Geo-Politics of Most Favoured Nation (MFN) Status under the WTO and Future of Trade between India-Pakistan

Abstract

This paper presents the impact of political decision on regional trade between India and Pakistan from the prospect of Pakistan Most Favoured Nation (MFN). The study is based on pre and post MFN status, which shows substantial evidence that Indian decision of declaring Pakistan as MFN in 1996 has shifted the dimension of trade in favour of India. The study is based on qualitative and descriptive analysis, which shows consumerism in Pakistan and its trend of Indian exports to Pakistan. The broad objective of study is aimed at analysing the possibility of trade between India and Pakistan under the world trading system. However, Pakistan exports to India are indifferent to Indian economic situation and Pakistan’s decision has insignificant impact on mutual trade. Thus, despite the volatile relationship, trade can play an important role for economic growth of Pakistan and the country can exploit the bigger market of India. Further, reduction in political tensions would eventually benefit both countries and means can generate larger benefits and trade facilitation measures. In this regard, trade routes should be opened, communications shall be restarted, and contracts should restore.