OVER A COFFEE: MFN and the ‘ghairat brigade’ —Dr Haider Shah
The term ‘Most Favoured Nation’ (MFN) is a misnomer. Laypersons, on hearing this term, are led to believe that MFN means giving special concessionary treatment to another country. In reality, MFN is exactly the opposite of that
“We traded, we conquered, we governed.” In these six words, John Kaye sums up 350 years of British involvement in the Indian subcontinent, which started in the 17th century. When David Cameron visited India in July 2010, Britain wanted to re-energise its involvement with India, this time for the promotion of trade only. When the East India Company took control of India, the white officers believed that the “white Englishmen were uniquely fitted to rule lesser breeds without the law” (Kipling), as they viewed local culture as being decadent and based on superstitious paganism. This time, however, the British had no such notions as they acknowledge the emerging economic power of India. Britain is, however, not alone in recognising the potential benefits of forging a trade relationship with India. A number of developed and developing nations have lined up to negotiate a preferential trade agreement with India. Pakistan is therefore singularly unlucky as, instead of nursing economic woes, it should have been basking under the sunshine of India’s economic prosperity. We should thank our noisy ‘ghairat (honour) brigade’ (GB) for this as opportunities have regularly been devoured by our big fat crocodiles and their inflated egos.
The term ‘Most Favoured Nation’ (MFN) is a misnomer. Laypersons, on hearing this term, are led to believe that MFN means giving special concessionary treatment to another country. In reality, MFN is exactly the opposite of that. It means giving no special concessions and treating the country in the same way as other countries are dealt with in matters of duty, taxes and regulations. For the sake of simplicity, we can categorise trade relations between two countries on three levels. First is the prohibitive level in which there is a general ban on trade except for a list of some items, commonly known as a ‘positive list’. Second is the normal level. In this, no discrimination is observed with regards to imports from that country and all items are importable except for a list of items known as a ‘negative list’. Third is the preferential level in which lower tariff or no tariff is charged on imports from the country with which an agreement is negotiated. MFN represents the second level, i.e. the normal level. The US uses the term ‘Normal Trade Relations’ (NTR) instead of MFN as the former conveys much better the essence of trade relations with totalitarian states of the communist era.
Normal, non-discriminatory trade relations are the cornerstone of the international trade system under the World Trade Organisation (WTO) as MFN is the first article of the General Agreement on Tariffs and Trade (GATT), second article of the General Agreement on Trade in Services (GATS), and the fourth article of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Despite this overwhelming importance of the MFN principle, countries are negotiating preferential trade agreements (PTA), utilising some exceptions provided under the aforementioned agreements. This means that the prohibitive tariff of yesteryears amounts to pushing the country back into the Stone Age as all other countries have moved ahead of the second stage of MFN/NTR and are entering the third phase of Free Trade Agreements (FTA).
The composition of our GB is interesting. Faiz Ahmed Faiz says, “Aashiq to kisi ka naam nahi, Kuch Ishq kisi ki zaat nahi” (a lover is not somebody’s name, love is not someone’s caste). In the same vein, I find little difference in the mindset of the militant Taliban and the many glamorous anchors on TV talk shows and their panels of retired military/civil bureaucrats who appear as defence analysts. The only difference between the mainstream Taliban and these good looking ones is that the former are at least sincere to whatever they believe in. The other day, I was listening to a talk show hosted by a female anchor and the programme was a microcosm of the GB. A good qawwal (sufi devotional singer) knows that he is most successful if he makes the audience ecstatic, but for that he must never be in a trance himself during the performance. With some honourable exceptions, most of our young anchors forget this basic principle of good hosting. That particular episode was a good example of relentless firing with the Two Nation Theory’s (TNT) ammunition by the fashion conscious female anchor. Kashmir was mentioned umpteen times by all members of the GB. Unless some antidote of rationality had been voluntary taken by the TNT baptised generation, one always hears half a dozen clichés from them — their fashion tastes notwithstanding as appearances can be deceptive.
Adulteration is so common that one can hardly find anything pure these days. The ghairat of our good-looking Taliban is also not very pure. Before joining academia, I happened to be a civil servant and had the opportunity to deal with FTAs of Pakistan with other trading partners. This included visiting Beijing as a member of the Pakistani team to discuss the Pak-China FTA. I find it a bit strange that our GB’s ghairat bleeds profusely when a basic level, normal trade relations-related effort is made in the case of India where the world’s third largest Muslim population lives but their ghairat is not pricked when we open our borders to free trade with China where 20 million Muslims do not enjoy the same level of religious freedom as Muslims enjoy in the US or in India. I am not suggesting that we should not forge better trade relations with China, as being one of the emerging economic giants it is sensible to benefit from the prosperity of our big neighbour. What I am advocating here is that, like other regional trade pacts, we should also try to negotiate a SAARC level FTA, which has been stalled due to the GBs of both India and Pakistan. India, however, took the first positive step in 1996 when Pakistan was given MFN status. It took us 15 years to reciprocate this gesture of mutual goodwill. A journey of 1,000 miles begins with a single step. Of course, many non-tariff barriers remain and need to be removed before the dream of a genuine trade bloc in South Asia can become a reality. Trade will not only bring prosperity to the region but will also usher in peace. I hope our GB can learn from the EU countries, which, after 70 million deaths in World War II, have learnt how to invest their energies in trade and thus live in peace.
The writer teaches public policy in the UK and is the founding member of Rationalist Society of Pakistan. He can be reached at email@example.com