Most Favored Nation (MFN) Treatment for India An Analysis

Conclusion and the Course Ahead

A closer look on the concept of MFN treatment shows that exceptions have existed, and have been exercised by countries for their own national interest. Based on the above discussion, one can conclude that in purely commercial terms there may be some short-term benefits of granting MFN treatment to India but those seem to be outweighing the costs and demerits. Thus, this decision may result to be a heavy price and risky bet for Pakistan in the medium to long run.  
In light of the above brief discussion on this multidimensional subject, the following is suggested for Pakistan’s policy makers:

•    A gradual and cautious approach should be adopted and no decision should be taken in a haste doing away with the “negative list” in a quick span of time, just 10 months. Such decisions are not made merely to establish soft images but ground realities (economic as well as political and strategic) are also considered accordingly. Gradual and sectoral approach should be adopted for liberalization of trade with India. For the short to medium term, the items that can useful for mutual trade can be added to the “Positive List”.
•    The passage/transit through Pakistan towards Afghanistan and Central Asia is utmost important for India. It is also detrimental for the interests of world powers, particularly the US, at this point of time. The idea is not to block India’s access to Afghanistan and CARs. But the very concept of trade is ‘give and take’. Therefore, if Pakistan is granting this big concession, the country should link it  with certain concessions from India – economic and political – particularly elimination of NTBs, guarantees for Pakistan’s rightful share of water, and assurance that India will not malign Pakistan on pretext of supporting terrorism.
•    Concerned government ministries and departments, before the grant of MFN, should prepare a comprehensive study of implications that this decision will have for Pakistan’s economy in general and industry and infrastructure in particular. Remedial and precautionary measures should be taken before this major move.
•    Business and industrial sectors of the two countries should also build pressures upon the two governments that while enhanced trade will be in favor of both sides; its sustainability will always be very hard to ensure unless the fundamental irritants and sources of tension between the two sides are removed.