SAARC: India, Pakistan agree on a path towards preferential trade

Prime Minister Manmohan Singh and his Pakistan counterpart Yousf Raza Gilani, meeting on the sidelines of the South Asian Association for Regional Cooperation (SAARC) summit in the Maldivian resort of Addu, have decided to lead the two countries towards a Preferential Trade Agreement and give a further push to regional free trade.

The two prime ministers have agreed that bilateral trade will be conducted on Most Favoured Nation (MFN) basis under South Asia Free Trade Agreement (SAFTA) that will lead to zero customs duty on all traded goods by 2016.

During an hour-long meeting, the two leaders also decided to put in place a liberalised visa regime at the earliest and revive the Indo-Pak joint Commission that has not been defunct since 2005.

The SAFTA, an agreement reached at the 2004 SAARC summit among Islamabad, Bangladesh, India, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka, envisages a free-trade area with a population of over 1.8 billion people.

The decision to move toward a preferential trade agreement comes after Pakistan last week accorded most favoured nation status to India in return for India unilaterally according MFN status to Pakistan 15 years ago.

Singh and Gilani also said their bilateral relations were improving, but they declined to give a date for their next meeting.