Pakistan, Iran working on draft Free Trade Agreement
By Abdul Kerimkhanov
As part of the expected major event, Pakistan and Iran are likely to finalize the draft Free Trade Agreement (FTA) during the two-day talks on April 22-23, which will be held in Islamabad.
Technical groups of both sides will discuss crucial interaction and, most likely, will approve the draft free trade agreement, reports The News International.
According to a high-ranking official in the Pakistan Ministry of Commerce, both sides worked a lot on the draft Free Trade Agreement, and now they are inclined to give a green light to it.
Currently, the trade activities between both neighboring countries is conducted in accordance with the Preferential Trade Agreement (PTA), which was signed in 2006 and entered into force in 2007.
In 2008-2009 fiscal year, the trade between the two countries increased by almost $1.32 billion, but after the sanctions of the U.S. and UN enetred into force, the volume decreased dramatically to almost $318 million, of which imports from Iran totalled $280 million and exports from Pakistan - only $35 million.
Pakistan’s exports dropped to $ 35 million in 2018 from $ 350 million in 2018–2019. The reintroduction of strict U.S. sanctions by the Trump administration is the main reason for the low level of trade relations.
The Preferential Trade Agreement (PTA) no longer works. However, imports from Iran are about $ 280 million.
Iran, which is the nearest neighboring country, has $ 18 billion in a trade with India, even with U.S. sanctions.
Sources also said that Pakistani banks are still embarrassed to conduct operations with Iranian banks. The lack of banking channels is the only serious obstacle to the expansion of trade. However, the State Bank of Pakistan and the Central Bank of Iran are also negotiating payment terms through banking channels.
Diplomatic relations between Iran and Pakistan were established in August 1947. Iran became the first country in the world to recognize the sovereign status of Pakistan.
Both countries are members of the Islamic G8, the Economic Cooperation Organization (ECO) and observers in the Shanghai Cooperation Organization (SCO).
Iran and Pakistan are close neighbors enjoying the similarity of views on most regional and international issues.
Today, Iran and Pakistan are well aware that solving economic problems, strengthening the security of the two countries is possible only with close cooperation.
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Abdul Kerimkhanov is AzerNews’ staff journalist, follow him on Twitter: @AbdulKerim94
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