Most Favoured Nation: What does Pakistan stand to lose?

New Delhi, Feb 15: India has withdrawn the 'Most Favoured Nation' status granted to Pakistan in the wake of the Pulwama terror attack in which 37 CRPF jawans were martyred.

What is 'Most Favoured Nation' status?

Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.

This principle is known as most-favoured-nation (MFN) treatment. It is so important that it is the first article of the General Agreement on Tariffs and Trade (GATT), which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services (GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 4), although in each agreement the principle is handled slightly differently. Together, those three agreements cover all three main areas of trade handled by the WTO.

National treatment: Treating foreigners and locals equally Imported and locally-produced goods should be treated equally - at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of "national treatment" (giving others the same treatment as one's own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.

Treating foreigners and locals equally Imported and locally-produced goods should be treated equally - at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of "national treatment" (giving others the same treatment as one's own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.

When did India grant MFN status to Pakistan?

India granted MFN status to Pakistan in 1996, a year after the formation of WTO. After the Uri attack in 2016, Prime Minister Narendra Modi reviewed the MFN treatment accorded to Pakistan. Pakistan still hasn't granted India with MFN status.

What did India get?

Pakistan came up with a globally popular Non-Discriminatory Market Access (NDMA) agreement. The reason Pakistan has chosen to adopt the NDMA with India is due to political mistrust and a history of border conflicts.

Pakistan allows only 137 products to be exported from India through Wagah/Attari border land route. The bilateral trade between the countries stood at USD 2.28 billion in 2016-17. India mainly exports cotton, dyes, chemicals, vegetables and iron and steel while it imports fruits, cement, leather, chemicals and spices.