Most Favored Nation (MFN) status is withdrew by India after attack in Pulwama. At least 40 Central Reserve Police Force (CRPF) lost their lives in worst ever attack after Uri.
Finance Minister Arun Jaitley will initiate all process from international community to isolate from Pakistan. Prime Minister Sri Narendra Modi has reacted strong reply to such monstrous attack and full freedom to Army Chief for any future attack.
Jaish-e-Mohammed Pakistan based terror group took the responsibility. A suicide bomber carrying 350Kg of explosives ran into CRPF battalion bus on the Srinagar-Jammu Highway at Latoomode in Awantipora in south Kashmir around 3.15 pm on Thursday.
Indian had granted MFN status to Pakistan in 1996. This will enable India to increase custom duty on good and service to Pakistan. Many exported product from Pakistan will stop. It is the first clause in the General Agreement on Tariffs and Trade (GATT), 1994, by the World Trade Organisation (WTO). As per World Trade Organisation (WTO), a member country is not allowed to discriminate between trade partners and if a special status is granted to one trade partner, the country is required to extend it to all members of the WTO. It ensures equal trading among all WTO members. India continues maintain a substantial trade surplus despite the fact the Pakistan is yet to transition fully to MFN status to India.
Total trade by India-Pakistan has increased from $2.27 to $2.41 billion in 2017-18 fiscal years as compare to 2016-17.
Pros of MFN:
- Trade are increased which eventually provide gain in free tax free exchange of good and service.
- Beneficial for smaller countries in gain more advantage
- It provides a more transparent rules of tariff for all countries
- Non-discrimination among members
Cons of MFN:
- All member should also grant the same to each other but in many case smaller countries avoid such status
- Without tax, domestic companies are subsidized which allow them to export product at very cheaper price. And vize versa will lead to monopoly.