Items and the MFN Status

During the last several years, opening up of trade between India and Pakistan has become the most sought after question at many policy forums and among concerned groups. The issue has gained particular importance after India granted the Most Favored Nation (MFN) status to Pakistan, to comply with the principles of World Trade Organization (WTO) regime in 1995, and Pakistan’s reluctance in reciprocating so far. It is believed that increased trade relationship can play a vital role in normalizing the political relationship between the two countries. This will, therefore, benefit millions of people living in both countries as the resources would be diverted from less desirable areas, such as defense spending, to poverty alleviation initiatives. Given the likely impact of trade liberalization between the two countries, the unavailability of any established estimate of potential trade and the items likely to be traded is unfortunate. With a view to come up with some estimates based on some methodology, however simple it is, this note attempts to find the potential of trade between the two countries by identifying the potential items. It estimates th