ISLAMABAD: Pakistan and Iran have agreed to resume negotiations for implementation of Iran-Pakistan (IP) Gas Pipeline Project, possibility of starting Electronic Financial Messaging System (SEPAM) and achieving barter trade target of $4 billion.
The work on IP gas pipeline was stalled due to US sanctions on Iran as no Pakistani bank was ready to take the risk of financing the project. The project has always been part of discussions at the high-level interactions between both the countries but no progress has been witnessed since years.
Official documents available with Business Recorder reveal that Ministry of Petroleum, Iran has also declared its readiness to discuss exporting oil and petrochemical products and technical services from Iran to Pakistan.
Banking quarters are aimed to enhance and expedite bilateral banking relationship between the two countries; both sides have expressed their willingness to explore correspondence banking relationships.
Pakistani side agreed to share its opinion regarding SEPAM with Iranian side. In addition, the Iranian side will share the details of block chain-based financial messaging system through diplomatic channel. The Pakistani side will share its views within two months after receipt of the model.
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Regarding the previous submission of the proposed draft of “Banking Payment Arrangement (BPA) for bilateral trade between Iran and Pakistan” to the Pakistani authorities to develop trade relations between the two countries, Iranian side has already proposed an alternative proposal to address the Pakistani concerns and reservations on BPA. Hence, the Pakistani side agreed to expedite the process of reviewing the new proposal within two months.
With respect to power in order to develop existing cooperation between Iran and Pakistan and to increase the electricity export capacity, Iranian side shared a draft MoU for purchase of additional power from Iran on a long-term basis (15-20 years). It was decided that the Pakistani side would announce its views through diplomatic channels after completion of technical and commercial evaluation of the proposed MoU.
The two sides expressed their desire to complete the 230 kV Plan (Iran)-Gwadar (Pakistan). According to the Pakistani side’s request from Iran to supply 100 MW of electricity through the Polan-Gabd transmission line with a voltage level of 132 kV, it has been agreed for the Pakistani side to take all measures related to construction of the transmission line in its territory as soon as possible.
Agriculture: Both Sides emphasized removing non-tariff trade barriers (health & quarantine requirements, standard, etc) and tariff trade barriers (modification and reduction of tariffs on selected agriculture goods) as well as trade of agriculture products through organizing sub-Committee. The parties announced their readiness to negotiate on the barter of agricultural products. The parties emphasized recognizing the Mutual Recognition Agreement (MRA) in the field of quarantine and plant health. The Iranian side announced its readiness to export seeds of agricultural products, including vegetables and summer crops in four seasons, agricultural machinery and agricultural technical and engineering services to Pakistan.
Cooperation in Commerce and Trade: Both sides agreed to reach trade target of at least $ 4 billion in barter trade.
Following the 9th meeting of the Joint Trade Committee of the two countries, both sides emphasized the importance of drawing guidelines for improving bilateral trade and economic relations, agreed to renew the Five Year Strategic Trade Cooperation Plan (FYSTCP) which was signed on March 25, 2016 for the next Five years (2022-2027). Iranian side shared the draft of FYSTCP with the Pakistan side and it was agreed that the Pakistani side will reply within one month.
Considering the positive effect of the Free Trade Agreement on boosting the trade and investment between two countries, and considering holding four rounds of technical negotiations in this regard and exchanging the lists of sensitive goods between the parties, both sides expressed their desire to finalize and sign the FTA within the next six months. In this regard, as committed, the Iranian side would propose two sets of dates for holding 5th meeting of Trade Negotiation Committee (TNC) and invite Pakistani delegation to Iran for holding next round of FTA.
The Iran Chamber of Commerce Industries, Mines and Agriculture (ICCIMA) and the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) declared their readiness to exchange trade delegations during the current year. In this regard, both sides expressed their willingness to receive provincial trade delegations as well. The FPCCI has extended invitation to ICCMA for visit of their trade delegation to Karachi in September 2022. The Quetta Chamber of Commerce and Industry and Zahidan Chamber of Commerce and Industry will also exchange trade delegations in September-October 2022.
Both sides agreed to discuss removal of tariff and non-tariff barriers to enhance bilateral trade. Pakistan side raised the issue of attestation fee as export consignments from Pakistan to Iran are required to be attested by the Consulate of Iran at Quetta with attestation fees despite the fact Pakistan has not imposed any such conditions on Iranian exports to Pakistan. The Pakistani side requested for removal of the attestation fee on the export consignments.
Both sides decided to keep holding quarterly meetings of the Joint Border Trade Committee (JBTC) to discuss local customs and trade issues.
Pakistan side agreed to reserve specific area in Gwadar Export Processing Zone (EPZ) to Iranian investors, if type and number of industries are identified by the Iranian side. Both sides agreed to consider investment opportunities in the industries offered by the other side in engineering sector i.e. home appliances, industrial machinery & equipment and light engineering and cutlery and kitchenware.
Pakistani side announced his readiness to receive investment in surgical instruments industry and sports goods industry, especially soccer balls manufacturing in Pakistan by making joint ventures with Pakistani investors.
Customs Cooperation: with regard to the MoU on electronic exchange of customs data between the Iranian Customs Administration and FBR signed in Feb 2019 in Islamabad the specified schedule on establishment of software infrastructure, the Customs of both sides have agreed to implement the stage of pilot plan for the electronic exchange of customs data during the second half of the current year (2022) to subsequently complete the procedure of the project.
Considering the accession of Pakistan to the TIR Convention 1975 and the requirements of the International Road Union (IRU), IRICA proposed the implementation of E-TIR between the customs administrations of both sides to the Pakistani side, and expressed its readiness to provide technical assistance to FBR in this regard. FBR agreed to the proposal.
Copyright Business Recorder, 2022