Iran agrees to make existing trade deal with Pakistan functional

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The News | 27 April 2017

Iran agrees to make existing trade deal with Pakistan functional

Iran has agreed to deepen existing trade pact with Pakistan — Preferential Trade Agreement (PTA) — which is dysfunctional for many years, and make it functional with an aim to boost the bilateral trade up to $5 billion by 2020, a senior official at Economic Affairs Division (EAD) said.

“However, both sides have decided that there will be no fresh Free Trade Agreement (FTA), rather both sides will later on turn the current PTA into FTA,” said the official.At present, the existing PTA is dysfunctional for many years between the two countries owing to which Pakistan exports have alarmingly dwindled to lowest ebb to $35 million in 2015-16 from $800 million in 2008-09.

Both the countries held talks in Tehran on April 17-18 under the canopy of Joint Economic Commission (JEC) where in Pakistan’s 14-member delegation from six ministries participated.

“During the talks, Iran has also asked Pakistan to use its crude oil for various refineries in Pakistan to make finished petroleum products. The authorities in Tehran have also asked Pakistan to expedite the construction of IP gas line,” the official, who was part of the talks, told The News.

The official said Iran also refused to accept the force majore contention of Pakistan which has caused delay in the project. Iran argues that unless and until Pakistan import is gas and crude oil, the dream of jacking up the trade between the states up to $5 billion by 2020 to get metalised is mission impossible.

Experts say Pakistan has at present put its all eggs in one basket by importing from Gulf states crude oil, furnace oil and even diesel and more importantly LNG, saying it would be better preposition if Pakistan diversify its fuel import regime by importing some volume of crude oil from Iran.

However, relevant Pakistani officials in the delegations came up with the stance that there is no state-owned refinery in Pakistan, so it would be better for authorities in Iran to make direct contact with top management of refineries for talks in this regard.

“Iran has also expressed its desire to initiate the ferry service between the two states for pilgrims through sea as well as for trade of goods,” said the official.

However, during the talks on trade related issues Pakistan gave tough time to Iranian side for imposing non-tariff barriers on exports of Pakistani items such as rice, textile and kinnu and making PTA dysfunctional. However, Iranian side argued that they have different kind of procedure to tackle the imports and they also said that they have imposed non-tariff barriers on import of some items from all countries and there are no Pakistan specific barriers. But Pakistan said both countries have PTA and under this trade deal one cannot give such treatment to the items of the partner country of the agreement.

Under the existing PTA, Pakistan has given concessional tariff rate on 338 items of Iran and Iran has extended the tariff concession on 307 Pakistani items. However, Iran has agreed to import Pakistani mangoes provided they are treated in hot water facilities.

Since Iran is going for presidential election on May 18, and after election new cabinet with new parliament will be formed and this process will take reasonable time, so both sides have decided to meet sometime in October and November under the umbrella of Joint Trade Committee (JTC) as the ongoing cabinet will not be able to take decisions on trade and other issues.

“Under the JTC, both countries would extend more tariff concessions on 500 items from each side in move to deepen the preferential trade agreement,” said the official.

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source: The News