-term both countries could swap their currencies, which means that both countries would trade in their own countries rather than using dollar which is beneficial for both countries. Currently Pakistan and Turkey have signed this agreement. All these benefits look great but it is important that the government creates conditions at home to enable businessmen to bolster production, complementing the grant of MFN status to India. Heres link of my report

 http://www.youtube.com/watch?v=xMphhm4esSk&context=C318bb22ADOEgsToPDskKKTDq5K-7hfXWRwHy_0P8Z

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