The Hindu : MFN, a most misleading phrase

Online edition of India's National Newspaper
Wednesday, May 28, 2003

Opinion

Opinion - News Analysis

MFN, a most misleading phrase

By Inder Malhotra

In the overused jargon of international diplomacy, political and economic, no expression is more misleading than MFN or the most favoured nation trading status. All that this high-sounding phrase means is that a country to which MFN is extended would be treated exactly as every other country. In other words, it would no longer be discriminated against. But then GATT or General Agreement on Trade and Tariff that important trading nations worked out at a conference in Havana immediately after World War II chose, for inexplicable reasons, the meretricious euphemism for non-discriminatory trade.

This thought has been triggered by some events over the last two days in the wake of the Prime Minister, Atal Behari Vajpayee's deservedly acclaimed peace initiative in relation to Pakistan. On Monday morning there was much hype in almost all major newspapers and even more so on competing TV channels in this country over an inter-ministerial meeting to be held in Islamabad later in the day. The only item on the meeting's agenda was the issue of extending to India MFN that Pakistan has consistently and persistently refused to do under successive Governments, military and civilian. Evidently, the expectation was that in the new mood and ambience in the subcontinent, things might move. The anti-climax came the next morning when MFN practically disappeared from newspapers and TV bulletins, except for a passing reference in one daily that said that the planned meeting had indeed taken place but no decision had been taken. In any case, by this time focus had shifted to New Delhi's sudden announcement late on Monday evening of its decision to resume the twice-a-week bus service to Lahore. Since then Pakistan's Information Minister, Sheikh Rashid, has been quoted as having said that a decision might be taken at the next meeting of the Cabinet. But one can safely bet against this happening any time soon. For, in Pakistan, the issue of trading with India has been invested with so much sentiment and prejudice that it would not be easy to make a 180-degree change in policy. In any case, an issue of such high sensitivity would be decided by that country's permanent establishment, dominated by the Army, and not by a civilian Government that could well be transitory. The joke, however, is that under the rules of the World Trade Organisation — that replaced GATT in 1995 and of which both India and Pakistan are members — it is mandatory for every member to extend MFN to all other members. All concerned have chosen not to make any fuss.

During the Zia years I was witness to a vivid display of the Pakistani mindset on the subject. Zia's Foreign Minister, Shabizada Yakub Ali Khan, on a visit to Delhi, held one of his customary briefings for a select band of Indian journalists at a time when Pakistan was suffering from an acute food shortage. It was buying wheat in such far-away countries as Argentina, Australia and Bulgaria. The country's only port, Karachi, was choked, making it difficult to unload the incoming wheat. A senior Indian journalist asked the Sahibzada why Pakistan wasn't buying India's surplus wheat and transporting it to Lahore from Amritsar by rail and road? His chilling reply: "Even in adversity the Pakistani would not want to eat Indian grain."

Since then things have changed no doubt, but sadly not much. On BBC's programme "Question Time Pakistan" last week, it was refreshing to see Pakistan's Minister of State for Trade make out a case that trade with India would be beneficial for both countries. But both from the podium and the audience he was confuted. His critics asked again and again, "until the core issue of Kashmir is settled, how can we even talk of trade".

Come to think of it, the Pakistani mindset has affected some other neighbours, too. For instance, during a recent visit to Dhaka, the Minister of External Affairs, Yashwant Sinha, found his interlocutors greatly worked up about the huge trade balance in favour of India. He gently replied that Bangladesh's trade deficit with the United States was exactly the same. That, retorted his interlocutors, "is different. Trade with India is an emotional matter''. Of course, Bangladesh has its own complaints against the pettiness of Indian bureaucracy and some of these are legitimate.

In the existing circumstances the same cannot be said however, of the Pakistani grouse that India is keeping it out of the Bangkok Association, the Indian Ocean Rim Association for Regional Cooperation and so on. The crowning irony of it all is that with both Pakistan and Bangladesh there is what is charmingly called "informal trade". Its magnitude in both cases is far, far greater than that of the so-called official trade. All three Governments lose revenue and smugglers flourish. The highest demand in Pakistan, for obvious reasons, is that for Indian-made whisky and in Bangladesh for Indian beef. No wonder then that a large part of the beef is sent there all the way from Haryana — mostly on the hoof. So much for all the tears that are being shed for the cow by politicians of all hues.

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MFN, a most misleading phrase