ISLAMABAD - Pakistan has failed to abolish the negative list and has deferred the announcement of granting Most Favoured Nation (MFN) status to India due to ‘extreme pressure’ from trade lobbies, it was learnt on Saturday.

The government had announced in October 2011 that it will grant MFN status to India from January 1, 2013 by converting the negative list into positive list by the end of 2012 – a step that would have automatically granted MFN status to India.

Though trade relations have improved significantly between the two countries and India granted MFN status to Pakistan in 1996, but non-tariff barriers remained intact on exports from Pakistan and both sides did not make much of progress towards trade liberalisation. India at present can export all items to Pakistan other than those 1,209 items put on the negative list.

“The status of MFN to India is to be granted by the cabinet, which did not meet last week due to Quaid-e-Azam Day and death anniversary of Benazir Bhutto,” said a top official of the commerce ministry while talking to The Nation. Some other government officials said the next possible federal cabinet meeting will be held on January 2, 2013 but revealed that the issue of granting MFN status to India was not on the agenda.

The commerce ministry official however said that the ministry has finalised its homework and would issue notification of granting MFN to India after getting approval from the cabinet. He said that the government has already decided in principle to grant MFN status to India and the cabinet would take final decision in this regard soon.

But other sources maintained that announcement of granting MFN status to India might be delayed for some time as certain forces are pressing the government to avoid doing this. They said various trade and industry sectors, including automobile, pharmaceutical, and agriculture and auto parts, are bitterly opposed to giving the MFN status to India. They fear that the local markets would be flooded with Indian goods, which are cheap, because of low input cost in India.