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Abstract

The multilateral trading principle of nondiscrimination and the World Trade Organization commitment of most-favoured nation (MFN) treatment have been missing in the Pakistan–India trading relationship. This practitioner commentary addresses recent moves toward multilateral principles between these two countries, namely Pakistan's decision to grant MFN status to India. It considers the political economy of Pakistan's ‘negative list’ in addressing ‘sensitive sectors’ in Pakistan and provides partial equilibrium estimates of the domestic output, consumer welfare and net welfare impacts in Pakistan of liberalizing trade in this negative list.