Updated By: LatestGKGS Desk
India Withdraws Most Favored Nation Status of Pakistan
India Withdraws Most Favored Nation Status of Pakistan: Details, Highlights
After disheartening Pulwama terror attack on 14th February 2019 in Jammu & Kashmir, India has taken a strong step of withdrawing the Most Favoured Nation or MFN Status of Pakistan.
After this step, it would enable India to increase customs duty on goods coming from Pakistan. The decision was taken in the meeting of the Cabinet Committee on Security (CCS) that took place on 15th February 2019.
About MFN Status
The MFN status is given under WTO’s General Agreement on Tariffs and Trade (GATT). It is given to an international trade partner to ensure non-discriminatory trade amongst all the members of WTO.
As per the first clause in the General Agreement on Tariffs and Trade (GATT), a country providing MFN status to another country has to provide concessions, privileges, and immunity in trade agreements.
An MFN status helps reduce trade barriers and results in a reduction in tariffs, especially in customs duty. This, in turn, strengthens trade ties between the two countries.
As India and Pakistan both are members of the WTO, both are required to grant MFN status to each other and other partner countries.
Background
India had granted MFN status to Pakistan in 1996, a year after the formation of WTO. But Pakistan hasn’t accorded MFN status to India till now. The reason for this is decades of conflict, mistrust, and war.
Now the total India-Pakistan trade has increased marginally to $2.41 billion in 2017-18 as compared to $ 2.27 billion in 2016-17. India had imported goods worth $488.5 million in 2017-18 and exported goods worth $ 1.92 billion in that fiscal.
India’s exports mostly include cotton, dyes, chemicals, vegetables, and iron and steel; while its imports include fruits, cement, leather, chemicals, and spices. Given that Indo-Pakistan trade-ties is not very strong, this step of revoking the MFN status is only symbolic.
