Iran’s Foreign Minister Mohammad-Javad Zarif and his accompanying political and economic delegation made a visit to Islamabad last Tuesday and met with high-ranking officials of Pakistan, including Prime Minister Imran Khan, Foreign Minister Shah Mahmood Qureshi, and Army Commander General Qamar Javed Bajwa. Zarif had already visited Pakistan 10 times.
Pakistan is one of the most important neighbors of Iran and its population, about 212 million, is more than all the other countries that have land border with Iran.
However, level of trade with Pakistan is not satisfactiry for Iran. Iran ranked the 30th exporter to Pakistan in 2018 and provided only 0.6% of the needs of the most populated neighbor. The number is tiny for a country that has 900 km of land border with Iran.
Therefore, the 11th trip of Zarif to Islamabad should be seen as one to discuss economic relations. Business Recorder wrote, “Pakistan and Iran are said to have discussed different ways and means to enhance bilateral trade through barter mechanism due to absence of banking channels.”
The Business Recorder said, “Both countries discussed different options during two-day visit of Iranian Foreign Minister Mohammad Javad Zarif. Prime Minister Advisor on Commerce and Investment, Abdul Razak Dawood also discussed bilateral trade relations informally with the visiting Iranian Foreign Minister.”
Saying that presently, informal trade between Pakistan and Iran is far higher than formal trade, it added, “Interestingly, both countries have complaints against each other on informal trade/smuggling which is hitting their formal economies.”
Iranians argue that Pakistani smuggled products can be found in Tehran's bazaars and on the other hand, Iranian oil and other goods are also available in every part of Pakistan. Also, Iranian fruits are being smuggled into Pakistan through Afghanistan without payment of duty which hurts the interests of Pakistani farmers especially in Baluchistan.
The Business Recorder also wrote, “The sources said, in order to finalize the Free Trade Agreement (FTA) with Iran, a couple of meetings of the Technical Negotiating Committee (NNC) have been held since 2016. Draft of FTA in goods and Mutual Recognition Agreement (MRA) on Technical Barriers to Trade (TBT) and sanitary and phytosanitary have been shared.”
“However, Pakistan maintains that Iran should take measures to fully operationalize existing Preferential Trade Agreement (PTA) until FTA is finalised.”
Iran can meet Pakistan’s need for oil “at a comparatively cheaper price”, and there has always been demand of medical and surgical instruments and Pakistani rice and fruits in Iran.
Pakistan is capable of meeting Iranian needs of these products by improving the requisite logistics and infrastructure in this regard, the article added.
If legal means of trade are not explored between Iran and Pakistan, the people residing near the borders are likely to get involved in exploring illegal means and channels of trading goods, which may ultimately give rise to the greater risks.
The main obstacle for trade between Iran and Pakistan is the banking sanctions, which can to a large extent be overcome if there is mutual resolve for barter trade.
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