Should India withdraw MFN status from Pakistan?

Q.  India is set to withdraw MFN status to which country?
- Published on 29 Sep 16

a. Pakistan
b. Afghanistan
c. Bangladesh
d. China

ANSWER: Pakistan
 
Should India withdraw MFN status from Pakistan?As per the MFN principle of the WTO General Agreement on Tariffs and Trade for which India is a signatory or contracting party, WTO said all members should treat others as MFN trading partners.
MFN status was accorded to Pakistan in 1996 as per India’s commitment to WTO.
  • Pakistan did not reciprocate citing non-tariff barriers and huge trade imbalance
  • PM Modi called for a meeting to review MFN status to Pakistan
  • Currently , the level of bilateral trade is “very low” - representing a mere 0.4 percent of India’s overall goods trade worth USD 643.3 billion in 2015-2016.
  • India could consider making use of a ‘security exception’ clause - Article 21(b)(iii) - in the GATT to deny the MFN status to Pakistan or bring in certain trade restrictions.
  • However, there have been Article 21 disputes in the past between Czechoslovak (Socialist Republic) and the U.S. (1949); the U.S. and Nicaragua (1983 and 1985) and between the European Communities and former Yugoslavia (1992).

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