Srinagar: The Government of India will review the Most Favoured Nation (MFN) status given to Pakistan at a meeting called by Prime Minister Narendra Modi on Thursday. The decision comes a day after Modi at a high-level meeting reviewed the Indus Water Treaty (IWT), the World Bank-guaranteed water-sharing agreement between India and Pakistan.
The review meetings were held in the wake of the September 18 attack in Uri near the Line of Control (LoC) dividing the two parts of Kashmir between India and Pakistan that resulted in the death of 18 Indian soldiers and four fidayeen militants.
The MFN status was accorded in 1996 under the WTO’s General Agreement on Tariffs and Trade (GATT). Both India and Pakistan are signatories to the agreement, according to which they have to treat each other and rest of WTO member countries as favoured trading partners.
According to Assocham (Associated Chambers of Commerce of India), out of India’s total merchandise trade of US $ 641 billion in 2015-16, Pakistan accounted for a meagre US $ 2.67 billion.
India’s exports to Pakistan worked out to USD 2.17 billion, or 0.83 per cent, of the total Indian outward shipments while imports were less than USD 500 million, or 0.13 per cent, of the total inward shipments.
The possible revision of the MFN treatment accorded to Pakistan will effectively close down trade further between the two countries. Pakistan still hasn’t granted India with MFN status. On the other hand, it came up with a dissimilar but globally popular Non-Discriminatory Market Access (NDMA) agreement. The reason Pakistan has chosen to adopt the NDMA with India is due to political mistrust and a history of border conflicts.
The MFN revision meeting was convened a day after Modi chaired a review meeting of the IWT, during which it was decided that India will “exploit to the maximum” the water of Pakistan-controlled rivers, including Jhelum, as per the water sharing pact.
“Blood and water can’t flow together,” Indian media quoted Modi as saying in the Monday meeting. Principal secretary to PM Nripendra Misra, National Security Adviser Ajit Doval, Foreign Secretary S Jaishankar, the Water Resources Secretary and senior PMO officials were present at the meeting.
The Indian media reported that the meeting did not review the Indus Water Treaty but steps to utilise India’s western rivers better were discussed.
It was also decided to review the 1987 suspension of the Tulbul navigation project after Pakistan’s objection in 1987. The Prime Minister was briefed about the dams under construction in Jammu and Kashmir and he wanted it to be expedited.
At the meeting it was decided that India will exploit to the maximum the capacity of three Pakistan-controlled rivers — Indus, Chenab and Jhelum — as per the Indus Water Treaty.
Under the treaty, which was signed by Prime Minister Jawaharlal Nehru and Pakistan President Ayub Khan in September 1960, water of six rivers – Beas, Ravi, Sutlej, Indus, Chenab and Jhelum – were to be shared between the two countries.
According to the agreement, India has control over three eastern rivers — Beas, Ravi and Sutlej — all flowing from Punjab.
Pakistan, as per the treaty, controls the western rivers — the Indus, Chenab and Jhelum that flow from Jammu and Kashmir.
External affairs ministry spokesperson Vikas Swarup had said last week that there were differences between India and Pakistan on implementing the Indus Waters Treaty.
According to World Bank guaranteed IWT, India can use only 20 per cent of the water of the Indus, which flows through it first, for irrigation, transport and power generation. The Indian government plans to exploit an option it hasn’t for 30 years – which is to use the western rivers to “benefit farmers of Jammu and Kashmir.” India has been debating whether it can afford to leverage the river agreement to tighten pressure on Pakistan after the Uri attack. But officials say India cannot afford to reckon without China, where the river Indus originates. China also holds the controls of the river Brahmaputra, which sustains large parts of India and Bangladesh. Theoretically, if India were to cut off supply to Pakistan, it could cause major crises in that country as a majority of its areas are dependent on Indus water. But stopping the flow of the Indus into Pakistan would cause floods in Jammu and Kashmir and Punjab. Sources say the government wants three dams on the river Chenab to be speeded up, though that is not an immediate solution.