Smuggling impedes trade between Pakistan, Iran

Despite a preferential trade agreement (PTA) and memorandums of understanding (MoUs) inked between Pakistan and Iran, smuggling of goods between the two countries has been increasing due to high tariffs.

During a webinar organised by the Karachi Chamber of Commerce and Industry (KCCI), Chamber Vice President Shamsul Islam Khan suggested that Pakistan and Iran should look into the possibility of setting up a duty-free Common Trading Zone and an industrial park at the border to improve the existing meagre trade volume between the two countries and effectively curb smuggling, which was hampering legal trade.

Khan pointed out that other than the PTA between Pakistan and Iran, numerous MoUs had also been inked and a free trade agreement (FTA) was being negotiated.

“However, all these agreements and MoUs have not yielded positive results as the trade volume remains low while smuggling flourishes,” he lamented. “Hence, it is essential to bring down tariffs and establish a duty-free common economic zone and industrial park where business communities of both countries could easily set up their business units and warehouses, which will surely give a boost to the two-way trade.”

Setting up of the common economic zone would prove to be the first step in documentation of the economy, he added. Khan emphasised that Pakistan and Iran, besides looking into the possibility of implementing a paper visa regime, must also agree on giving duty-free access to numerous products.

“We can start from five to 10 items having immense trade potential and after seeing the impact, the list can be enhanced by adding more items being traded between the two countries.”

Identifying the lack of banking channel as a major barrier, he stated that although the banking channel should be established at the earliest, unfortunately, it was suffering delay due to sanctions on Iran. “Therefore, we must not wait further and instead of letting the trade suffer, the business communities should go for barter trade or some other feasible option.”

Speaking on the occasion, Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) President Masoud Khansari said the volume of bilateral trade was unsatisfactory as compared to the potential, which required attention of both sides.

“Although an Iranian trade delegation visited Pakistan before the Covid-19 outbreak, which proved very fruitful, trade suffered due to an extraordinary situation triggered by the pandemic. Hence, such visits will once again resume and trade will improve as soon as the pandemic is over,” he added.

He mentioned that although the two countries were keen to improve trade ties, both needed to overcome the high tariff barrier and lack of banking channel while connectivity must also improve.

Linking Chabahar Port with Gwadar Port would surely pave the way for improved trade ties, he said.

Published in The Express Tribune, December 24^th, 2020.

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