India to Meet WTO to Withdraw MFN status from Pakistan

BENGALURU: The conflict between India and Pakistan has turned into a cliché since the partition. As reported by the Times of India, the latest news that has surfaced is that PM Narendra Modi will drag Pakistan to the World Trade Organization’s (WTO) dispute resolution body for not imparting the most favored nation status for 20 years. In contrast, New Delhi might not consider the withdrawal of Pakistan’s status.

Looking at the concept of most favored nation as a whole; the World Trade Organization agreement do not allow countries to discriminate among their trading partners. If any country allows special privilege to another country including lower customs duty on imports, the same offer should be equally favorable to all the WTO members.

The benefit of MFN status is only applicable to WTO members. Moreover, countries can even enter into trade agreements over and above MDN. The MFN status was granted to Pakistan in 1996 and from then the trade agreements between the countries was minimal. However, Pakistan is yet to reciprocate- where the annual official trade among the countries in the year 2015-16 was $2.5 billion where as the unofficial trade is estimated to be $ 15 billion. A section of Pakistan also stated that the Indian goods may swamp Pakistan if MFN is granted.

The plan of India to withdraw MFN status from Pakistan is on the move, with India requesting WTO for citing breach of security. According to article 21(b) (III), the agreement cannot prevent any WTO member for taking necessary action for protecting its security interest during war or other emergency international relations.

In addition, if India withdraws MFN status, it directly impacts consumers in some sectors, especially affecting the Attari-Wagah border. In contrast, importing from India through direct sales channels has even contributed to cut down the steel costs by 55 pct, engineering goods by 26 pct, and bicycles by 20 pct and pharmaceuticals by 35 pct.

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