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Pak not planning MFN status for India

Pakistan said on Tuesday it was not prepared to grant most favoured nation trading status to arch-rival India until the dispute between the two countries over Kashmir is resolved.

"We are looking to try to sort out the Kashmir problem first," Commerce Minister Abdul Razzak Daud told a news conference when asked about the issue.

"Once that is sorted out, everything else starts fitting into place, and insha'allah (God-willing) trade will be one of these key elements."

Pakistan's military ruler General Pervez Musharraf is due in India from July 14 to 16 for summit talks with Prime Minister Atal Bihari Vajpayee that Islamabad says must focus on Kashmir.

India, which granted Pakistan MFN status in 1995, plans to push Islamabad to reciprocate at the summit but says it will be satisfied if the two sides can agree to hold further talks on trade.

Daud said Pakistan's position on trade had not changed and the country had 'no intentions' of granting MFN status to India.

"In order to get the trade to flourish between India and Pakistan... we have issues of lack of infrastructure, we have issues of visas, we have issues of customs and court procedures.

"Whoever says 'announce it' doesn't solve the problem. There are still many, many points. When they will be resolved, business will start," Daud added.

The main aim of the summit is to defuse tensions over Kashmir, on which the two nuclear-capable powers have fought two of their three wars since independence from Britain in 1947.

Nearly a dozen militant groups are fighting New Delhi's rule in the Himalayan region of Jammu and Kashmir, India's only Muslim-majority state.

Kashmir summit focus

Pakistani officials say the summit's focus will remain Kashmir but trade and other issues will be on the table if brought up by India.

Daud said he was not accompanying Musharraf because Islamabad did not want the focus of the visit "diluted".

"I had discussed this with the chief executive (Musharraf) and it's a question of priorities; it's not so much that trade is not important; trade is very important. But the question is of priorities and we feel that at this moment, although trade is very important, there are other subjects that are even more," Daud said.

Chirayu Amin, president of the Federation of Indian Chambers of Commerce and Industry, says two-way trade has the potential to hit $5 billion annually, up from $200 million.

Unofficial trade, smuggled or routed through third countries, is estimated at $1.0 billion annually.

Trade analysts in Pakistan say the country could import machinery, iron ore, sugar and other goods 25 per cent to 40 per cent cheaper from India than elsewhere because of lower freight costs.

Pakistan could export cotton yarn and textile fabrics, leather products, surgical instruments and sports goods to India.

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