ISLAMABAD: Pakistan and Iran are said to have discussed different ways and means to enhance bilateral trade through barter mechanism due to absence of banking channels, well informed sources told Business Recorder.
Both countries discussed different options during two-day visit of Iranian Foreign Minister Mohammad Javad Zarif. Prime Minister Advisor on Commerce and Investment, Abdul Razak Dawood also discussed bilateral trade relations informally with the visiting Iranian Foreign Minister.
Presently, informal trade between Pakistan and Iran is far higher than formal trade. Interestingly, both countries have complaints against each other on informal trade/smuggling which is hitting their formal economies.
Iranians argue that Pakistani smuggled products can be found in Tehran's bazaars and on the other hand, Iranian oil and other goods are also available in every part of the country.
Iranian fruits are being smuggled into Pakistan through Afghanistan due to less duty which is hurting the interests of Pakistani farmers especially in Balochistan. This issue was recently raised at a meeting of Senate Standing Committee on Commerce.
The sources said, in order to finalise the Free Trade Agreement (FTA) with Iran, a couple of meetings of the Technical Negotiating Committee (NNC) have been held since 2016. Draft of FTA in goods and Mutual Recognition Agreement (MRA) on Technical Barriers to Trade (TBT) and sanitary and phytosanitary have been shared.
However, Pakistan maintains that Iran should take measures to fully operationalise existing Preferential Trade Agreement (PTA) until FTA is finalised. Over the years, Pakistan's relations with Iran have remained mired in several layers of mistrust.
Pakistan's economy is highly dependent on import of oil while Iran is an oil producing country and can offer oil to Pakistan at a comparatively cheaper price. There has always been demand of medical/surgical instruments and Pakistani rice and fruits in Iran. Pakistan is capable of meeting Iranian needs of these products by improving the requisite logistics/infrastructure in this regard.
In case, legal means of trade are not explored between Iran and Pakistan, the population in border areas is likely to be involved in exploring illegal means/channels of trading goods, which may ultimately give rise to the greater risks of money laundering and terror financing. Iranian authorities are charging a fee from Pakistani drivers and business community.
Pakistan is also considering various options for engaging in trade with Iran. Currently, trade with Iran is conducted mainly through Dubai. According to the State Bank of Pakistan, although, a Memorandum of Understanding (MoU) was signed between SBP and Bank Markazi Jamhouri Islami Iran (BMJII) on April 13, 2017 in Tehran, Pakistani banks are still reluctant to do business with the Iranian banks and have adopted a risk averse approach especially after the recent penalty imposed on Habib Bank Limited by US treasury.
Copyright Business Recorder, 2020
Comments
Comments are closed.