They also agreed to work for closer economic co-operation of the countries in the region, especially with Turkey and Afghanistan.
This was stated in a brief joint press conference addressed by the visiting senior Iranian Vice President Mohammed Reza Arif and Prime Minister Mir Zafarullah Khan Jamali at the Prime Minister House here on Thursday.
In his introductory statement, Prime Minister Jamali said that there was comprehensive exchange of views on regional and bilateral matters.
The economic ties were being strengthened through signing of a number of agreements and memorandums of understanding (MoUs). These cover setting up of a joint investment council, customs co-operation, preferential tariff for trade, avoidance of double taxation, transit trade, expansion of road and rail links, supply of electricity and gas and the proposed gas pipeline.
The prime minister said that a working group has been set up with Finance Minister Shaukat Aziz and his Iranian counterpart to oversee the implementation of the agreements and progress on the MoUs.
The working group will meet within three months to monitor the progress. It will further review the follow-up action in six months.
Concluding his statement, the prime minister said that the new co-operation would have "better, immediate and positive impact" on the two countries and benefit the people in the region, which included Pakistan, Iran, Turkey and Afghanistan.
In his brief statement, the Iranian vice president reciprocated by saying that they had good discussions on the existing economic relations and co-operation in agreement for trade, investment and having free trade between the two countries.
The Iranian vice president added that bilateral co-operation was proposed to have multilateral dimension, which would include Turkey and Afghanistan.
He added that the two countries agreed to resolve regional issues with mutual co-operation and also work jointly for the reconstruction in Afghanistan.
To a question that Iran had landed Pakistan into trouble by telling the International Atomic Energy Agency (IAEA) of sources of assistance in nuclear technology, the vice president said that Iranian deputy foreign minister had already denied this allegation. "Whatever was required we got it from the open market," he stressed, adding that Iran has no atomic weapons and needs nuclear energy for peaceful purposes.
To another question, he said that Iran has been opposed to the coalition forces attack on Iraq and would like them to move out and be replaced by an international force under the aegis of the United Nations.
The occupation forces have caused immense loss to the innocent lives in Iraq in various incidents of violence.
Earlier in his statement, Prime Minister Jamali said that there was complete identity of views on global issues. The Iranian vice president expressed the hope that through dialogue the issue of occupied Kashmir would be resolved between Pakistan and India.
The two countries have agreed to enhance bilateral trade crossing $3 billion from the current below $400 million through numerous measures, like cutting tariffs by signing preferential trade agreement, spreading oil pipeline, laying optical fiber, improving roads and rail links, setting up bank branches, developing border markets and establishing a $25 million Joint Investment Company, sources told Business Recorder.
Experts of both countries have completed spadework during the last few days before signing agreements.
A working group has been set up for chalking out modalities for oil pipeline, which would pinpoint viable routes and other options and would submit its reports to the next Joint Ministerial Commission meeting.
For Preferential Trade Agreement (PTA) both sides have set 90 days as cut-off date, but the agreement is likely to be signed within 60 days. Iran has agreed to cut textile tariff by 20 percent initially and list of items for PTA would be prepared.
To curb smuggling, border markets would be allowed to trade essential items for their livelihood. Iran has also offered to enhance road links because Iran is planning to access Europe through road and Pakistan has been asked to work on road links from Quetta to Taftan.
Iran would provide access through Zahidan to Kerman highway to Pakistani trucks. Almost 600 km road improvement would provide Pakistan access to Iranian routes.
The meeting agreed that currently Pakistan and Iran trade only rice and petroleum products below $400 million and that could be brought up to $3-4 billion. Agriculture products would also be traded.
PROGRESS REVIEWED: The progress on economic co-operation between the two countries was reviewed by the co-chairman of the Joint Ministerial Commission, Ahmed Khorram, Minister of Transport, Islamic Republic of Iran and Shaukat Aziz, Pakistan Finance Minister, here on Thursday morning.
The two sides also reviewed progress of construction of pipeline by Iran to supply gas in bulk at border, agreement on road transportation, and setting up of Iran-Pakistan Joint Investment Company.
The two sides expressed satisfaction over progress on these issues and hoped that an agreement to this effect would be finalised soon, which would subsequently lead to establishment of an effective communication and financial infrastructure between the two countries to further promote economic co-operation.
Iran and Pakistan also agreed that talks on increasing and enhancing air, road and railway links between the two countries to promote economic relations between the two countries.
Ahmed Khorram complimented Pakistan on introducing financial and structural reforms leading to economic recovery and said that Iran was also in process of implementing economic reforms to further consolidate its economic base.
RAIL LINK: Ahmed Khorram briefed Shaukat Aziz about the Iranian plan to establish rail link from Kirman to Zahidan so as to provide a rail link between Pakistan and Europe via the Syrian port of Latakia.
The rail link would be ready in about a year. He proposed that Pakistan might upgrade its existing rail link between Quetta to Zahidan to enable smooth flow of goods and passenger traffic between Pakistan and Europe and thus promote trade through private sector.
The Iranian Transport Minister also briefed Finance Minister about Iran plans to link their country through highways with Europe and Pakistan.
Finance Minister Shaukat Aziz briefed the Iranian Minister that private sector of Pakistan was keen to establish contact with their Iranian counterparts to establish trade links.
He said that the Chamber of Commerce and Industries was planning to host lunch in honour of the Iranian Vice-President and his entourage, which would afford an opportunity for an active interaction among the private sectors of the two countries.
He also requested issuance of multiple visas for businessmen on the recommendations of the respective Chambers of Commerce and Industry.
Shaukat briefed his Iranian counterpart on the economic reforms undertaken by the Government of Pakistan. He briefed the minister on the recent Pakistan sovereign Eurobond issue as well as government's initiative to enhance regional trade.
The Iranian finance minister informed Shaukat that while they had foreign exchange reserves of $ 25 billion, they had also floated Euro denominated bonds worth $ 1 billion.
He said that the reason for the floatation of the bond was the same as that of Pakistan that is, to put Iran's name on the radar of the international capital markets and attract foreign investment.
He said that the rate of interest on the bonds ranged from 7.75-8.75 percent with a spread of 425 basis points.
Shaukat said that in case of Pakistan, the interest rate was 6.75 percent, which is 370 basis points above five-year US Treasury. He also said that shortly Pakistan was going for interest rate swap from fixed to floating with a view to reduce the interest cost.
He suggested that Pakistan and Iran needed to co-operate in the fields of customs not only to encourage trade between the two brotherly countries, but also to curb the menace of smuggling, which was detrimental to both the economies.
The finance minister of Iran said that they had successfully introduced container X-ray system in Iran to check mis-declaration of goods in transit and export from and imports in Iran.
Shaukat said that the Government of Pakistan has also taken a decision to install a container X-ray machine.
The Iranian minister offered technical assistance to Pakistan to help in this connection. The Iranian minister also offered to exchange data on imports, exports and transit trade.
On the request of Shaukat Aziz, the Iranian finance minister assured that they would take necessary steps against smuggling of betel nuts and right-hand vehicles to Pakistan. It was also decided to exchange delegations to promote co-operation in customs, trade and investment.
The 14th session of the Iran-Pakistan Joint Ministerial Commission lasted several hours and concluded this morning in Islamabad after agreeing to sign several MoUs and highlight progress and co-operation in road and rail transportation, banking links, anti-smuggling measures, trade, gas pipelines and several other areas of mutual interest.
The 25-member Iranian delegation, headed by Minister Ahmed Khurram, included several deputy ministers and Iranian ambassador to Pakistan while Finance Minister Shaukat Aziz was assisted by Chairman BoI, Secretary Commerce, EAD, Finance, Railways, Water and Power, Petroleum and senior officials from several ministries.