Pakistan’s cabinet approved a proposal granting India the status of “most favored nation” in trade negotiations, a breakthrough for the two countries, the Associated Press reports.
The new status for India is a step in the direction of normalizing trade relations between the nuclear arm rivals, which have been in three wars since 1947. India responded granting Pakistan “most favored nation” status also, which will lower tariffs and increase the amount of imports between the two nations, BBC reports.
Read more at GlobalPost: Pakistan to grant MFN status to India
"The federal cabinet has unanimously approved India as the most-favored nation," said Pakistan Information Minister Firdous Ashiq Awan, the AP reports. "This will bring economic benefits to us and this decision has been taken in the national interest.”
The decision, which could boost bilateral trade, is supposed to ensure that World Trade Organization members don’t discriminate against one another and allow all countries in the organization to benefit equally from the lowest possible tariffs, according to WTO agreements, the Wall Street Journal reports.
Not only will this agreement help the economies of the South Asian neighbors, it could also push forward a fragile peace process, Reuters reports. India and Pakistan resumed peace talks in February.
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"It's a very powerful step, and a welcome step in the right direction," Indian Trade Secretary Rahul Khullar, Reuters reports. "It's good for business. It's good for commerce, and most importantly it increases confidence on the economic front that both Pakistan and India are committed to moving the social and trade agenda forward."
In the mid-1990s India granted Pakistan the same status in hopes of normalizing trade then, but Pakistan declined to reciprocate, WSJ reports. Instead of abiding by WTO obligations, Pakistan had limited imports from India to under 2,000 items. Now Pakistan will move to a “negative list” of goods, items such as defense equipment which will still be banned, but will allow a wider range of imports, WSJ reports.
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