Iran Business Mission in Pakistan

Iran and Pakistan will soon start free trade, said Chairman of Iran Chamber of Commerce, Industries, Mines and Agriculture Gholamhossein Shafei in his meeting with President of Federation of Pakistan Chambers of Commerce and Industry Irfan Iqbal Sheikh.
The Iranian private sector trade delegation led by Shafei is in Karachi, Pakistan, for an official visit. The delegation participated in the first meeting of the Pakistan-Iran Business Council on Wednesday.
The mission comprises 26 businesspeople active in the fields of food, agricultural products, petrochemicals, chemicals and textile, as well as the heads of chambers of commerce of several Iranian cities and parliamentarians, ICCIMA’s news portal reported.
The mission is scheduled to visit Lahore Chamber of Commerce.
Iran’s exclusive and specialized exhibition in Pakistan is scheduled to be held from April 7-9, 2023, at the Continental Hotel in Lahore sponsored by Aresa International Trade and Event Management Company and licensed by the Trade Promotion Organization of Iran.
Lahore, the capital of Punjab, is the largest state in Pakistan with a population of more than 110 million.
With an annual income of $173 billion, Punjab accounts for more than 57% of Pakistan's gross national product, of which Lahore's share alone is about $40 billion, according to ICCIMA.
Punjab has 48,000 large industrial units and 390,000 rural small industrial units. More than 60% of Pakistan's total industries are located in Lahore. 
The delegation is due to hold B2B meetings with their Pakistani counterparts, visit industrial sites and trade centers, meet chairman and members of Pakistan Chamber of Commerce, sign MoUs with the Federation of Pakistan’s Chambers of Commerce, and Sarhad Chamber of Commerce, expand transit ties between the two countries and familiar with trade and investment rules and regulations. 

Free Trade Prospects

Iran’s Cabinet members recently issued a permit for the Industries, Mining and Trade Ministry to negotiate, revise and sign a temporary free trade agreement between Iran and Pakistan with regard to the huge volume of capacities in Iran's eastern neighbor, Pakistan, for expanding bilateral trade and turning that country into an important export market for Iran, IRNA reported.
Pakistan and Iran have decided to finalize and sign a Free Trade Agreement within the next six months with the aim of increasing bilateral trade, Pakistan’s Commerce Ministry said recently.
The decision was taken at the 21st session of the Pakistan-Iran Economic Commission hosted by Pakistan from Aug. 16-18, Pakistan Observer reported.
The two sides also decided to work together to operationalize barter trade as per the agreement signed between Quetta and Zahedan cambers of commerce.
Both sides agreed to discuss the removal of tariff and non-tariff barriers to enhance bilateral trade. 
On the sidelines of the commission meeting, the chambers of commerce from the two sides called for more frequent business-to-business exchanges.
Pakistan Businesses Forum Senior Vice President Muhammad Riaz Khattak recently said Pakistan has a narrow export basket to Iran, as 63% of its exports are rice alone.
A preferential trade agreement was signed with Iran in 2006. Tariff concessions were granted to Iran on 309 tariff lines whereas Pakistan was given concessions on 338 tariff lines. Major sectors covered under the PTA include rice, fruits, cotton, cotton yarn, pharmaceutical products and cutlery. In 2017, both sides decided to finalize the proposed FTA by November that year. 
The trade negotiating committee of both countries held two rounds of discussions on the FTA when it was projected that the agreement would increase bilateral trade from $300 million in 2016 to $5 billion by 2021. However, unavailability of a payment mechanism casts a shadow on the viability of a much-awaited agreement, the Nation reported.
While Iran has about 959 joint border crossings with Pakistan, it remains to be seen how many border crossings will be used for trade. Under the current trade regime, bilateral trade, as per statistics, was slightly in favor of Tehran. 
Khattak briefed the media that now full-fledged barter trade between Pakistan and Iran may likely resume in December. He said that according to official sources, all barriers on transit trade have been abolished, as an experimental trial, apple fruit from Iran would hit the market soon.  
Through the trade mechanism, Pakistan would export 1 million tons of rice to Iran. Pakistan also exports kinnow and other products to Iran. He said due to various US/international sanctions imposed on Iran, Pakistani banks have been reluctant in opening letters of credit (LC) for export to Iran despite the repeated appeal of its exporters and traders. 
The absence of a credible payment mechanism remains the major irritant in the way of Pakistan-Iran trade. International sanctions, particularly those imposed by the US and European Union in 2010, have targeted Iran’s banks.
The sanctions have prevented Pakistani banks from doing business with their Iranian counterparts, including the opening of LCs. Trade was conducted through alternative payment mechanisms of limited scope, such as cash and, to a certain extent, barter.

Barter Deal

Pakistan’s daily English-language newspaper The Express Tribune recently reported that a barter trade agreement with neighboring Iran has been signed, thanks to the relentless efforts of the local trader community and businessmen from across the country should take advantage of the deal.
This was stated by President Quetta Chamber of Commerce and Industry Fida Hussain Dashti. He added that this trade would greatly benefit the business communities of both countries.
Dashti noted that they had made a promise and it had been turned into a reality, which is a great opportunity for the traders of the province.
“The initiation of barter trade between the two neighboring countries will generate employment and improve the economic condition of the country and the province,” he added.
He said those interested in barter trade should register with the Quetta Chamber of Commerce and Industry for conducting business.
He also held meetings with various delegations at the chamber.
Dashti, Muhammad Ayub Mariani and Amjad Ali Siddiqui said the Pakistan-Iran Barter Trade Agreement was signed and necessary steps were also taken in this regard with the close assistance of relevant departments and institutions to successfully implement the deal.
“The business leaders worked together with the authorities, as a result of which ID [Barter Trade Module] has been allotted to the Quetta Chamber of Commerce by Federal Board of Revenue] for barter trade and wayback automation. The system has come into effect, after which Pakistan-Iran barter trade will start,” he said.
“We are happy that the chamber of commerce has consulted stakeholders in industry and commerce,” he said, adding that another promise has been fulfilled.
The official noted that this has been a longstanding demand of the business community of the province as the start of barter trade will help eliminate unemployment in the province and improve the economic condition of the country and the province.
Dashti also said it was a good news for the business community across the country that they can conduct barter trade with Iran.
“Those interested in barter trade could consult and register with the Quetta Chamber of Commerce and Industry to take advantage of this opportunity,” he concluded.