Indian Treaty Series

New Delhi, 21 March 1960

The Government of India and the Government of Pakistan with a view to developing, extending and consolidating trade and economic relations between the two countries have resolved to enter into the following Agreement :

Article I

The two Governments recognising the needs and requirements of each other in the context of their developing economies undertake to explore all possibilities for expansion and promotion of trade between the two countries on the basis of mutual advantage.

Article II

Each Government shall accord to the commerce of the country of the other Government treatment no less favourable than that accorded to the commerce of any third country.

Article III

The provisions of Article II shall not apply to the grant or continuance of any

(a) privileges which are or will be granted by either of the two Governments in order to facilitate frontier trade;

(b) preferences, advantages, privileges or immunities accorded by either country to any third country prior to the 15th August, 1947, or in replacement thereof; and

(c) any advantages accorded in connection with Customs Union or Free Trade Zone of which either may become a member.

Article IV

With regard to commodities mentioned In Schedules 'A' and V attached to this Agreement, the two Governments shall facilitate imports and exports to each other's territories in accordance with their respective laws, regulations and procedures.

Article V

The Export and/or Import of goods not included in Schedules 'A' and `B' will also be permitted in accordance with the laws, regulations and procedures in force in either country from time to time.

Article VI

The two Governments further agree to enter by means of Protocols to this Agreement, into such Special Arrangements, including arrangements relating to Border Trade as may be considered by them to be necessary from time to time during the period of the validity of this Agreement to facilitate the movement of goods from one country to the other.

Article VII

The two Governments agree to accord, subject to their respective laws and regulations, reasonable facilities for the holding of trade fairs and exhibitions and visits of businessmen and Trade Delegations sponsored by the Governments concerned.

Article VIII

In order to facilitate the implementation of this Agreement, the two Governments shall consult each other as and when necessary, and also review the working of the Agreement at least once a year.

Article IX

This Agreement shall come into force from the date of signature, and shall remain in force for a period of two years. The Agreement will be extended for a further period of one year unless either party gives to the other notice for its termination three months before the expiry of the said period of two years.

DONE at New Delhi this twenty-first day of March, 1960 A.D. in two original copies in English language, both of which are equally authentic.

Sd/- K.B. LALL

For the Government of India.

Sd/- I.A. KHAN

For the Government of Pakistan.

EXPORTS FROM INDIA TO PAKISTAN

1. Coal 2. Stone boulders 3. Stones (Pakur) 4. Silbatta 5. Fire bricks 6. Lime and limestone 7. Mica 8. Bauxite 9. Barytes (white) 10. Pigments and dry colours 11. Dyeing and tanning substances 12. Chemicals 13. Drugs and medicines, including Ayurvedic and Unani Medicines 14. Mill board 15. Machinery and mill-work all sorts 16. Workshop equipment including hand tools and machine tools 17. Electric instruments, apparatus and appliances 18. Electric cables and wires 19. Fluorescent electric tubes 20. Electric insulation material 21. Accumulators and spare parts 22. Bicycles and spare parts 23. Scientific instruments, including laboratory glassware 24. Glass bottles, jars and phials 25. Iron and steel bolts, nuts and screws 26. Sanitary ware 27. Agarwood 28. Cinema films (exposed) 29. Canes and rattaris 30. Books, periodicals and newspapers 31, Essential oils 32. Sugar 33. Tea for blending 34. Coffee 35. Betel leaves 36. Biri tobacco 37. Biri leaves 38. Spices, all sorts 39. Fresh fruits 40. Catechu. 41. Potatoes 42. Buffalo horns 43. Conch shells 44. Gums and resins 45. Synthetic stones 46. Wood and timber 47. Fruit plants, seeds and bulbs 48. Iron and steel 49. Cement 50. Livestock 51. Gramophone records (in Indian and Pakistani languages and instrumental) 52. Hardware 53. Crockery and earthenware 54. Umbrella fittings 55. Khari salt 56. Cutch and gambier 57. Grouridmit H.P.S. 58. Hardwood and softwood 59. Tallow and wax 60. Sewing machines and spares 61. Coaltar and pitch 62. Typewriters 63. Rolling stock and accessories 64. Printing inks 65. Sports goods 66. Asbestos products.

EXPORTS FROM PAKISTAN TO INDIA

1. Raw jute 2. Jute cuttings 3. Raw cotton 4. Hides and skins 5. Betel leaves G. Betel nuts 7. Fresh and dried fruits 8. Coriander and methi seeds 9. Spices, including green spices 10. Honey

DONE at New Delhi this twenty-first day of March, 1960 A.D. in two original copies in English language, both of which are equally authentic.

Sd/- K.B. LALL

For the Government of India.

Sd/- I.A. KHAN

For the Government of Pakistan.

SCHEDULE 'A'

EXPORTS FROM INDIA TO PAKISTAN

1. Coal 2. Stone boulders 3. Stones (Pakur) 4. Silbatta 5. Fire bricks 6. Lime and limestone 7. Mica 8. Bauxite 9. Barytes (white) 10. Pigments and dry colours 11. Dyeing and tanning substances 12. Chemicals 13. Drugs and medicines, including Ayurvedic and Unani Medicines 14. Mill board 15. Machinery and mill-work all sorts 16. Workshop equipment including hand tools and machine tools 17. Electric instruments, apparatus and appliances 18. Electric cables and wires 19. Fluorescent electric tubes 20. Electric insulation material 21. Accumulators and spare parts 22. Bicycles and spare parts 23. Scientific instruments, including laboratory glassware 24. Glass bottles, jars and phials 25. Iron and steel bolts, nuts and screws 26. Sanitary ware 27. Agarwood 28. Cinema films (exposed) 29. Canes and rattaris 30. Books, periodicals and newspapers 31, Essential oils 32. Sugar 33. Tea for blending 34. Coffee 35. Betel leaves 36. Biri tobacco 37. Biri leaves 38. Spices, all sorts 39. Fresh fruits 40. Catechu. 41. Potatoes 42. Buffalo horns 43. Conch shells 44. Gums and resins 45. Synthetic stones 46. Wood and timber 47. Fruit plants, seeds and bulbs 48. Iron and steel 49. Cement 50. Livestock 51. Gramophone records (in Indian and Pakistani languages and instrumental) 52. Hardware 53. Crockery and earthenware 54. Umbrella fittings 55. Khari salt 56. Cutch and gambier 57. Groundnut H.P.S. 58. Hardwood and softwood 59. Tallow and wax 60. Sewing machines and spares 61. Coaltar and pitch 62. Typewriters 63. Rolling stock and accessories 64. Printing inks 65. Sports goods 66. Asbestos products.

EXPORTS FROM PAKISTAN TO INDIA

1. Raw jute 2. Jute cuttings 3. Raw cotton 4. Hides and skins 5. Betel leaves G. Betel nuts 7. Fresh and dried fruits 8. Coriander and methi seeds 9. Spices, including green spices 10. Honey, 11. Books and periodicals and newspaper 12.Cinema films (exposed) 13.Cement 14.Saltpetre 15.Machine tools 16. Bicycles and spare parts 17. Surgical instruments 18. Sports goods 19- Wood and timber, allsort. 20. Kapok(raw) 21. Livestock including horses 22. Asbestos products 23. Paints 24. Chuna khari pearls 25. Mother of pearl shells 26. Red beans 27. Black curnin seeds 28. Fresh fish 29. Dried and salted fish 30. Frozen fish 31. Eggs and poultry 32. Fruit plants, seeds and bulbs 33. Dhanicha seeds 34. Chuna Rhari pearls 35. Chrome ore 36. Newsprint 37. Paper 38. Gaur meal 39. Gaur gum 40 Fresh vegetable. 41. Gramophone records 42. Forest Produce (specified itemsonly) 43. Drugs and medicines including Ayurvedic and Unani medicines.

PROTOCOL NO. 1: In pursuance of Article VI of the Trade Agreement between the Government of India and the Government of Pakistan, the two Governments have agreed to enter into the following Special Payments Agreement to facilitate, on a self-balancing basis, the exchange between the two countries of the commodities mentioned in Annexure I thereto.

I. All payments in respect of the sale and purchase of the commodities listed in the Schedules at Annexure I up to the values mentioned therein, shall be made by Pakistan and India in nonconvertible Indian Rupees 1

2. For the exclusive purpose of facilitating transactions in respect of the sale and purchase of the commodities listed in the said Schedules, payments shall be made through Account 'A' opened by the National Bank of Pakistan, Karachi, with the State Bank of India, New Delhi, in accordance with the provisions of the Limited Payments Agreement between the Governments of Pakistan and India, dated the 3rd December, 1959.

All transactions in the commodities listed in the said Schedules for purposes of Account 'A' shall be valued either on F.O.R. or C & F basis depending on the terms of the contracts entered into. I

4. Account 'A' shall be self-balancing Account with a swing limit of Rs. 50 lakhs (Rupees fifty lakhs only) on either side. When the outstanding amount in Account "A' exceeds the swing limit, the country running an import surplus may suspend imports temporarily, while the country running an import ' deficit shall take steps to expedite imports, so that the imbalance is rectified. The rate of interest and technical details for the operation of Account 'A' shall be in accordance with Annexure 11.

5. In order to facilitate the implementation of this Arrangement, the two Governments shall review the working of this Arrange and other consequential problems arising therefrom at the expiry of six months from the date of signature and compare the debits and credits on either side to devise such measures as may be mutually agreed upon to rectify the imbalance, if any, in favour of one or the other country.

6. In case of any change in the parity rate of the Indian rupee, the balance in Account 'A' shall be adjusted in proportion to the change in the rate.

7. If at the close of the currency of this Arrangement, there remains any amount outstanding in Account 'A' to the credit of either Government, the same shall be liquidated by the import of goods mentioned in the Schedules by the country concerned except that if a small balance not exceeding, say Rs. 1,000 (Rupees one thousand only), remains unadjusted for six months after the termination of this Arrangement, this amount may be adjusted by a remittance from Pakistan if the account is in debit or a remittance from India if the account is in credit.

8. Values for the export and import of the commodities have been shown in Schedules 'I'and'll' of Annexure I to this Arrangement. These values are valid for a period of one year, except that in the case of the initial year, the values shall be deemed to take

11Books and periodicals and newspaper 12.Cinema films (exposed) 13.Cement 14.Saltpetre 15.Machine tools 16. Bicycles and spare parts 17. Surgical instruments 18. Sports goods 19- Wood and timber, allsort. 20. Kapok(raw) 21. Livestock including horses 22. Asbestos products 23. Paints 24. Chuna khari pearls 25. Mother of pearl shells 26. Red beans 27. Black curnin seeds 28. Fresh fish 29. Dried and salted fish 30. Frozen fish 31. Eggs and poultry 32. Fruit plants, seeds and bulbs 33. Dhanicha seeds 34. Chuna Rhari pearls 35. Chrome ore 36. Newsprint 37. Paper 38. Gaur meal 39. Gaur gum 40 Fresh vegetable. 41. Gramophone records 42. Forest Produce (specified itemsonly) 43. Drugs and medicines including Ayurvedic and Unani medicines.

PROTOCOL NO. 1: In pursuance of Article VI of the Trade Agreement between the Government of India and the Government of Pakistan, the two Governments have agreed to enter into the following Special Payments Agreement to facilitate, on a self-balancing basis, the exchange between the two countries of the commodities mentioned in Annexure I thereto.

I. All payments in respect of the sale and purchase of the commodities listed in the Schedules at Annexure I up to the values mentioned therein, shall be made by Pakistan and India in nonconvertible Indian Rupees 1

2. For the exclusive purpose of facilitating transactions in respect of the sale and purchase of the commodities listed in the said Schedules, payments shall be made through Account 'A' opened by the National Bank of Pakistan, Karachi, with the State Bank of India, New Delhi, in accordance with the provisions of the Limited Payments Agreement between the Governments of Pakistan and India, dated the 3rd December, 1959.

All transactions in the commodities listed in the said Schedules for purposes of Account 'A' shall be valued either on F.O.R. or C & F basis depending on the terms of the contracts entered into. I

4. Account 'A' shall be self-balancing Account with a swing limit of Rs. 50 lakhs (Rupees fifty lakhs only) on either side. When the outstanding amount in Account "A' exceeds the swing limit, the country running an import surplus may suspend imports temporarily, while the country running an import ' deficit shall take steps to expedite imports, so that the imbalance is rectified. The rate of interest and technical details for the operation of Account 'A' shall be in accordance with Annexure 11.

5. In order to facilitate the implementation of this Arrangement, the two Governments shall review the working of this Arrange and other consequential problems arising therefrom at the expiry of six months from the date of signature and compare the debits and credits on either side to devise such measures as may be mutually agreed upon to rectify the imbalance, if any, in favour of one or the other country.

6. In case of any change in the parity rate of the Indian rupee, the balance in Account 'A' shall be adjusted in proportion to the change in the rate.

7. If at the close of the currency of this Arrangement, there remains any amount outstanding in Account 'A' to the credit of either Government, the same shall be liquidated by the import of goods mentioned in the Schedules by the country concerned except that if a small balance not exceeding, say Rs. 1,000 (Rupees one thousand only), remains unadjusted for six months after the termination of this Arrangement, this amount may be adjusted by a remittance from Pakistan if the account is in debit or a remittance from India if the account is in credit.

8. Values for the export and import of the commodities have been shown in Schedules 'I'and'll' of Annexure I to this Arrangement. These values are valid for a period of one year, except that in the case of the initial year, the values shall be deemed to take effect from the 3rd December, 1959. The list of commodities and values thereof in the Schedules may be amended from time to time by mutual consent.

9. This Arrangement supersedes the Limited Payments Agreement, dated the 3rd December, 1959,1 and shall form Protocol No. 1 to the Trade Agreement, dated the 21st March, 1960. It will remain in force for the duration of the said Trade Agreement. Provisions of this Protocol shall apply mutatis mutandis to the transactions entered into in accordance with the provisions of the Limited Payments Agreement.

10. This Protocol is signed in New Delhi on the 21st day of March 1960, in two original copies in English language, both of which are authentic.

Sd/- K.B. LALL
For the Government of India.

Sd/- I. A. KHAN
For the Government of Pakistan.

Banking Agreement between the State Bank of India and the National Bank ofPakistan. for Financing the mouementofgoods underthe Protocol to the Trade Agreement between the Government ofIndia and the Government of Pakistan signed on March 21, 1960.

The National Bank of Pakistan, Local Principal Office, Karachi, shall maintain a special non-convertibi.--~ Indian Rupee Account with the State Bank of India, New Delhi for the purpose of making and receiving of all payments in respect of the sale and purchase of commodities covered by the Protocol to this Arrangement signed on the 21st March, 1960. This Account shall be styled "NATIONAL BANK OF PAKISTAN CLEARING ACCOUNT'A'."

2. All claims or adjustments in respect of goods exchanged under this Protocol as also all bank charges shall be settled through the said Account.

3. This Account shall have a swing limit of Rs. 50 lakhs (Rupees fifty laklis; only) on either side subject to the proviso that all outstanding Letters of Credit and other commitments on the part of either the National Bank of Pakistan or the State Bank of India shall be honoured, even if the balance, debit or credit, exceeds the said limit. The balance in the Account, both credit and debit, shall carry interest at 21/2 per cent per annurn on a daily product basis, and this interest shall be credited or debited monthly to the said Account under advice to the National Bank of Pakistan.

PROCEDURE

4. Exports from Pakistan to India.

The Offices of the National Bank of Pakistan handling export documents will send these documents under a covering schedule to the concerned office of the State Bank of India in India and will at the same time send a copy of this schedule to the State Bank of India, New Delhi.

5. Exports from India to Pakistan.

The Offices of the National Bank of Pakistan opening Letters of Credit will advise the credits through the concerned offices of the State Bank of India in India and will send a copy of each such Letter of Credit to the State Bank of India, New Delhi. Collecting Offices of both National Bank of Pakistan and State Bank of India will advise the respective remitting offices on the other side of the payment of each bill received for collection. Copies of such advices issued by offices of the State Bank of India will in each case be sent to the National Bank of Pakistan, Local Principal Office, Nicol Road, Karachi.

The State Bank of India, New Delhi, will send weekly statements of account to the National Bank of Pakistan, Local Principal Office, Karachi. The statements will indicate the relative bill and Letter of Credit number against each item posted in the statement, and also the name of the office of the National Bank of Pakistan concerned.

PROTOCOL No. II

In pursuance of Article VI of the Trade Agreement between the Government of India and the Government of Pakistan, the two Governments have agreed to enter into, by means of this Protocol, Special Arrangements in respect of the commodities specified below

TABLE

This protocol is signed in New Delhi on the twenty first day of March, 1960, in two original copies in English Language, both of which are equally authentic.

Sd/- K.B. LALL
For the Government of India.

Sd/- I.A. KHAN
For the Government of Pakistan

GOVERNMENT OF INDIA
MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 21st March, 1960

Dear Mr. KHAN,

During the course of the discussions -leading to the conclusion of the Trade Agreement between the two countries, it was suggested with reference to Article 11 thereof that the following letter be exchanged between the two countries :

'With reference to Article 11 of the Trade Agreement concluded between the Government of India and the Government of Pakistan on 21st March, 1960, it was suggested that if the Government of either country enters into a bilateral arrangement with any third country for any commodity in the export of which the other country has a substantial interest, the Government entering into the bilateral arrangement shall give due consideration to and safeguard the interests of the other country to the extent practicable.

I shall be grateful if you could kindly confirm that the above correctly sets out the understanding reached between us".

You undertook to place the above suggestion before your Government for consideration and communicate their views as soon as practicable.

I shall be grateful if you would kindly acknowledge this letter.

Yours sincerely, Sdl- K.B. LALL

Mr. I. A. KHAN Leader, Pakistan Trade Delegation, New Delhi.

No. 2

New Delhi, the 21st March, 1960

Dear Shri LALL,

I write to acknowledge having received your letter which reads

I as follows (Letter No. 1 not reproduced)

My Government's decision on your suggestion will be communicated to you as soon as practicable.

Yours sincerely,
Sd/- K. B. LAL

MR. I. A. KHAN, Leader Pakistan Trade delegation, New Delhi.

No. 3

GOVERNMENT OF INDIA
MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 21st March, 1960

Dear Mr. KHAN,

In the course of our discussions which resulted in the conclusion of the Trade Agreement which was signed today, we reviewed the working of the Limited Payments Agreement which was signed between the two countries in Karachi on the 3rd December, 1959. It was agreed to expand the scope of Special Payments facilities and to increase the swing limit from Rs. 25 lakhs to Rs. 50 lakhs. The amplified Arrangement has been signed today as a Protocol in pursuance of Article VI of the Trade Agreement. In order, however, to give a smooth start to extended exchanges of goods through Special Payments Agreement, it has been agreed that for a period of six months from today, the reference in paragraph 4 of the Protocol concerning the swing limit shall remain in abeyance.

I shall be grateful if you kindly confirm that the above correctly sets out the understanding reached between us.

Yours sincerely, Sd/- K.B LALL

Mr. I.A. KHAN Leader, Pakistan Trade Delegation, New Delhi.

This protocol is signed in New Delhi on the twenty first day of March, 1960, in two original copies in English Language, both of which are equally authentic.

Sd/- K.B. LALL

For the Government of India.

Sd/- I.A. KHAN

For the Government of Pakistan

GOVERNMENT OF INDIA
MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 21st March, 1960 Dear Mr. KHAN,

During the course of the discussions -leading to the conclusion of the Trade Agreement between the two countries, it was suggested with reference to Article 11 thereof that the following letter be exchanged between the two countries :

'With reference to Article 11 of the Trade Agreement concluded between the Government of India and the Government of Pakistan on 21st March, 1960, it was suggested that if the Government of either country enters into a bilateral arrangement with any third country for any commodity in the export of which the other country has a substantial interest, the Government entering into the bilateral arrangement shall give due consideration to and safeguard the interests of the other country to the extent practicable.

I shall be grateful if you could kindly confirm that the above correctly sets out the understanding reached between us".

You undertook to place the above suggestion before your Government for consideration and communicate their views as soon as practicable.

I shall be grateful if you would kindly acknowledge this letter.

Yours sincerely, Sd- K.B. LALL

Mr. I. A. KHAN Leader, Pakistan Trade Delegation, New Delhi.

No. 2

New Delhi, the 21st March, 1960

Dear Shri LALL,

I write to acknowledge having received your letter which reads as follows (Letter No. 1 not reproduced)

My Government's decision on your suggestion will be communicated to you as soon as practicable.

Yours sincerely,

Sd/- K. B. LAL

MR. I. A. KHAN, Leader Pakistan Trade delegation, New Delhi.

No. 3

GOVERNMENT OF INDIA
MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 21st March, 1960 Dear Mr. KHAN,

In the course of our discussions which resulted in the conclusion of the Trade Agreement which was signed today, we reviewed the working of the Limited Payments Agreement which was signed between the two countries in Karachi on the 3rd December, 1959. It was agreed to expand the scope of Special Payments facilities and to increase the swing limit from Rs. 25 lakhs to Rs. 50 lakhs. The amplified Arrangement has been signed today as a Protocol in pursuance of Article VI of the Trade Agreement. In order, however, to give a smooth start to extended exchanges of goods through Special Payments Agreement, it has been agreed that for a period of six months from today, the reference in paragraph 4 of the Protocol concerning the swing limit shall remain in abeyance.

I shall be grateful if you kindly confirm that the above correctly sets out the understanding reached between us.

Yours sincerely, Sd/- K.B LALL

Mr. I.A. KHAN Leader, Pakistan Trade Delegation, New Delhi.

This protocol is signed in New Delhi on the twenty first day of March, 1960, in two original copies in English Language, both of which are equally authentic.

Sd/- K.B. LALL

For the Government of India.

Sd/- I.A. KHAN

For the Government of Pakistan

GOVERNMENT OF INDIA
MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 21st March, 1960 Dear Mr. KHAN,

During the course of the discussions -leading to the conclusion of the Trade Agreement between the two countries, it was suggested with reference to Article 11 thereof that the following letter be exchanged between the two countries :

'With reference to Article 11 of the Trade Agreement concluded between the Government of India and the Government of Pakistan on 21st March, 1960, it was suggested that if the Government of either country enters into a bilateral arrangement with any third country for any commodity in the export of which the other country has a substantial interest, the Government entering into the bilateral arrangement shall give due consideration to and safeguard the interests of the other country to the extent practicable.

I shall be grateful if you could kindly confirm that the above correctly sets out the understanding reached between us".

You undertook to place the above suggestion before your Government for consideration and communicate their views as soon as practicable.

I shall be grateful if you would kindly acknowledge this letter.

Yours sincerely,

Sd- K.B. LALL

Mr. I. A. KHAN Leader, Pakistan Trade Delegation, New Delhi.

No. 2

New Delhi, the 21st March, 1960

Dear Shri LALL,

I write to acknowledge having received your letter which reads as follows (Letter No. 1 not reproduced)

My Government's decision on your suggestion will be communicated to you as soon as practicable.

Yours sincerely, Sd/- K. B. LAL

MR. I. A. KHAN, Leader Pakistan Trade delegation, New Delhi.

No. 3

GOVERNMENT OF INDIA
MINISTRY OF COMMERCE AND INDUSTRY

New Delhi, the 21st March, 1960 Dear Mr. KHAN,

In the course of our discussions which resulted in the conclusion of the Trade Agreement which was signed today, we reviewed the working of the Limited Payments Agreement which was signed between the two countries in Karachi on the 3rd December, 1959. It was agreed to expand the scope of Special Payments facilities and to increase the swing limit from Rs. 25 lakhs to Rs. 50 lakhs. The amplified Arrangement has been signed today as a Protocol in pursuance of Article VI of the Trade Agreement. In order, however, to give a smooth start to extended exchanges of goods through Special Payments Agreement, it has been agreed that for a period of six months from today, the reference in paragraph 4 of the Protocol concerning the swing limit shall remain in abeyance.

I shall be grateful if you kindly confirm that the above correctly sets out the understanding reached between us.

Yours sincerely, Sd/- K.B LALL

Mr. I.A. KHAN Leader, Pakistan Trade Delegation, New Delhi.