Pakistan-Iran Ties: New Opportunities

Date: 09 November 2021 - 21:38

News ID: ۹۶۳۸۶

TEHRAN -- Adviser to Prime Minister of Pakistan for Commerce and Investment Abdul Razak Dawood talked to Kayhan International during his visit to Tehran this week. The visit resulted in the signing the first barter trade agreement to exchange Pakistani rice with Iranian LPG. Dawood said he feels that over the last two years, there has been a change from both sides and now they have to have very good relations and do more trade and investment. Their next joint ministerial committee meeting will be held around the middle of December in Islamabad to discuss “certain issues” after “frank” talks held in “a spirit of brotherhood” and “very friendly atmosphere” in Tehran. Iran and Pakistan hope to sign their long-awaited free trade agreement (FTA) in the next three months which they believe will help raise bilateral trade to $5 billion a year from $1 billion now but in Dawood’s words, there are many issues that need to be sorted out. Here are the excerpts:
Why is bilateral trade between Iran and Pakistan not increasing in accordance with the potentials of both countries?
The biggest hurdle in the bilateral trade is the absence of banking channel between the two countries due to American sanctions on Iran. Both countries need to have an effective barter trade mechanism to counter the negative impact of banking sanction on trade. Besides, some non-tariff barriers are also there which can easily be removed through regular interactions and mutual understanding.
It is said that without regional trade, economic progress is not possible; what is the best way to increase regional trade?
It is true that regional trade is very important for countries. Pakistan and Iran should also focus on that and try to explore the ways and means for enhancing regional trade in addition to their bilateral trade. One way of doing that is to strengthen the transit trade and TIR regimes by removing the hurdles in their way. This is also one of the agenda data-x-items for the 9th Session of the JTC (Joint Trade Committee).
Iran-Pakistan FTA is being negotiated since last several years but there is no outcome yet. What in your opinion should be done to conclude it at the earliest?
Negotiations on FTA always require very careful evaluation of several economic factors such as the impact of FTA on domestic industries of the countries; therefore, the progress may seem slow but Pakistan and Iran are making headway. Iran has shared its list of sensitive data-x-items which Pakistan has examined and has shared its views in this session of JTC. So the progress is there and in due course we will be able to reach an agreement.
What’s the aim of your Tehran visit and subjects for discussions?
The aim of the visit is to participate in the 9th session of the JTC to discuss bilateral trade and investment in several areas of economic cooperation and find solutions to the problems that are hindering bilateral trade. These areas include
negotiations on FTA, barter trade, non-tariff barriers, TIR, customs cooperation, investment and border markets etc.
Transportation, especially cross-border transport, is one of the main factors for trade development. Are there plans in place for development in this area?
No doubt trade and investment cannot flourish in the absence of an effective road transport mechanism between the two countries. Pakistan and Iran had signed agreements for road transportation of goods. There is need to implement those agreements in an effective manner to improve the mobility of goods and make it more cost effective. There is another solution to it: TIR. Pakistan has recently exported a couple of TIR consignments through Iran to Turkey, Azerbaijan and Russia. This is just a beginning of bilateral cooperation in this area. Iran and Pakistan can make use of this system more effectively by removing hurdles in its way.