ISLAMABAD: Indian Commerce Minister Anand Sharma is unlikely to come to inaugurate an exhibition in Lahore on Friday because mistrust between the two countries over normalising bilateral trade has deepened.
Mr Sharma was scheduled to arrive in Pakistan on Thursday for inauguration of ‘the India Show’, which is being organised by the Indian Federation of Chambers of Commerce and Industry.
He was also supposed to announce a roadmap for liberalisation of bilateral trade with his Pakistani counterpart.
But an official confirmed on Tuesday that the Indian minister was not coming because of slow progress on the roadmap agreed in New Delhi between the commerce ministers of the two countries.
“We have not reached consensus on the thorny issues and pre-conditions for offering India the most-favoured nation (MFN) status by the end of this month,” the official said.
The commerce secretaries of both countries exchanged letters during the past few weeks, but no major breakthrough was made on major issues.
Pakistan is willing to offer MFN status to India, but demands market access for its products in return.
The Indian minister may have cancelled his visit to avoid an embarrassment like the one witnessed in February 2012 when he led a high-profile Indian business delegation to Pakistan, but the federal cabinet deferred the finalisation of a ‘negative list’ of products.
The list was announced about 14 days later, but by then the Indian delegation had left.
The list replaced the positive list, allowing import of over 5,000 Indian products.
As a result of the decision, de facto MFN status was given to India two years ago.
The issue had not been discussed by the cabinet during recent weeks. Although some meetings have been held with stakeholders, they may not have given the Indian government encouraging signals to sends its minister for the much-awaited announcement.
Pakistan had assured India that the MFN status would be offered and the announcement to this effect made on the sidelines of the Indian exhibition, but had sought access to neighbouring country for 250-300 of its items at lowered duties.
The official said the offer of MFN status to India was still there and it could be implemented by issuing a statutory regulatory order (SRO), abolishing the negative list of 1,209 items.
However, the Indian offer of market access is not enough to persuade those opposing further opening of trade with the country.
At the outset, India offered to give about 80 per cent of the market access sought, but Pakistan wanted full acceptance and early implementation of its demand.
India is believed to have offered a timeframe of one and a half years for the market access, but Pakistan wants implementation within six months. “Reducing the time is one of the pressing demands of Pakistan,” the official said.
Most of the decisions will have to be taken in the Indian budget to be announced next month.
The delay from Pakistan side may also be an attempt to get assurances about announcement of the decisions in the Indian budget.
There is still room for the announcement to be made during a proposed visit to the country by Indian Prime Minister Manmohan Singh, which also appears to be linked with the MFN status.
Until that time, both sides will strive to narrow down the differences on the timeline and remove mistrust, but other elements are also reported to have jumped in and called for linking of trade liberalisation with the resumption of composite dialogue on other issues as well, which was suspended following the Mumbai terrorist attacks in 2008.