Islamabad: Pakistan on Thursday said its decision to normalise trade ties with India reflects a desire to move away from the policies of the past 40 years but should not be taken as any dilution of its stand on "core issues" like Kashmir.

"We believe that the establishment of normal trade relations with India will be mutually beneficial for both countries. Significantly it also illustrates the priority that we attach to Pakistan's economic development," Foreign Minister Hina Rabbani Khar told a news conference at the Foreign Office.

Her comments came a day after the cabinet introduced a negative list regime for trade with India and for doing away with the negative list of 1,209 items by the end of the year.

"This decision, however, should in no way be construed as any dilution of our principled stance on the core issues that have bedeviled Pakistan-India relations for the last 60 years, and notably the issue of Jammu and Kashmir," she said in her opening remarks.

Pakistan, she said, will continue to "seek the peaceful resolution of all issues with India" and continue to insist on "meaningful progress in the dialogue process on all issues simultaneously".

Khar made it clear that the Pakistan government was willing to try new means to engage with India that amounted to a shift from the policies of the past four decades.

She pointed out that Pakistan's founder Muhammad Ali Jinnah had bequeathed to the people "normal trade relations" with India at the time of the country's creation in 1947, and that these arrangements had continued till 1965, when the two countries fought a war.

Since the earlier policies for engagement with India had not produced results despite been in place for 40 years, this new track should be given some time, she argued.

"If from 1965 to now, we feel that we have done a great job in being able to achieve our objectives within Kashmir and within the foreign policy domain, then clearly we would not be encouraged to change the way we do business with our neighbours," she said in response to a question on whether Pakistan should normalise trade relations with India despite lack of progress in resolving the Kashmir issue.

"But I think there's a good case to be made in normalisation of trade ties and all other ties and pursuing what you consider to be your core interests within this relationship," she added.

The move by the Pakistani cabinet will allow traders to import about 6,000 products from India and pave the way for giving India Most Favoured Nation-status by the beginning of next year.

Khar said there was "complete consensus" in the cabinet on the issue of normalising trade relations with India and the proposal was not opposed even by a single member.

She further pointed out to a questioner that the cabinet was the "final authority and body" for defining the national interests of Pakistan.

In response to a question about India's alleged lack of interest in engaging on the Kashmir issue, Khar said: "There is no retreat by India. India is exceptionally keen to pursue dialogue to be result-oriented".

"I think there is keenness on both sides for the dialogue process to be result-oriented".
The current Pakistan People's Party-led government has been able to build "a degree of trust with our Indian counterparts" and this is a prerequisite to "pursue our goals and to be able to solve all the disputed issues between India and Pakistan", Khar said.

The Commerce Ministry had held consultations with all stakeholders in Pakistan on the issue of normalising trade relations with India for a year before bringing the proposal to the cabinet a fortnight ago, Khar said.

The Prime Minister then asked the Commerce Ministry to hold more consultations and few hundred more items were added to the negative list before the measure was approved, she said.

Noting that South Asia was one of worst performing regions in terms of connectivity and collaboration, Khar said the differences between India and Pakistan had held back the progress of SAARC for the past few decades.

"We hope good things come out of this for both countries... If we do not reach out to our neighbours we will not able to bring stability to our region," she said.