Free trade agreement wins Iran’s support
Pakistan and Iran have taken a step towards streamlining commerce-rated matters between the two countries
Prime Minister Nawaz Sharif meets Iranian President Hassan Rouhani in Tehran on January 19, 2016. PHOTO: PM OFFICE
Pakistan and Iran have taken a step towards streamlining commerce-rated matters between the two countries, after the latter gave its input to the initial draft of the free trade agreement (FTA). Pakistan shared its version of the draft after Iran’s president expressed the desire for free trade between the two countries during his visit to Islamabad in March this year. Both countries also agreed to move on from the current preferential trade agreement in place to increase the volume of goods. Talks are also under way to establish formal banking channels, which has proven a major hindrance to increasing the volume of bilateral trade.
After most sanctions on Iran were lifted in January this year, a development that came after the country agreed to roll back the scope of its nuclear programme, Pakistan had announced its intention to swiftly and decisively move towards arranging a formal trade agreement with the oil-rich Islamic republic. Talks of formalising trade-related matters began as soon as the announcements came through and were seen as welcoming moves for Pakistan where falling exports and a widening trade deficit had worried economic managers. One would have hoped that globalisation and interconnectedness among world economies would lead to greater sharing of goods and a competitive business environment, but Pakistan — despite being strategically located — has generally been unable to take advantage. The FTA with China is heavily tilted in favour of the foreign country, but this has generally been the case with most trading partners. Improper negotiations and a general haste to sign agreements have meant that Pakistan has remained behind. Additionally, a higher cost of production and uncompetitive goods have left the country prioritise one problem over another. The energy crisis has shaved off precious points of GDP growth and has left exporters tackling challenges on multiple fronts. One would hope that Pakistan would move on from just exporting raw material and sell value-added material to Iran, where years of sanctions have crippled the economy. Times are changing and stress needs to be laid on ecommerce as well as value addition. Iran may very well be the regional market Pakistan so desperately needs given tension with other neighbours seems to be a never-ending phenomenon.
Published in The Express Tribune, September 16th, 2016.
After most sanctions on Iran were lifted in January this year, a development that came after the country agreed to roll back the scope of its nuclear programme, Pakistan had announced its intention to swiftly and decisively move towards arranging a formal trade agreement with the oil-rich Islamic republic. Talks of formalising trade-related matters began as soon as the announcements came through and were seen as welcoming moves for Pakistan where falling exports and a widening trade deficit had worried economic managers. One would have hoped that globalisation and interconnectedness among world economies would lead to greater sharing of goods and a competitive business environment, but Pakistan — despite being strategically located — has generally been unable to take advantage. The FTA with China is heavily tilted in favour of the foreign country, but this has generally been the case with most trading partners. Improper negotiations and a general haste to sign agreements have meant that Pakistan has remained behind. Additionally, a higher cost of production and uncompetitive goods have left the country prioritise one problem over another. The energy crisis has shaved off precious points of GDP growth and has left exporters tackling challenges on multiple fronts. One would hope that Pakistan would move on from just exporting raw material and sell value-added material to Iran, where years of sanctions have crippled the economy. Times are changing and stress needs to be laid on ecommerce as well as value addition. Iran may very well be the regional market Pakistan so desperately needs given tension with other neighbours seems to be a never-ending phenomenon.
Published in The Express Tribune, September 16th, 2016.