Jayesh Gupta asked: How can Pakistan defer MFN status for India given that Pakistan is a WTO member? What could be the economic, strategic and geo-political implications in case Pakistan grants the MFN status to India?

Sumita Kumar replies: While it is generally understood that a member of the World Trade Organisation (WTO) would accord the Most-Favoured Nation (MFN) status to other member-states within the multilateral trading system, Pakistan has been citing certain provisions of exemptions under the WTO rules, thus refusing to extend the MFN status to India. While Pakistan did move towards granting India the MFN status by changing the nomenclature to Non-Discriminatory Market Access (NDMA) as the literal Urdu translation of MFN - sabse pasandida mulk - has unpalatable connotations for certain domestic constituencies within Pakistan, the final agreement is yet to go though.

It is generally acknowledged that extending the MFN status to India would help increase the quantum of official trade between the two countries with a reduction in transportation costs and time taken that are inevitable due to trade  through third countries. There is hope that an improvement in economic relations would help promote normalisation of relations between the two countries. The resultant political stability in the subcontinent could be one of the factors influencing better growth outcomes in the South Asian region.

Posted on December 31, 2015