Iran’s exports to Pakistan reached 1.6 million tons worth $704 million in the current fiscal year’s first seven months (ended Oct. 22), according to the spokesperson of the Islamic Republic of Iran Customs Administration, Morteza Emadi.
Liquefied petroleum gas, hydrocarbon gas liquids, bitumen, milk powder, liquefied natural gas and liquefied butane were the main exports, IRIB News reported
Iran’s imports from Pakistan hit 512,000 tons worth $563 million during the same period.
Rice, mango, sesame seeds and banana were the main imported goods during the period.
The above data indicate that total trade between the two sides stood at $1.26 billion during the period, with Iran registering about $141 million in trade surplus.
Free Trade
Iran and Pakistan will soon start free trade transactions, said chairman of Iran Chamber of Commerce, Industries, Mines and Agriculture, Gholamhossein Shafei, in his recent meeting with President of the Federation of Pakistan Chambers of Commerce and Industry Irfan Iqbal Sheikh.
An Iranian trade delegation from the Iranian private sector led by Shafei was in Karachi, Pakistan, for an official visit last month.
The visiting delegation participated in the first meeting of the Pakistan-Iran Business Council.
The mission was made up of 26 businesspeople active in the fields of foodstuff, agricultural products, petrochemicals, chemicals and textile, as well as heads of chambers of commerce of several Iranian cities and members of parliament, ICCIMA’s news portal reported.
Iran’s Cabinet members recently issued the 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 neighboring country, Pakistan, for expansion of 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 to increase bilateral trade, the Commerce Ministry of Pakistan said recently.
The decision was taken at the 21st session of the Pakistan-Iran Economic Commission hosted by Pakistan from August 16-18, Pakistan Observer reported.
The two sides also decided to work together to operationalize barter trade as per an agreement signed between Quetta and Zahedan chambers of commerce. Both sides agreed to discuss 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 decided for more frequent business-to-business integrations.
Pakistan Businesses Forum Senior Vice President Muhammad Riaz Khattak recently said Pakistan has a narrow export basket to Iran, as 63% of the exports constitute rice.
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 declared for trade. Under the existing 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, according to official sources, all barriers on transit trade have been abolished and on a trial basis, apples 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 on the part of exporters and traders of the country. 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 prevented Pakistani banks from doing business with their Iranian counterparts, including the opening of LCs, which is the most credible method for carrying out international trade transactions. Trade was conducted through alternative payment mechanisms of limited scope, such as cash and to a certain extent through barter.
Barter Deal
Pakistan’s English-language newspaper The Express Tribune reported recently that a barter trade agreement with neighboring Iran has been signed, thanks to the efforts of the local trader community, and businessmen from across the country should take advantage of the deal.
This was claimed by President of Quetta Chamber of Commerce and Industry Fida Hussain Dashti.
He added that due to this trade, the business communities of both the countries would benefit greatly.
He noted that they had made a promise and it had been turned into a reality, which is a great opportunity for the traders in the province.
“The initiation of barter trade between the two neighboring countries will provide employment to the jobless and improve the economic condition of the country and the province,” said Dashti.
He added that those interested in barter trade should register with the Quetta Chamber of Commerce and Industry and start their business.
He was talking to various delegations at the Chamber.
Dashti, Muhammad Ayub Mariani and Amjad Ali Siddiqui said the Pak-Iran Barter Trade Agreement has been 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 the Federal Board of Revenue for barter trade and wayback automation. The system has come into effect, after which Pakistan-Iran barter trade is going to start,” Dashti said.
“We are happy that the chamber of commerce has consulted with the stakeholders in industry and commerce,” he added, noting that another promise has been fulfilled.
The Pakistani 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.
“It was a good news for the business community across the country that now they can do 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.
