Thursday, February 16 2006 15:50 Hrs (IST) - World Time -

Islamabad: The Kashmir issue cast its shadow on free trade with India with Pakistan Commerce Minister saying that bilateral trade would continue on an approved 'positive list' of items rather than being opened up under SAFTA even after the Cabinet approval to the treaty.

"We would continue our bilateral trade with India through 773 items. Those products which are not included in the positive list would not be allowed to be imported under the SAFTA agreement," said Humayun Akhtar Khan, who is opposed to opening up trade with India without the resolution of the Kashmir issue.

After the Pakistan Cabinet approved the treaty yesterday at a meeting, he said Islamabad would not grant the Most Favoured Nation (MFN) status to India until there was a tandem move in other bilateral issues, particularly Kashmir.

"The implementation of SAFTA could not bind us (Pakistan) to grant the MFN status to India until bilateral issues are not resolved amicably," the Minister was quoted as saying by the local daily 'Dawn'.

He said Pakistan need not grant MFN status to India as even WTO rules allow member countries a cushion of not granting such a status to any country for some peculiar reasons. When Pakistan did not give the MFN status to India under the WTO, then how would it be possible to give the same under a regional agreement? he asked.

Under the SAFTA agreement, the seven SAARC countries would bring down their tariffs to 0-5 per cent within the agreed time period to increase the volume of regional trade.