Pakistan's free trade agreement draft wins Iran’s backing

Published: September 12, 2016
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Negotiations on tariffs, duties and other hurdles to start soon. PHOTO: EXPRESS

Negotiations on tariffs, duties and other hurdles to start soon. PHOTO: EXPRESS

ISLAMABAD: In a sign of progress towards a free trade agreement (FTA), the Iranian authorities have agreed with the initial draft shared by Pakistan and returned it with their input, paving the way for kicking off formal negotiations on streamlining commerce between the two sides.

Pakistan had shared the draft on Iran President Hasan Rouhani’s desire for free trade between the two countries during his visit to Islamabad in March this year.

Both the sides agreed to switch from the current preferential trade agreement to an FTA and push bilateral trade volume up to $5 billion over the next five years.

Govt endorses move to enhance trade, political ties with Iran

“We have recently got back the initial draft that we shared earlier with the Iranian authorities; they have given their input and agreed to push ahead with the plan,” said a senior officer in the Ministry of Commerce.

“Now, we will soon start formal negotiations on tariff lines, duties and other matters to finalise the document as quickly as possible,” said the officer. “A Pakistani delegation will leave for Iran most probably by next month to start talks on the FTA.”

As soon as the international community lifted longstanding sanctions from Tehran earlier this year, Pakistan and Iran expressed interest in promoting and expanding bilateral trade and later they developed a five-year road map with the objective of boosting trade to $5 billion.

Under the road map, they also agreed last month to open special bank accounts in their currencies in Pakistani and Iranian central banks for streamlining the payment mechanism for trade transactions.

Earlier when international sanctions were in place, there was no proper payment mechanism for trade with Iran as there were restrictions on financial transactions with the Islamic republic. That was the reason for a significant decline in Pakistan’s trade with Iran over the past many years.

As part of the road map, both the sides have highlighted scores of challenges that will be addressed to achieve the trade objectives.

They will establish a mechanism to do away with the hurdles to bilateral trade such as non-tariff barriers, absence of a mutual recognition agreement, lack of banking facilities, infrastructure bottlenecks and trade through informal channels.

Pakistan, Iran sign MoU in step towards formal banking channels

They are eager to step up efforts to give a fresh impetus to bilateral trade and open up commerce and investment as well as provide market access under formal agreements.

In addition to the preferential trade agreement, which has been in force since September 2006 and is being reviewed for better performance in line with the changed scenario after the removal of sanctions, the two countries have agreed to enter into negotiations for free trade including trade in goods, services and investments.

They will move forward at a fast pace to conclude the FTA negotiations, effectively implement the preferential trade agreement, establish appropriate mechanisms for coordination in upcoming rounds of free trade talks and periodically monitor the progress.

A framework agreement in this regard will deal with trade in goods, trade facilitation, rules of origin and dispute settlement. The road map suggests that negotiations will come to an end in one and a half years from June 2016 to December 2017 unless the two sides agree on an extension.

Published in The Express Tribune, September 13th, 2016.

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Reader Comments (11)

  • FAZ
    Sep 13, 2016 - 12:40AM

    First step in being a part of CPECRecommend

  • Hakim Afghani
    Sep 13, 2016 - 10:11AM

    It seems Pakistan is so desperate to have a working partner after being isolated from all corners but Iran ain’t going to help much in any near future because Iran is already sold out to India.Recommend

  • Shuaib
    Sep 13, 2016 - 1:31PM

    Our leaders must take on board all our industrial lobbies, otherwise we’ll lose out on this deal, let us try to make it as much of a win-win for Iran and Pakistan.Recommend

  • Darvesh
    Sep 13, 2016 - 2:47PM

    There it is, Iran is also joining cpec leaving India wandering hopelessly alone.
    Where are you Modi, trolls.Recommend

  • Rana
    Sep 13, 2016 - 7:22PM

    @Darvesh: India’s total trade is 1.2 tn$.Export is expected to reach 1tn$ in a decade.so CPEC or whatever is not a big concern for India obly concern is it goes through POK. India is much integrated with other countries in trade than you can ever think.Recommend

  • Danni
    Sep 13, 2016 - 9:16PM

    @rana
    Sir sure India will do great but you must consider the GDP …….I am sure 1 tn$ won’t help much since you’ll have much people to feed . In contrast to Pakistan same thing will happen as with panama canal. More money than people.Recommend

  • Pukhtoon
    Sep 14, 2016 - 12:36AM

    @Hakim Afghani
    Once again Indian troll desperate to read all good news about Pakistan, getting frustrated and being amongst the first to comment, that too negatively, making use of the great secret art of using bold letters- and trying (and clearly failing) to hide behind a very obviously fake name. One is amused at what the BJP has been teaching it’s Bhakt. Recommend

  • al
    Sep 14, 2016 - 1:22AM

    Burnol for MODI…Recommend

  • kamal
    Sep 14, 2016 - 2:41AM

    Indians and Afghans here. Don’t be left out in this great new economic game and ignore the Chinese initiative. Europeans did against the Chinese and now apart from Germany and to some extent the Nordic countries they are in total economic disarray. UK has seen the light and I hope you both envious neighbors can do better. Extend an honest hand of friendship and we may let you be part of the mega chain.Recommend

  • Sunny
    Sep 15, 2016 - 6:25PM

    Next step for Pakistan is to engage economic development cooperation with Nepal, Bhutan, Bangladesh, Myanmar and Vietnam.Recommend

  • observer
    Sep 17, 2016 - 10:07AM

    PAkistan is taking the right steps to ensure that the ECO (Economic Cooperation Organization) becomes a reality. SAARC is dead.The puppet Ashraf Ghanis threats are meaningless when the majority of Pustoons in Pakistan will not fight against their brothers. India in its desperation will try and create trouble in PAkistan. But Pakistanis are awake, and will fight for their sovreignity and national borders. PAkistan zindabad and love to my PAk brothers and sisters.Unity, Faith, Discipline.Recommend

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