MFN: What is the mystery?
Ambassador’s Diary
Dr Samiullah Koreshi
Monday, November 14, 2011 - In examining this matter we will take into consideration four things: What is MFN, intimate relation between trade and diplomacy and the limits upto which a government can take the plea that it has mandate of the people to do what it likes during its “term of the mandate” and fourthly the history of trade with India itself. MFN {Most Favoured Nation) is a term used in trade agreements to indicate that practically the country granted this status will pay as low custom duties as possible, there will be no barrier on their imports and exports , no embargos etc other than that which the closest friend – factually- enjoys. The word friend is not used in trade agreements.
Trade in fact – not in theory is part of diplomacy, it is used as carrots and stick in favouring or punishing countries according to relations desired. The history of international trade is full of the part it plays in modulating relations with target countries. Trade is an adjunct of diplomacy. Western nations have been the most illustrious examples of it, particularly in their dealings with China and trade concessions were obtained, shall we say snatched by bombarding . Never in modern history trade has been devoid of diplomacy.
But in history these concessions had been granted either by gun boat diplomacy as was done by Western countries in China in the 19th Century like by the two Opium wars and in Japan when to start with Commodore Perry bombarded Yokohama in 1854 to force open Japan’s gates for trade and allowing Christian missionaries to preach Christianity - or because the relations between the countries are so cordial as was done in Europe In most recent days it all started with the Treaty of Rome, European Economic unions, then division of Europe into two unions, then finally reaching European Union. Experts will recall that for long years UK had its reservations on joining these European groupings. There was controversy in UK over the fate of Pound Sterling in merging it into Euro-dollar, and joining such a grouping or opening the gates wide will have on British economy and effects on employment level. EU did not come into existence just by some summit meeting of European leaders over night. These vital matters are not decided in jiffy. It took Europe , am I right three decades or more to come to EU- which our writers some times wish happens in SAARC also, as if it is a matter of just uttering some amicable words and the South Asian Union comes into existence.
Trade is an adjunct of diplomacy in modern age. For example , Turkey’s admission into EU. Turkey can become NATO member but not where there is the cake of being part of the EU. Or Pakistan’s trade with Europe or US etc. Over all relations are connected with granting MFN status to India, and this does not mean one is looking at the issue with malicious eye. It is a realistic examination that is needed in deciding grant of MFN to India, that is in granting this privilege to India there is no impediment in opening Pakistan’s the gates so wide The same has been the case with Pakistan’s trade.
As regards the history of trade with India , I will begin with 1949 “war on devaluation”. It would look like a fairy tales in the modern days that in 1949 India devalued its Rupee but Pakistan did not, which made Pakistan Rupee much higher compared to India’s Rupee and since we are heavily depended on imports from India it favoured us, making imports cheaper. Prof G W Choudhry has given greater details of this in his book published in 1969 . May be Pak Rupee went up by the percentage India devalued. That is by 33 % . My I join the lament on the present value of Pak currency It is Pak Rs 2.20 equal to One Indian Rupee. India cut off all our trade and we did not know what to do. We went round all over the world to get coal and Iron from Poland and got European markets for our exports etc. Just giving the readers an idea what happened in this India-Pak devaluation war. Then we adopted the policy of not depending on India for trade, There are strategic maerials involved also I believe in Tito’s aphorism Hope for the peace as if it would last for ever and prepare for war as if it would out tomorrow . Trade is also connected with strategic matters. For example there was an item of importing electricity from India. Digressing from the topic, I remember in the 90s we were surplus in electricity and were even hoping or wishing to export electricity to India and to neighbouring countries. No we cannot link our imports with India in strategic industries. Linking rdae with India would have to remain on the assumption that we are not One unit, repeat Not One Unit. We cannot for the sake of our Western masters go on the road of one unit but theoretically two states . EU is all Christian and that is one factor that makes them having some commonality of values. South Asia is not.
Diversification of trade links for Pakistan is necessary.- from the point of view of economic independence, for the sake of not becoming sitting duck in defence. But my assumption is that Pakistan is and Pakistan must remain an independent country. This is why last Prime Minister’s idea of privatization of Karachi Steel Mill – to Indian tycoon Mittal was opposed by my feeble voice, as in this case.
Let there not be any misunderstanding that there are only two extreme- either loving embrace with India which MFN is or hostility etc. Only a bankrupt diplomat would look or wish relations with India in this perspective.. Any diplomat worth the name would like a balanced and mature approach in relations with India but not a sudden flight of imagination. For example, with MFN what will happen to the value of Rupee, what will happen to our uncompetitive industries which are necessary in the perspective that we must remain an independent country and must develop economically. The present third rate economy is our down fall and not our zenith that we become dauntless in opening our doors for India.
This is too sudden diplomatic move. I am inclined to read in it intention to break us from our good friend China, we have agreed to India’s permanent membership in Security Council , and accept India’s hegemony as a “good realist” . This is why the sudden shift towards India.. We used to have ambitions to compete with India and acquired the N-safety belt for that purpose. Example of Japan was before us territorially smaller country than Pakistan, poorer in natural resources , does not grow food for one month for its consumption became Third major Economic power.
This was a major turn in Pakistan’s history.. The idea that Government has been given “mandate” to do what it likes is not true. It does not mean that people outside the Government have been deprived of the right to question the Government They are merely representatives and not masters and it would not be right to tell the public to shut up because we have been given mandate.
Granting MFN to India is too big a jump. It must be submitted to the National Assembly for approval. Under international law, Agreements are not treaties. Treaties are sacrosanct not agreements. Who in the world would believe that suddenly India Pakistan call each other most favoured nations to each other. To me it raises certain very important questions regarding behind the scene pressures by the US!
Trade in fact – not in theory is part of diplomacy, it is used as carrots and stick in favouring or punishing countries according to relations desired. The history of international trade is full of the part it plays in modulating relations with target countries. Trade is an adjunct of diplomacy. Western nations have been the most illustrious examples of it, particularly in their dealings with China and trade concessions were obtained, shall we say snatched by bombarding . Never in modern history trade has been devoid of diplomacy.
But in history these concessions had been granted either by gun boat diplomacy as was done by Western countries in China in the 19th Century like by the two Opium wars and in Japan when to start with Commodore Perry bombarded Yokohama in 1854 to force open Japan’s gates for trade and allowing Christian missionaries to preach Christianity - or because the relations between the countries are so cordial as was done in Europe In most recent days it all started with the Treaty of Rome, European Economic unions, then division of Europe into two unions, then finally reaching European Union. Experts will recall that for long years UK had its reservations on joining these European groupings. There was controversy in UK over the fate of Pound Sterling in merging it into Euro-dollar, and joining such a grouping or opening the gates wide will have on British economy and effects on employment level. EU did not come into existence just by some summit meeting of European leaders over night. These vital matters are not decided in jiffy. It took Europe , am I right three decades or more to come to EU- which our writers some times wish happens in SAARC also, as if it is a matter of just uttering some amicable words and the South Asian Union comes into existence.
Trade is an adjunct of diplomacy in modern age. For example , Turkey’s admission into EU. Turkey can become NATO member but not where there is the cake of being part of the EU. Or Pakistan’s trade with Europe or US etc. Over all relations are connected with granting MFN status to India, and this does not mean one is looking at the issue with malicious eye. It is a realistic examination that is needed in deciding grant of MFN to India, that is in granting this privilege to India there is no impediment in opening Pakistan’s the gates so wide The same has been the case with Pakistan’s trade.
As regards the history of trade with India , I will begin with 1949 “war on devaluation”. It would look like a fairy tales in the modern days that in 1949 India devalued its Rupee but Pakistan did not, which made Pakistan Rupee much higher compared to India’s Rupee and since we are heavily depended on imports from India it favoured us, making imports cheaper. Prof G W Choudhry has given greater details of this in his book published in 1969 . May be Pak Rupee went up by the percentage India devalued. That is by 33 % . My I join the lament on the present value of Pak currency It is Pak Rs 2.20 equal to One Indian Rupee. India cut off all our trade and we did not know what to do. We went round all over the world to get coal and Iron from Poland and got European markets for our exports etc. Just giving the readers an idea what happened in this India-Pak devaluation war. Then we adopted the policy of not depending on India for trade, There are strategic maerials involved also I believe in Tito’s aphorism Hope for the peace as if it would last for ever and prepare for war as if it would out tomorrow . Trade is also connected with strategic matters. For example there was an item of importing electricity from India. Digressing from the topic, I remember in the 90s we were surplus in electricity and were even hoping or wishing to export electricity to India and to neighbouring countries. No we cannot link our imports with India in strategic industries. Linking rdae with India would have to remain on the assumption that we are not One unit, repeat Not One Unit. We cannot for the sake of our Western masters go on the road of one unit but theoretically two states . EU is all Christian and that is one factor that makes them having some commonality of values. South Asia is not.
Diversification of trade links for Pakistan is necessary.- from the point of view of economic independence, for the sake of not becoming sitting duck in defence. But my assumption is that Pakistan is and Pakistan must remain an independent country. This is why last Prime Minister’s idea of privatization of Karachi Steel Mill – to Indian tycoon Mittal was opposed by my feeble voice, as in this case.
Let there not be any misunderstanding that there are only two extreme- either loving embrace with India which MFN is or hostility etc. Only a bankrupt diplomat would look or wish relations with India in this perspective.. Any diplomat worth the name would like a balanced and mature approach in relations with India but not a sudden flight of imagination. For example, with MFN what will happen to the value of Rupee, what will happen to our uncompetitive industries which are necessary in the perspective that we must remain an independent country and must develop economically. The present third rate economy is our down fall and not our zenith that we become dauntless in opening our doors for India.
This is too sudden diplomatic move. I am inclined to read in it intention to break us from our good friend China, we have agreed to India’s permanent membership in Security Council , and accept India’s hegemony as a “good realist” . This is why the sudden shift towards India.. We used to have ambitions to compete with India and acquired the N-safety belt for that purpose. Example of Japan was before us territorially smaller country than Pakistan, poorer in natural resources , does not grow food for one month for its consumption became Third major Economic power.
This was a major turn in Pakistan’s history.. The idea that Government has been given “mandate” to do what it likes is not true. It does not mean that people outside the Government have been deprived of the right to question the Government They are merely representatives and not masters and it would not be right to tell the public to shut up because we have been given mandate.
Granting MFN to India is too big a jump. It must be submitted to the National Assembly for approval. Under international law, Agreements are not treaties. Treaties are sacrosanct not agreements. Who in the world would believe that suddenly India Pakistan call each other most favoured nations to each other. To me it raises certain very important questions regarding behind the scene pressures by the US!
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