Banking Hurdles Impair Iran-Pakistan Trade

There is ample potential for boosting economic and trade relations between Iran and Pakistan in diverse fields, but there also are hurdles, said the consul general of Iran in Karachi,  Ahmad Mohammadi.
Speaking at the Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, he singled out lack of normal banking channels as the main barrier.
He said bilateral trade stood at $1.5 billion in 2018; however, actual trade was much higher than what official figures say because of massive indirect two-way trade due to the absence of a proper banking channel.
Nonetheless, State Bank of Pakistan and the Central Bank of Iran are in talks for payment arrangements through banking channels, The Pakistani daily The Express Tribune reported. 
“At the Iranian consulate we are committed to resolving all the issues so that bilateral trade and economic relations could reach their actual potential,” he added. The envoy stated that an important step towards improving bilateral trade is encouraging participation of businesses in commercial and industrial exhibitions in the two countries.
“Almost two-and-a-half years ago, we hosted Iran’s Solo Trade Exhibition in Karachi which was very successful and brought the two business communities closer,” he said.
Such exhibitions must take place regularly, he told the conferees.
Speaking on the occasion, KCCI President Agha Shahab Khan said that negotiations on a Free Trade Agreement (FTA) with Iran are underway and both neighbors are keen on  upgrading the Preferential Trade Agreement (PTA) to FTA.
He said the initial draft has been shared while the State Bank of Pakistan also shared a draft of the MoU for a Banking Paying Arrangement (BPA) with the Central Bank of Iran. 

Currently, bilateral trade is conducted in accordance with the PTA, which was signed in 2006 and entered into force in 2007.
According to media sources, the PTA stipulates that Pakistan extend tariff concessions to Iran over 320 tariff lines and Tehran grant concessions on 309 tariff lines.
However, this has been pending due to the US economic sanctions.