Trade with Iran is at record low levels. Import data from SBP indicates Pakistan imported just $59,000 worth of goods from January to October this year. This is why Iranian news of exports to Pakistan of $860 million come as a shock.

Iran’s Trade Promotion Organization (TPO) reports that the value of its exports to Pakistan in the first eight months of the current Iranian calendar (March – November) rose 58 percent YoY from $539 million last year.

The report was based on comments by Iran’s Commercial Attache to Pakistan, Mahmoud Haji Yousefipour.

A certain amount of discrepancies in trade data reporting is normal because of difference in valuation. Generally, exports are reported on a free on board (FOB) basis and imports on the basis of cost, insurance and freight (CIF). Time of recording, processing errors and accuracy and quality of data provided by reporting countries also result in inconsistencies. UN COMTRADE estimates that FOB and CIF alone account for 10 to 20 percent of discrepancy.

Pakistan has a history of trade discrepancies with PBC estimating Pakistan China trade figures inconsistency to be at around $3.5 billion due to under invoicing. A 2016 study by Lahore Journal of Economics estimated more than $92.7 billion in losses from 1972 to 2013 for 52 major traded commodities for trade with 21 partners due to mis-invoicing.

But this is different. The ITC figures have been taken for comparison since Iran’s TPO links up with TradeMaps. Based on SBP and ITC comparison, Pakistan has been reporting nearly non-existent imports whereas Iran’s figures place it at around $1 billion since 2010 when trade with Iran peaked and tapered off due to sanctions.

While it is often contended that oil is smuggled over the border, by its very nature smuggling is hard to quantify because of the lack of its paper trail. Differences in official trade figures cannot be accounted for by it.

Lack of formal banking channels is often cited as one of the biggest handicaps regarding trade with Iran. But if trade is being prevented through lack of financials pathways, then how is Iran reporting nearly a billion dollar of exports to Pakistan?