New Delhi,
November 10, 1998

Talks were held today between India and Pakistan on Economic and Commercial Cooperation as part of the composite dialogue process that has begun between India and Pakistan. This dialogue process is aimed at building mutual trust and confidence, establishing a stable structure of cooperation across a broad front and addressing outstanding issues between the two countries.

India strongly believes that as two neighbouring countries India and Pakistan should have normal interaction on economic and commercial matters. However, bilateral trade between the two countries is less than 1% of their global trade. During these talks we proposed a series of steps aimed at enhancing the scope of cooperation on these issues. Our proposals were specific, constructive and realistic with the objective of addressing the economic and commercial matters both on long term and on short term basis.

India has since the 70s accorded the Most Favoured Nation (MFN) status to Pakistan, it was impressed upon Pakistan during the meeting that the latter needs to reciprocate the same in accordance with its own obligations under WTO. Pakistan side conveyed that this would be done in due course. It was suggested that in case Pakistan had difficulties in formally according the MFN status forthwith, it could in the interim period consider allowing imports from India of such commodities which Pakistan is anyway importing from other countries but are not permitted to be exported from India to Pakistan in addition to the list of 600 items that are currently allowed to be imported from India.

It was decided that the existing difficulties in Railway sector should be discussed at the technical level so that the movement of freight by Rail is speeded up. The Pakistan side agreed that the proposal of the Indian Railways for discussion would be responded to as early as possible.

Furthermore, India has proposed that the possibility of agreement on avoidance of double taxation could be considered.

There were discussions between the two sides on the possibility of sale of power from Pakistan to India. It was conveyed to the Pakistan side that we had set up a Technical Committee to examine the modalities in this regard. It was our view that discussions were necessary with Pakistan on technical, commercial and operational parameters for which either an Indian team could visit Pakistan or vice versa. On its part Pakistan informed that they had also set up a Task Force on the subject and that it would soon extend a formal invitation for an Indian technical delegation to visit Pakistan to discuss this matter.

Pakistani side indicated that there is absence of information flow regarding trade and investment. Pakistani side wanted a mechanism for quick transmission of information and other developments in regard to trade and business. India agreed to establish a mechanism. It was explained that all our information can be accessed from websites of the various Ministries.

There was an exchange of views on outstanding dues to be settled between India and Pakistan in different sectors including inter alia in Telecom, Railways and Mints & Coins.

Recognising the importance of a coordinated approach by both sides in areas like social clause, environmental issues, etc. in international fora the two sides noted with satisfaction the onging cooperation between the two sides and emphasised the need for continuing and further strengthening such coordination in countering the barriers which thwart market access to developing countries.

We are hopeful that the Railway authorities and the technical team on purchase of Power from Pakistan will meet before discussion on economic and commercial cooperation during the next round of dialogue.