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Pakistan and Iran are working on a barter trade deal mechanism to enhance bilateral trade which is negligible due to sanctions imposed by the United States of America on Tehran. This was disclosed during a heavily attended meeting of the National Assembly Standing Committee on Commerce and Textile presided over by Syed Naveed Qamar. It was the worst day in terms of the response to the briefing given by the Commerce Division, despite the presence of many officials from the ministry.

Prime Minister's Advisor on Commerce, Textile, Industries and Production, Abdul Razak Dawood, who recently accompanied Prime Minister Imran Khan during his visit to Iran, informed the committee that he held a meeting with the Iranian Trade Minister and discussed the ways and means of a barter trade deal between the two neighbours.

He said both countries have decided to select two or three items each which can be traded through barter, adding that Iran has identified electricity and Liquefied Natural Gas (LPG) whereas Pakistan will export agri products.

"Pakistan is considering three proposals for trade with Iran which include seeking waiver on sanctions from US, barter trade and setting up a special bank to do business with Iran," said a Ministry official.

Chairman Standing Committee argued that except petroleum products, all other products can be traded through barter between the two countries. Director General Trade, Commerce Division, Muhammad Ashraf informed the committee that informal trade between Pakistan and Iran is continuing. However, Chairman Standing Committee asserted that informal trade means smuggling, sarcastically querying whether it should continue.

Additional Secretary, Commerce Division, Capt. Javed Akbar (retired) further explained that both countries are working together to improve the barter trade mechanism and State Bank of Pakistan (SBP) is extending help in this regard.

He further stated that Federation of Chamber of Commerce and Industry (FPCCI) and Iranian Chamber are actually taking the lead in this deal.

An insider stated that a committee under the chairmanship of Minister of State for Revenue comprising public and private sector (Quetta Chamber of Commerce and Industries) representatives has been constituted. During the meetings, the SBP revealed that since the entire banking sector is under sanctions, it is not possible to open branches of Iranian banks in Pakistan. Following deliberations, the committee has come up with the following proposals to overcome the payment problem with Iran: (i) seek waiver from the US on sanctions; (ii) establish a mechanism for barter trade; and (iii) set up a dedicated bank to do business with Iran. These proposals are under examination by the relevant Ministries and Department in the light of their possible economic and political repercussions.

There has always been demand for medical/ surgical instruments and Pakistani rice and fruits in Iran. Pakistan is quite capable of meeting such needs of Iran by improving the requisite logistics/infrastructure in this regard.

Additional Secretary further stated that Pakistan's kinnow is already being exported to Iran, adding initially Tehran had imposed unjustified non tariff barriers which have now been removed. Pakistan's exports to Iran are about $ 22.5 million which are expected to increase after barter trade deal is made operational.

Shaista Pervez Malik informed the committee that the European Union (EU) has written a letter to the Prime Minister with respect to GSP plus, seeking Commerce Division's viewpoint on it.

Abdul Razak Dawood said he feared that this can be a big issue for Pakistan. However, Secretary Commerce, Sardar Ahmad Nawaz Sukhera promised that Commerce Division will brief the committee in detail on the subject in its next meeting. He said a committee headed by Attorney General is working in this regard.

Answering a question regarding wheat, he said that Ministry of National Food Security and Research, in a briefing to the Economic Coordination Committee (ECC) of the Cabinet, acknowledged that 1 million tons of wheat will probably be wasted this year with the government procuring 5.1 million tons. He said best quality wheat is produced in Multan and Rahim Yar Khan.

He further stated that there is no grading of wheat in Pakistan and if this is done, Pakistan can easily export 1 million tons of wheat or flour per annum.

Director General Trade, Muhammad Ashraf gave a presentation on export of agriculture products, rice, wheat, sugar ad cotton horticulture products like mangoes and kinnows.

Commerce Advisor stated that presently 45 million tons of surplus wheat is available in the country but there are no good arrangements to store wheat. Chairman Standing Committee suggested silos for this purpose.

During discussion, he stated that China had shown a willingness to import 0.3 million tons of sugar and 0.2 million tons of rice. He said there should be no subsidy on sugar export and federal government has already taken this decision. He further stated that the government intends to increase rice exports from $ 2.5 billion to $ 5 billion. The issue of dates also came under discussion. Secretary Commerce updated the committee about the meeting he held with dates' stakeholders in Karachi last week.

The issue of Geographical Indication (GI) laws was discussed and the Advisor informed that Pakistan does not have any law to protect its domestic products at the international level. Other countries are selling Pakistan's unbranded goods with their own logo. The government is working on GI laws and once enacted Pakistan would be able to safeguard its products internationally.

The committee rejected a crop insurance "ambiguous" plan by National Insurance Corporation Limited (NILC) as none of the committee members and Commerce Division officials understood the scheme.

According to official statement, Abdul Razak Dawood briefed the committee on Strategic Trade Policy Framework (STPF) 2019-2024. The policy objectives of STPF are to make the exports a driver of economic growth, transition from factor-driven to efficiency-driven exports in the short to medium term and innovation driven exports in the long term, improve competitiveness and efficiency of industry especially export-oriented sector by reducing input costs and increasing productivity, attract efficiency-seeking investment into export-oriented production, reduce relative "disincentive" for exporting activities by reducing structural anomalies, and to improve the trade ecosystem by increasing institutional efficiencies and reducing cost of doing business. The vision of STPF is to make Pakistan to become a dynamic and efficient domestic market and a globally-competitive export-driven economy, and its mission is to transform Pakistan from a factor-driven to an efficiency-driven economy integrated into the global and regional value chains in the medium term and an innovation-driven economy in the long term.

The committee showed serious concerns over the crop insurance schemes offered to the farmers and asked the Ministry and National Insurance Company Limited to come up with better packages. Although the wheat crop has been damaged due to the weather calamities but there are sufficient stocks left from the past. He opined that wheat should be deregulated and grading of wheat is necessary. Syed Naveed Qamar, Chairman Standing Committee stressed to change the policy regarding sugar cane and said that this is high time to invest in other crops. For dates' crop, the committee asked the Ministry to resolve the issue of running finance and remittance by taking the farmers into confidence. The committee desired to have more crops covered by Zarai Taraqiati Bank Ltd. (ZTBL).

The meeting was attended by Abdul Razak Dawood, and MNA's, Ali Khan Jadoon, Muhammad Yaqoob Sheikh, Muhammad Asim Nazir, Ahmed Hussain Deharr, Mian Muhammad Shafiq, Wajhia Akram, Sajida Begum, Tahira Aurangzeb, Shaista Pervaiz, Syed Javed Ali Shah Jillani, Secretary along with Senior Officers.

Copyright Business Recorder, 2019

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I did graduation from the Government Murray College Sialkot and MSc in Psychology from the University of Punjab. I am in journalism since 1990. I worked in Daily Nawa-i-Waqt as sub editor and staff reporter in Daily Pakistan and Daily Din prior to joining Daily Business Recorder. I have been associated with this newspaper since 2000 as staff reporter. Energy Sector, Commerce / Trade and Industries are key areas of my interest. I have also the credit of exposing number of scams like Rental Power Plants (RPPs), LNG, sugar import, etc.