However, the unavailability of a payment mechanism casts a shadow over the viability of a long-awaited agreement. The Joint Committee follows topics such as the free trade agreement (FTA) between the two countries and the organization of exhibitions. The prime minister`s adviser on trade, Abdul Razak Dawood, echoed the same sentiments, saying Pakistan also wants to improve bilateral trade with Iran. “Understanding the new trade goal was reached at the ninth session of the Iran-Pakistan Joint Trade Committee in Tehran,” according to an official announcement by the Ministry of Commerce on Saturday. Pakistan and Iran have agreed to take steps to expand annual trade to $5 billion by 2023. Iranian Minister Says Obstacles to Free Trade Expansion Will Be Removed Within Three Months The decision was taken at the 9th joint meeting of the trade committee between the two sides in Tehran on Saturday, co-chaired by Iranian Trade Minister Reza Fatemi-Amin and the Pakistani Prime Minister`s Trade and Investment Advisor, Abdul Razak Dawood, Anadolu Agency has learned. Until the regular banking channel for a payment method is put in place, the goal of increasing trade to $5 billion over the next two years could even remain on paper, a senior Commerce Ministry official said. During Saturday`s meeting, the two sides also discussed barter, transport, frontier markets, exhibitions and private sector investment, Anadolu Agency officials and diplomats said. Iran and Pakistan agreed to restart negotiations on a free trade agreement (ATM) and reaffirmed their commitment to increase annual trade to $5 billion. Pakistan has a tight export basket to Iran, as 63% of its exports were made up solely of rice. In 2006, a Preferential Trade Agreement (APTA) was signed with Iran.

Tariff concessions were granted to Iran on 309 tariff lines, while Pakistan received concessions on 338 tariff items. The important sectors covered by the PTA were rice, fruit, cotton, cotton yarn, pharmaceuticals and cutlery. In 2017, the two sides also decided to finalize the draft free trade agreement by November. The two countries` trade negotiating committee held two rounds of discussions on the free trade agreement when it was predicted that the agreement would increase bilateral trade from $300 million in 2016 to $5 billion by 2021. Amin pointed out that Pakistani and Iranian officials have already held discussions on economic cooperation and the Joint Trade Commission has the task of paving the way for improving trade relations between the two countries. The minister said that although Iran and Pakistan are two important countries in the region, they have not yet made good use of their economic capabilities. He said trade barriers to free trade between Tehran and Islamabad would be removed within the next three months. The two countries had signed a preferential trade agreement (PTA) in 2006, which experts said could not increase the trade balance beyond $1.5 billion, with US sanctions playing the trouble amicably. The two countries have already drawn up strategic cooperation plans and agreements, the consultant recalled, adding that they have yet to be implemented.

“I express the hope that the necessary measures will start from today,” he said. Iran`s Minister of Industry, Mines and Trade Reza Fatemi Amin said the two countries are determined to expand their annual trade. “If there is no payment mechanism, then there is no meaning to such an agreement,” the official added. While Iran has about 959 joint border crossings with Pakistan, it remains to be seen how many border crossings will be declared for trade. He stressed the determination to expand bilateral economic relations and said Iran is ready to remove obstacles to the development of trade with Pakistan in order to improve economic relations with the neighboring country. The two countries had finalized the draft free trade agreement in December 2017 after several rounds of talks, but the reimposition of sanctions against Iran by the former US administration in May 2018 led to the suspension of the agreement. The two sides on Saturday expressed confidence that the annual volume of trade will reach $5 billion, highlighting the increase in Pakistani investment in Iran. He proposed expanding transport trade, expanding the barter basket, building common border markets and reducing tariffs. Fatemi-Amin said the two sides had agreed to make concerted efforts over the next three months to “remove trade barriers,” in a proposal that the free trade agreement will enter into force. Dawood, for his part, said Pakistan was eager to see progress and promotion of trade relations with Iran, especially in “supplying goods, exchanging goods, reducing tariffs and creating frontier markets.” Bilateral trade between Tehran and Islamabad has fallen from $1.5 billion before the pandemic to less than $1 billion. Stressing the need for precise programming in a way that would allow Pakistani partners to invest in Iran, the minister said obstacles would be removed within three months to pave the way for the expansion of free trade.

Senior Iranian and Pakistani officials attended the meeting, as well as business and banking officials. Iran`s official IRNA news agency quoted Iran`s industry minister as saying tehran and Islamabad had planned cooperation in the fields of household appliances and dairy products. .