The Phenomenon That Is MFN

Government of Pakistan

The Government of Pakistan has recently announced to declare India as the Most Favoured Nation (MFN), which has resulted in mixed reactions from different business quarters of the country.

We need to minutely analyze the effects of having preferred trade on overall business environment of the country and to what extent are we ready to trust India keeping in mind the decades of enmity. For the last many years, declaring India as MFN and opening of trade between the two countries is one question that has been raised by many and suppressed by even more. This question has been raised with even more vigor during the last fifteen years or so as the world has moved towards the concept of Global Village and Pakistan was given the status of MFN by India in compliance of WTO. However, under the immense pressure from the rightists and business fraternity, no government managed to take a decision on the issue.

From the “the biggest enemy of our country” to “destruction of local industry” every argument has been used to deter the government from declaring India as the MFN for trade. Once again, when the present government announced to grant MFN status to India, it drew mixed reactions from different quarters. On one hand, we have Difa-e-Pakistan Council, a group of more than thirty rightist groups, giving us all the rhetoric against India as an enemy country, we cannot trust them etc. On the other hand, we have some businessmen, who believe that by declaring India the MFN and by having preferred trade ties with them, we would destroy our industry with our own hands. Unfortunately both the arguments have no solid footings.

Arguments against granting India the status of MFN are based mostly on misconceptions especially political considerations and trust deficit. However, it is hardly understood that even in the presence of these political barriers, the advantages of having preferred trade ties with India would outnumber the disadvantages and would surely result in removing the trust deficit and political barriers between the countries. The fact is that by awarding India the MFN status, we not only get an access to economic market of more than one billion people thus boosting our international trade, but, it would also give us a chance to minimize cross border tension and a future of co-existence thus negating the arguments given by both the groups opposing the idea.

No one disagrees with the fact that bilateral trade should be done on equal terms and would surely result in strengthening the economies of both countries. Furthermore, the decision would also help both the countries to build the trust and to sit down on the negotiation table to have meaningful talk for resolution of longstanding issues bugging the two countries. However, we should also be very careful while deciding on declaring India the MFN, analyzing in detail the costs and benefits of having preferred trade ties.

We need to make sure that trade relations should be on equal terms with the Pakistani manufacturers also getting ample opportunities in the Indian market thus giving both the countries a level playing field. Its high time that we stop using all the rhetoric and for once start trusting our neighbor to have better economic opportunities for Pakistan and to have a peaceful and prosperous South Asia. – Waqas Iqbal