In November 2017, Trade Negotiation Committee (NTC) comprising officials from both countries met in Tehran for two days to finalise the draft Pakistan-Iran FTA as Iran showed extraordinary interest in trade tries after the visit of Army Chief, Qamar Javed Bajwa.
However, the draft PIFTA did not sail through the federal cabinet due to restrictions imposed by the United States of America (USA), which does not allow business with Iran.
Pakistani banks', sources said, had refused to do business with Iran despite State Bank of Pakistan (SBP) pressure fearing that any such step could put them in hot waters. An official stated that bilateral trade without proper banking channels is not possible with any country.
According to the private sector, Iranian authorities have imposed a number of Non Tariff Barriers (NTBs) to discourage Pakistani products but Pakistan extends all facilities to Iranian products.
Official sources told this scribe that Pakistan would ask Iran to sign Mutual Recognition Agreement (MRA) aimed at making it mandatory both for Pakistan and Iran to accept each others' standards. With the signing of the MRA hurdles in smooth transportation of Pakistan products will be removed.
In order to expedite early finalization of the drafts of FTA, MRAs on TBT and SPS issues and customs cooperation, both sides have already agreed that the relevant sub-committees' members will negotiate on concluding MRAs texts simultaneously with TNC negotiations.
"Both countries have decided to carry out further deliberations in order to complete all Annexes of the FTA agreement by June 2018 which would complete the technical process of final FTA for consequential approval by respective governments," the sources continued.
Iran is now facing international isolation and has lost the channel of receiving foreign exchange through UAE, is now interested in barter trade with Pakistan. Many Pakistani businessmen who were exporting rice to Iran through Dubai were not paid by their Iranian business partners. Pakistan is not ready for any arrangement that will not help Pakistan earn foreign exchange, sources stated.
"Pakistan will extend all possible cooperation to Iran in trade but US sanctions which are already in place may not allow trade between the two countries to move further," said an analyst.
Both parties would review recent trade bilateral trade statistics and reaffirm the necessity of formal exchange of trade statistics by their customs authorities regularly in the format which has already been determined.
The sources further stated that during the meeting in November 2017, TNC discussed and negotiated on the FTA draft in goods in a positive manner and in a friendly atmosphere and reviewed it article by article.
Pakistan and Iran have also held preliminary discussions on the base year, HS Digits level, Tariff Reduction Modality (TRM) and FTA in goods which are expected to be finalized in the next TNC meeting.
When contacted, an official told this scribe that Pakistan would extend full cooperation to Iran to further deepen trade ties and finalization of different clauses of the FTA.
