Iran’s preferential trade agreement with Pakistan has been revived, as Iran removes goods included in its import ban list for trade with the neighboring country.
The import of more than 2,000 types of goods was banned by Iran since 2018 in an attempt to control its foreign currency reserves.
According to the spokesperson of the Ministry of Industries, Mining and Trade, Iran is now considering an exception for Pakistan with regard to the banned imports.
“The import ban had practically thwarted the implementation of the PTA. But now the agreement has once again been revived,” Omid Qalibaf was also quoted as saying by IRNA.
The official noted that the Iran-Pakistan PTA was signed in 2004 and listed 309 Pakistani and 338 Iranian types of goods to be traded at an average tariff of 19.5% lower than before.
“Based on the PTA, the average tariff for Pakistani goods was set at 12.7% and for Iranian commodities at 26%,” he added.
Qalibaf noted that as of 2022, it has been agreed that Pakistan extend tariff concessions to Iran to cover 570 types of commodities and Tehran grant concessions on 750 types.
Alireza Peymanpak, the head of Trade Promotion Organization of Iran, says that with the revival of trade agreement, Iran’s exports to Pakistan will rise manifold.
Noting the Iran’s import ban prevented the implementation of the agreement, he said, “For example, we banned the import of 30,000 tons of tangerine from Pakistan, which consequently prevented us from exporting 700,000 tons of apples in return.”
Iran’s exports to Pakistan stood at 1.6 million tons worth $704 million during March 21-Oct. 22, according to the spokesperson of the Islamic Republic of Iran Customs Administration, Morteza Emadi.
Liquefied petroleum gases and 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 goods imported 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 a trade surplus of $141 million.
Moving Towards Free Trade
Iran and Pakistan will soon start free trading, 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 in October.
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 in view of the huge volume of capacities in Iran's eastern neighbor, 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 with the aim to increase 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 August 16-18, Pakistan Observer reported.
The two sides also decided to work together to operationalize barter trade based on 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 of the two sides decided to have more frequent business-to-business interactions.
Pakistan Businesses Forum Senior Vice President Muhammad Riaz Khattak recently said Pakistan has a narrow export basket to Iran, as 63% of its exports only constitute rice.
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, the lack of a payment mechanism casts a shadow on the viability of a much-awaited agreement, the Nation reported.
Barter Trade
Pakistan’s 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 of Quetta Chamber of Commerce and Industry Fida Hussain Dashti, who added that this trade would greatly benefit the business communities of both countries.
He noted that they had made a promise and it has been turned into a reality, which is a great opportunity for the traders of the province.
Dashti said the initiation of barter trade between the two neighboring countries will provide employment to the jobless and improve the economic conditions of the country and the province.
He told various delegations at the chamber that those interested in barter trade should register with the Quetta Chamber of Commerce and Industry and start their business.
The Pakistan-Iran Barter Trade Agreement has been signed and necessary steps are being taken in this regard with the cooperation 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 stakeholders in industry and commerce.”
Dashti said 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.
