Mfn Status to India – Pakistani Perspective Essay Example

nation, Pakistan is fulfilling its obligations under the WTO Protocol and reciprocating India's decision in 1996. Additionally, trade between the two countries was already taking place illegally, so this decision regularizes it. The potential economic benefits resulting from increased trade with India could help resolve political issues and normalize relations between Pakistan and India. Pakistani consumers would also benefit by gaining access to cheaper medicines, automobiles, and raw materials for industries. Furthermore, the government would generate revenue through import duties on previously smuggled Indian products. However, critics question whether it is fair for future generations to bear the burden of liabilities solely for covering up mistakes made by past and present generations.The argument is made that when deciding on an answer to this question, it is important to consider national interest and reason in addition to the perspectives of economists and traders. It is sensible to begin the process of establishing a new trade regime sooner rather than later because it cannot be done immediately. Throughout the years, the amount of illegal/informal trade between India and Pakistan has consistently been double that of official trade.

The gap between the state and the people will continue to widen, resulting in losses for both. The people of Kashmir have a just cause, and regardless of their views on the territory's future, Pakistan will have a worthwhile objective to fight for (short of war). However, Pakistan, in its current state of instability, lack of democracy, aggressive theocracy, political division, and economic dependence cannot successfully carry out this struggle. To gain support, Pakistan must achieve political cohesion and economic strength under a democratic system. It is important to include India

in this process because transport costs are lower across the borders compared to China. Additionally, certain Pakistani exporters can benefit from reciprocal trade with India. A feasibility report conducted in the mid-1990s under the Benazir Bhutto regime showed significant advantages for Pakistan in trading with India. In 1998, Nawaz Sharif attempted to change this situation by utilizing Pakistan's surplus of sugar and electricity—creating an opportunity for both the private and public sectors in Pakistan to generate profits.

The US had placed economic pressure on Pakistan due to nuclear testing, motivating Sharif to seek economic opportunities beyond the region. However, there were insufficient transportation facilities to support exports. In response, India requested security assurances that any infrastructure built on their side of the border would not be affected by future conflicts with Pakistan. Thus, in February 1999, Sharif engaged in "bus diplomacy" with India's Prime Minister as a means to create room for political expansion and bolster trade and commerce.

Moreover, he initiated a back channel communication to address the Kashmir issue; however, this effort was disrupted by the military's operation in Kargil and subsequent ousting of Sharif. At present, India has been granted Most Favored Nation (MFN) status for two primary reasons. Firstly, Pakistan's economy is struggling due to its deteriorating relationship with America, resulting in a negative impact on financial aid. Additionally, the International Monetary Fund (IMF) has withdrawn support as we are unwilling to reduce expenses and increase revenues. Consequently, inflation, unemployment, and poverty are burdening the general public.

Importing inexpensive goods from India can help control inflation, while exporting to India can improve the balance of payments. The military's focus on resolving conflicts on the

western borders creates a desire to secure the eastern border with India. However, certain groups, driven by animosity towards India, oppose any improvement in relations as their existence depends on enmity with India. Some argue that according to the World Trade Organization (WTO), it is not obligatory to grant bilateral Most Favored Nation (MFN) status to all countries. Critics of normalizing trade with India assert that both countries have competitive economies rather than complementary ones and that Pakistan has less export potential compared to India. In 2010, bilateral trade between Pakistan and India amounted to approximately $1.7 billion, heavily favoring India with $1.5 billion in exports to Pakistan and only $275 million in exports from Pakistan to India.

Criticism arose when the cautious Indian Prime Minister referred to his Pakistani counterpart as a "man of peace," even within his own party, the Bharatiya Janata Party (BJP). Perhaps this was due to Pakistan granting IIndia the Most Favoured Nation (MFN) status which would boost trade and facilitate entry of Indian products into the Pakistani market..

The uncertain future of Pakistani industrial units is due to increased pressure from cheap Indian products. However, if the balance of payment equilibrium is disrupted, Pakistan can protect itself. Hina Rabbani Khar, the Foreign Minister of Pakistan, expressed optimism about the situation and emphasized the positive phase in the relationship between Pakistan and India. She also mentioned that for regional peace, Pakistan is willing to invest in both India and Afghanistan. However, she did not address how this positive environment can be achieved without resolving the Kashmir issue.

Economic experts in Pakistan have questioned the government's decision on Most Favored Nation (MFN) status as

they believe it to be premature. They fear that trade liberalization may result in Pakistani goods being priced out and worsen the existing trade imbalance. It is likely that India will maintain high tariffs on goods of export interest to Pakistan due to competition being a fundamental aspect of trade.

The uneven distribution of benefits from liberal trade could lead to further tensions between the two countries. In order to compete with cheaper Chinese products easily available in Pakistan, India may secretly subsidize some exports to Pakistan. Despite their longstanding stance on Kashmir, it is necessary for Pakistan to abandon it in order to be granted Most Favored Nation status by India.The status of India, seen as an enemy by Pakistan and a hindrance in the Kashmir matter, raises the question of how it can acquire such a position. Nonetheless, despite being granted this status, India did not extend any trade concessions to Pakistan. This implies that the decision was made primarily for international perception rather than practical reasons. It seems that India is reluctant to make compromises regarding Kashmir and may have disregarded the impact of their occupation of Hyderabad, which strengthens Pakistan's claim on Kashmir.

The Cabinet made the sudden decision to grant India the MFN status and promptly announced it through the information minister, without seeking input or deliberations from parliament, the Senate, or political parties. Given the historical backdrop of India-Pakistan relations, this decision was interpreted as having a militaristic approach.

Anticipating widespread uproar, it was expected that the hurried process would lead to controversy. Such decision-making contradicts democratic principles, especially when it involves foreign policy and a sensitive matter that will directly affect

everyday citizens. It is worth noting that India had previously granted Pakistan the Most Favored Nation (MFN) status, but no Pakistani government had reciprocated this action, indicating significant opposition to the issue.

Why did the government choose a militaristic approach instead of addressing public opinion? Such approaches inevitably have negative consequences, which is exactly what happened. For Pakistan to gauge the sincerity of India's desire for positive change, it should promptly address all unresolved matters, especially the Kashmir dispute. If India continues to delay on issues like water distribution and denying self-determination to the Kashmiris, this optimism will not endure for long.

While increased trade and easing restrictions on travel are positive signs for improved ties, it is important to not let those who advocate for erasing the scars of partition dominate Islamabad’s policy. It must be acknowledged that the dividing line between India and Pakistan is a permanent feature, and the notion of 'one culture' and 'one people' is not true. This phenomenon should be respected if the neighboring states want to progress and live peacefully.