EDITORIAL: The barter trade arrangement signed between Pakistan and Iran, which opens the door to formal FTA (Free Trade Agreement) talks and a jump in bilateral trade to $5 billion in five years, has been worked out rather ingeniously by the two sides. The Quetta Chamber of Commerce and Industry signed on the dotted line along with the Zahedan Chamber of Commerce and Industry because a direct contract between the two ministries or governments would have left the Pakistani side vulnerable to sanctions by the United States (US) for doing business with Iran. Full marks, then, to PM's Advisor on Commerce Razzak Dawood for leveraging the 9th Pak-Iran Joint Trade Committee meeting to work out a multi-billion-dollar deal that will benefit both neighbours. And since economic interests predominantly dictate political alliances, especially in the 21st century, this deal should get the ball rolling on greater diplomatic interaction and understanding as well.
It's also a very happy augury that Pakistan will now have progressive trade relations with more than just one neighbour. So far, there's almost no trade with India and very little trade with Afghanistan, which leaves China as our go-to neighbour for our commerce and investment; in addition to a number of other important things as well. Plus, Beijing has used its influence in the region to partner with countries like Iran and Russia to build a great arc of influence and trade across the region. India was also on board till recently, but it delinked from Iran on a number of issues following its promotion to Washington's number-one ally in the region and the centre-piece of its Pivot to Asia policy, which revolves around containing China. Pakistan can and should make a place for itself in that alliance for economic as well as security reasons.
There's a lot more to gain from such an arrangement than just more trade volume and revenue. Already, Beijing and Moscow are building a very long-term relationship, which includes carrying out a part of their bilateral trade in their own currencies instead of the dollar, which reduces their dependence on the international reserve currency. The world is at a historic pivot point as it emerges from the lockdowns of the pandemic that drove a knife through international trade for a good part of the last year. And a lot of things, including trade relations and contracts, are being revised. Pakistan has enjoyed the advantage of opening up ahead of others because it fared much better during the worst of the pandemic, and even captured export markets lost to competitors that had to be shut down for longer, yet its trade (im)balance does not reflect any such lead.
Copyright Business Recorder, 2021