Pakistan and Iran are to hold talks on November 21-22, 2017 on finalization of Free Trade Agreement (FTA) and find ways to open banking channels, remove NTBs, and not to understate export and import figures well informed sources told Business Recorder. Both sides discussed the possibility of the FTA at different levels and through video links and Islamabad maintains that while progress has been made on these issues one key issue which continues to hinder trade between the two countries is non-availability of banking channels.
"The businessmen of both countries want to deepen trade links but this has not been possible due to non existence of banking facilities," the sources continued. State Bank of Pakistan (SBP) and Central Bank of Iran have already signed Memorandum of Understanding (MoU) but commercial banks are not willing to open their branches in Iran fearing the reaction of the US as it has not yet lifted restrictions on Tehran.
The sources said both sides are also expected to discuss recently imposed regulatory duties on fruits and other edible items imported from Iran. Trade between Pakistan and Iran has shown an inconsistent pattern. It peaked at $1.32 billion in 2008-9 but subsequently declined to $217.56 million in 2013-14. However, the volume of Pakistan's trade with Iran has constantly been increasing and reached the level of $318.7 million in 2015-16 which includes Pakistan's exports of $35.488 million and imports of $283.21 million. The major reasons for inconsistency in trade pattern have been international sanctions on Iran and Iran's restrictive import regime.
As per provisions of five-year Strategic Trade Cooperation plan signed during the visit of Iranian President to Islamabad on March 25, 2016, Ministry of Commerce and Ministry of Industry, Mines and Trade of Iran have started negotiations on Pak-Iran FTA. The sources said one of the key issues was non reconciliation of export and import data between the two countries. According to Pakistan's data, Pakistan's exports to Iran are around $ 25-30 million whereas Iranian figure is $365 million.
The sources said both sides will discuss dozens of agenda items during the two day parlays including import of electricity from Iran. Other important agenda items for the JEC meeting is the signing of six Memoranda of Understanding (MoUs) in different fields. The JEC will discuss 45 items during two day parlays.
Iran argues that when PTA is expanded from existing list of 300-350 items the same list will be used for FTA. Both sides have already agreed to exchange data. The sources said there were a number of NTB and MRAs from the Iranian side. And secondly, PTA had not been implemented in letter and spirit so far by the Iranian side.
Pakistan is now closer to Iran after US threatened Pakistan on the issue of Afghanistan. Recently, Chief of Army Staff, General Qamar Javed Bajwa visited Tehran wherein all bilateral issues were discussed in detail. Ministry of Commerce is exploring various avenues to enhance bilateral trade to $5 billion in five years, in accordance with the vision of top political leadership of the two countries.
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