Pakistan working to give India 'most favoured nation' status

Indian and Pakistani prime ministers Narendra Modi (R) and Nawaz Sharif shake hands during a meeting in New Delhi on May 27, 2014. India and Pakistan have directed their peace efforts towards "trade diplomacy" in a bid to build enough trust to tackle
Indian and Pakistani prime ministers Narendra Modi (R) and Nawaz Sharif shake hands during a meeting in New Delhi on May 27, 2014. India and Pakistan have directed their peace efforts towards "trade diplomacy" in a bid to build enough trust to tackle thornier issues that divide them. --PHOTO: AFP

ISLAMABAD (AFP) - Pakistan on Thursday said it would re-start work on improving trade ties with arch-rival India when the two nations' foreign ministers meet in Islamabad next month.

Pakistan had pledged to grant India "Most Favoured Nation (MFN)" status by the end of 2012, meaning Indian exports would be treated the same as those from other nations, but so far has not done so.

India granted Pakistan MFN status in 1999.

"When the dialogue process resumes, we hope to build on the work already done in this regard," Pakistan's top foreign ministry bureaucrat Aizaz Ahmad Chaudhry told AFP at a weekly press briefing.

The foreign secretaries of Pakistan and India are set to meet in Islamabad on August 25 in the neighbouring countries' latest attempt at improving ties.

The proposed meeting, announced by Pakistan's foreign office on Wednesday, comes after Pakistan's Prime Minister Nawaz Sharif held talks with his Indian counterpart Narendra Modi in New Delhi following the Hindu hardliner's inauguration in May.

Chaudhry said there were number of issues on both sides for normalising bilateral trade which included "making sure that vulnerable sectors are protected and the issue of the non-tariff barriers in India and the issue of imbalance of trade and certain other infrastructure-related issue."

MFN status will mean India can export 6,800 items to Pakistan, up from around 2,000 at present, and the countries aim to lift bilateral trade to US$6 billion (S$ 7.5 billion) within three years, officials have said.

Trade between the two countries is presently around US$2.5 billion, with Indian exports accounting for US$1.75 billion, according to the Karachi Chamber of Commerce and Industry.

A futher US$3 billion is thought to be channelled through Dubai, almost all of it in Pakistani imports, though the business community believes that if Pakistan grants India MFN status the imbalance could change.

India and Pakistan have directed their peace efforts towards "trade diplomacy" in a bid to build enough trust to tackle thornier issues that divide them, such as the disputed Himalayan territory of Kashmir.

Bilateral relations broke down after attacks by Pakistani gunmen on India's commercial hub Mumbai in 2008, in which 166 people were killed, though relations have recovered slightly since then.

India in August 2012 lifted a ban on foreign investment from Pakistan except in defence, space and atomic energy in a step designed to build goodwill amid the renewed push for a peace settlement.