Iran-Pakistan Trade Hampered by Absence of Banking Channels

Trade Development Authority of Pakistan Secretary Inamullah Dharejo said bilateral trade with Iran is unlikely to see a surge as no Pakistani bank is ready to open its branch in the country due to international sanctions on Tehran.

“The State Bank of Pakistan is also involved in this matter, but to date there has been no major breakthrough to increase trade volume,” he said on Thursday.

Dharejo was talking to reporters on the sidelines of a consultative session on the Strategic Trade Policy Framework (2018-23), Pakistan’s daily newspaper The Express Tribune reported.

He said the only option is barter trade, but its scope would be limited due to non-presence of banking channels.

“Afghanistan, on the other hand, is a big trading partner and a key country for Pakistan for regional connectivity. Unfortunately, political tension between the two countries is the biggest impediment in implementing trade policy,” he said.

Referring to Pakistan’s widening trade deficit, the official said Islamabad is already focusing on the “Look Africa” initiative to increase its export volume.

“The 16 countries targeted under this initiative are projected to have a $10-trillion growth trajectory in the future,” he added.

Earlier, Dharejo said the government is endeavoring to formulate a medium-term trade policy framework for enhancing exports on a sustainable basis by incorporating suggestions of the business community.

Iran’s commercial attache to Pakistan said trade with Pakistan during the nine months to December 21, 2017, amounted to $982 million, registering an increase of 49% compared with the previous year’s corresponding period.

Speaking to IRNA, Morad Nemati Zargaran added that Iran exported $634 million worth of commodities to Pakistan during the period, up by 7% year-on-year.

Pakistan’s exports to Iran totaled $348 million, registering a 42% rise YOY.

Last Iranian fiscal year’s (March 2016-17) data show Iran exported more than $795 million and imported around $365 million worth of commodities to and from Pakistan.

Pakistan and Iran finalized the draft of a free trade agreement during the third meeting of the Trade Negotiation Committee on Pakistan-Iran Free Trade Area Agreement held in Tehran on Nov. 21-22, 2017.

The next meeting of TNC is expected to be held in January 2018 in Islamabad in which the FTA, which comprises 26 articles and five annexure, is expected to roll.

Both sides reviewed the tentative wish-lists exchanged during the second TNC meeting for broadening the Preferential Trade Agreement between Iran and Pakistan. The two sides agreed to exchange the final lists by January 31, 2018, for finalizing those by incorporating them in the Pakistan-Iran PTA by March 2018.