MFN: India likely to move WTO before stripping Pakistan of status
India is likely to move the World Trade Organisation first before it withdraws the Most Favoured Nation status accorded to Pakistan. India is likely to move the World Trade Organisation and say that Pakistan has not reciprocated India's grant of MFN.
Following this India is likely to tell the WTO that it would be withdrawing the MFN status accorded to Pakistan in the year 1996.
The Prime Minister of India, Narendra Modi will be convened on Thursday on this issue. This is part of India's strategy to build up pressure on Pakistan following the Uri attack.
While
this
is
not
the
first
time
that
India
has
decided
to
approach
the
WTO,
officials
say
that
this
time
around
the
issue
is
serious.
India
is
doing
everything
it
can
to
isolate
Pakistan.
The
meeting
regarding
the
Indus
Water
Treaty
was
also
a
step
in
that
direction,
officials
also
say.
India
says
that
the
MFN
status
granted
by
it
to
Islamabad
in
1996
has
not
been
reciprocated.
Pakistan has always been apprehensive of according MFN status to India calling it an enemy nation. Pakistan has also said that its industry has opposed any such move as their business interests could be hurt by Indian goods. Pakistan however came up with the Non-Discriminatory Market Access agreement due to lack of trust with India.
What is MFN about?
MFN is accorded to a trade partner which will ensure non-discriminatory trade. WTO rules state that a member country cannot discriminate between its trade partners. If the government today decides to revise the MFN status, then it would shut down trade with Pakistan.
The MFN status is considered to be beneficial for developing nations as it gives accesss to a wider market for trade goods. It leads to more competitive trade. There would be access to a wider market, reduced cost of export items due to reduced tarrifs and trade barriers.
On the downside, the country will have to hand out the same all trade partners who are members of the WTO. This could result in a price war and the country will not be able to protect the domestic industry from cheaper imports.