The Premier and Army Chief’s diplomatic trip can be dubbed a success considering Pakistan’s apparent haste to initiate a free trade agreement (FTA) with Iran in the wake of lifting of sanctions on Tehran. All the fears of having to pick a side and turning down opportunities of bilateral trade with our neighbour are suppressed for now as the belligerent sides seemed to welcome Pakistan’s “sincere efforts”.
The eagerness to initiate efforts to set up a trade agreement as well as linkages between banks is understandable considering the agreement signed between Pakistan and Iran in April last year on a five-year trade facilitation plan to enhance bilateral trade from $1billion to $5 billion. There is immense potential for bilateral trade with Iran, which is only receiving less than fifteen percent of Pakistan’s bilateral exports currently. Bilateral trade with Iran, which was nearing $1 billion, fell suddenly as a result of sanctions and the unwillingness of banks to finance trade.
Trade between the two countries has generally seen an increasing trend during the ten years period of 1996-2005, with some exceptions. After a fall of the country’s trade with Iran in 1998, when Pakistan met serious economic problems as a result of political instability and a severe drought, the situation picked up again in 2000. In 2005 the bilateral trade was 638 million US dollars showing more than a hundred percent rise in Pakistan’s trade with Iran compared to the year 1996, which stood at a figure of 302 million dollars.
Pakistan wants more predictability in tariffs on Iranian products and hopes that Iran will be as forthcoming as it is being right now. It has also unveiled plans to construct three border posts along the Pakistan-Iran border on modern lines to facilitate the land trade. It is a positive development overall to remove the red tape surrounding trade and commerce and building a relationship both countries could benefit greatly from. With Pakistan’s increasing dependence on China to fulfil all its needs and requirements, it is necessary that all our eggs not be in one basket.
http://nation.com.pk/editorials/21-Jan-2016/free-trade-with-iran
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