Does revoke of MFN Status affect Pakistan - Fusion - WeRIndia

Does the revoke of MFN Status affect Pakistan

Does revoke of MFN Status affect Pakistan

After the deadliest terror attack of Pulwama, India decided to withdraw the Most Favoured Nation (MFN) status to Pakistan.

But, now the question is would the revoke actually impact Pakistan.

Before knowing the answer to the question, read on the article to learn about the MFN status.

Member countries of General Agreement on Tariffs and Trade (GATT) of the World Trade Organisation (WTO) need to treat one another equally and as favoured nations with respect to custom duties on goods.

This status helps treat other counties in a non-discriminatory manner and ease bilateral trade between MFN countries. India granted MFN status to Pakistan in 1996, but Pakistan never reciprocated that despite promises.

Now, coming to the question, does the revoke of MFN status really affect Pakistan, the answer is very little.

With the withdrawal of MFN status, India increases customs duties on all goods that are being imported from Pakistan like cement, leather, chemicals, fruits and spices. Thus, the imports from Pakistan are discouraged and the country loses revenue to that extent, but negligibly.

Even the impose of punitive duties on goods cannot have more impact on Pakistan. This is due to low volume of trade between both the counties.

As per the report of World Bank, the current worth of trade between Pakistan and India is as littles as $2 billion, whereas the actual trade capacity is as high as $37 billion.

The list of non-allowed items from India is more than that of allowed items in Pakistan. 1,209 items are not allowed to be imported from India in that country.

Only 138 items are allowed for the imports from India by Pakistan. These include vegetables, cotton, dyes, chemicals, and iron and steel.

Most goods are exported to Pakistan from India through a third country like United Arab Emirates. Since Pakistan imposed restrictions on imports from India, the withdrawal might not affect much.

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