KARACHI - Commerce Secretary Zafar Mahmood in a secret summary sent to cabinet on MFN issue on February 10 proposed that the ministry be allowed to progressively phase out the Negative List in three stages on a quarterly basis after its approval with quarters ending on June 30, September 30, and December 31 this year.

The summary says for normalisation of trade, the proposed Negative List must be ultimately phased out, with a justification that an India-specific Negative List would be a violation of Article 17 of the SAFTA agreement, which clearly restricts countries from adopting any measures that diminishes or nullifies the concessions already agreed.

“The summary says there is no need of any Negative List. And if this is to be shaped into a reality, it is beyond anyone’s imagination why the Ministry of Commerce is phasing it out by the end of this year,” sources questioned.

They added it was not clear what would make the local industry more competitive to the Indian market in such a short span of time, which it had never been able to do before, while the balance of trade was still in favour of India.

The industry is deeply perturbed, and had already lodged protest against earlier decision to eliminate Negative list in 10 months (by Dec 2012), as it did not allow the government to establish trade defence measures against flooding of India’s goods into the Pakistan market. “This new approach is not understandable as it leaves no time at all for establishing infrastructures for a level playing field for trade with India,” sources added. Regrettably, none of the key industries were taken into confidence, neither in the initial decision of eliminating Negative List in December 2012 nor in the current proposal for phasing it out.

A source said: “The industry fails to understand how the rationale for protecting local industry would change from one quarter to the next quarter.”

“Instead of negotiating a long-term phase-out plan in the interest of the local industry, the government has tried to take short cuts and have practically sold out the national interests,” he added. He further said all the actions and measures had been taken by the government without consultation with the stakeholders, who hold the government fully responsible for the consequences of their decisions; therefore, the latest development would have severe adverse long-term impacts for the industry as well as the economic growth in the country. It is to be noted that the sectors and respective number of 636 items included in the proposed Negative List are: food and agriculture 16; minerals 3; chemical 4; pharmaceutical 32; plastics 74; rubber 24; paper and wood 55; textile and clothing 77; iron and steel 25; and auto sectors 311.