Pakistan and Iran are all set to hold parlays on Free Trade Agreement (FTA), deepening of PTA, Non Tariff Barriers (NTBs) and reconciliation of massively understated export and import data next week, well informed sources told Business Recorder A four-member Iranian team led by Director General Trade Promotion Organisation will arrive in Islamabad on Monday for two-day negotiations to be held on July 11-12.
Trade between Pakistan and Iran has been showing inconsistent pattern. It peaked to $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 this inconsistent trade pattern have been international sanctions on Iran and the restrictive import regime of Iran.
In view of the opening up of the post sanctions Iranian economy, 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. The agreed measurers to increase Pak-Iran trade include negotiations on Pakistan-Iran FTA, holding of single country exhibitions in each other''s country, visits of delegations to/from Iran, removal of NTB, regular holding of meetings of joint border trade and joint trade committees, reactivation of Joint Business Council, opening of additional international border cross points, and establishment of border markets.
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 export to Iran is around $ 25-30 million whereas Iranian figure is $365 million. Iran has handed over all data and lists to Pakistan.
"Informally it has been confirmed that the claim of Iranian authorities with respect to Pakistan''s exports is reliable," the sources added. The same scenario is witnessed in imports from Iran. Pakistan''s import figures show $300-400 million from Iran whereas actual import from Iran is $800 million. "There is a huge difference between export and import data of Pakistan and Iran," the sources added.
Major difference has been noted in rice. According to Pakistan''s own figures rice export was only $6 million whereas as per Iran rice imports from Pakistan were estimated at $185 million. Rice Exporters Association of Pakistan (REAP) has also confirmed figures provided by Iran. All major exporting items are agriculture. Pakistan also exported sesame seeds to Iran amounting to $50 million in one year. Sesame seeds are integral part of Iranian food. Export of meat was around $50 million. The sources said export to Iran was through five crossing points despite the fact that only one point was notified for trade.
Pakistan has requested Iranian Central Bank to devise a permanent mechanism to reconcile trade data on monthly basis. According to sources, during negotiations of Pak-Iran Joint Economic Commission (JEC) in Tehran, Iran suggested that though both countries are holding parlays on FTA which will take many months if not years, yet since Preferential Trade Agreement (PTA) is already in place it should be expanded at the same time. Pakistan accepted Iranian proposal with the plea that Pakistan wanted to enhance trade between the two countries but at the same time the main objective is to deepen PTA and progress towards FTA.
"Iran argued that when PTA will be expanded from existing list of 300-350 items, same lists will be used for FTA. We are simultaneously working on deepening of PTA and the same time the list would be adopted in FTA," the sources added. Both sides agreed to exchange data. Pakistan provided its data to Iran soon after the JEC meeting but Iran has provided its data recently. Pakistan has prepared initial analysis of it. The sources said there were numbers of NTB and MRAs from Iranian side. Secondly, PTA had not been implemented in letter and spirit so far by Iranian side, it added.
According to the Iranian system, all the importers are required to first register their requests for imports with the Ministry of Commerce through system called Sabt-e-Safarsh. After processing of the case, the Iranian Ministry of Commerce issues an import permit which is valid for six months. In some cases, the issuance of import permit also requires NoC from other ministries/departments.