Pakistan to Normalize Trade with India This Year

Posted February 29th, 2012 at 2:20 pm (UTC-5)
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Pakistan says it plans to normalize trade with its longtime rival India by the end of the year.

The Pakistani government said Wednesday that it will phase out restrictions on imports from India by December, honoring a commitment Islamabad made last year to liberalize trade with New Delhi. Pakistan currently restricts hundreds of items from India.

Last November, Pakistan's Cabinet approved a proposal granting India “Most Favored Nation” trade status. The designation removes tariffs and allows the countries to trade on equal terms.

Annual trade between the neighbors is estimated at some $2 billion. Economists say that lifting the barriers possibly could increase cross-border trade to more than $6 billion.

Relations between Pakistan and India have long been tense. The two countries have fought three wars since independence from British India in 1947.

While India granted Pakistan MFN status in 1996, Pakistan has hesitated. Critics in Pakistan have cited the long-standing dispute over Kashmir, a Himalayan region claimed in full by both countries.

Information Minister Firdous Ashiq Awan said it is in Pakistan's interest to normalize trade ties with India. But the Associated Press quoted her as saying that Islamabad would not do it by “compromising on the issue of Kashmir.” The mountainous region remains a rallying point for Islamist militants.