A report titled Unilateral Decisions, Bilateral Losses was published by BRIEF

The Bureau of Research on Industry and Economic Fundamentals (BRIEF) has released a report highlighting the impact of trade shutdown between India and Pakistan on people across borders.The report is called “Unilateral Decisions, Bilateral Losses”.

Following the Pulwama attacks, trade between India and Pakistan across the Wagah-Attari border and the Line of Control (LoC) Salamabad-Chakhan da Bagh routes was closed in 2019. MFN (most favoured nation) status to Pakistan was also cancelled.

Impacts of these decisions:

• The decisions on trade were meant to be a tough message for Pakistan and would impact Pakistan’s economy even more than India’s. Even though ties have been much worse in the past like after the Parliament attack, trade had never been touched.
• Now, at least 9,354 families, roughly 50,000 people, in Punjab and about 900 families in Kashmir have been directly impacted. Both countries have lost billions of dollars and hundreds of job days.
• These measures that led to a 200% duty increase on imports from Pakistan at Punjab saw even the relatively meagre bilateral trade of $2.56 billion in 2018-2019 dropping to $547.22 million (April-August 2019) – imports dropping from about $500 million to just $11.45 Similarly, the closure of LoC trading points in Jammu and Kashmir has put small trade, handicrafts sellers, truckers, labourers, and hotel owners near the LoC in Baramulla and Poonch out of business.

What is Most Favoured Nation status?

• A treatment accorded to a trade partner to ensure non-discriminatory trade between two countries vis-a-vis other trade partners.
• It is the first clause in the General Agreement on Tariffs and Trade (GATT). Under WTO rules, a member country cannot discriminate between its trade partners.
• If a special status is granted to a trade partner, it must be extended to all members of the WTO.

PAPER-III