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“India-Pakistan Relations” – Pakistan to Resume Trade with India

News: In a significant development in India-Pakistan relations, Pakistan allows the import of sugar and cotton from India. As per the Pakistan Commerce Ministry, the decision is driven by the rising prices of sugar in Pakistan.

Introduction
  1. The Pakistan government cancelled trade with India in Aug 2019, after the introduction of amendments to Article 370 in India.
  2. Initially, India did not ban trade with Pakistan. However, after the Pulwama attack, it suspended cross-LoC trade and withdrew the Most Favoured Nation (MFN) status to Pakistan.
  3. The Most Favoured Nation is a treatment accorded to a trade partner. Although it seems like a special status, it actually means the country will get equal treatment to other trading partners. It ensures non-discriminatory trade between two countries.
  4. India granted MFN status to Pakistan in 1996, just a year after the formation of the WTO. On the other hand, Pakistan did not award MFN status to India.

Read MoreIndia revoked MFN status to Pakistan

What are the reasons?

The Pakistan ministry cites the following reasons for its decision:

  1. The prices of sugar in India is very less compared to Pakistan and other countries.
  2. In Pakistan, the demand for Indian cotton is high among Pakistani Small and Medium Enterprises (SMEs). It is because of rising exports and decreasing crop in Pakistan.
Significance
  • It is one of the positive developments in India-Pakistan relations. Recently India and Pakistan agreed to observe the 2003 Ceasefire agreement along the Line of Control (LoC).
  • If bilateral relation normalizes, India would be able to pressurize Pakistan on cross border activities in Kashmir and also 2 front challenge would be manageable.

Read MoreCritically analyse the repercussions of India-Pakistan face-off on bilateral trade between both nations

Source: The Hindu

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