Boosting Pakistan Iran Trade

A Trade delegation from Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) recently visited Pakistan to discuss strengthening trade ties between the two countries.

In a meeting with their Pakistani counterparts, the Iranian delegation expressed concerns over the low level of trade between the two countries and suggested taking measures like holding exhibitions, exchanging business delegations and the use of non-bank channels for money transfers, for boosting trade between the two nations.

The delegation, Led by TCCIMA Head Masoud Khansari also visited Federation of Pakistan Chambers of Commerce & Industry (FPCCI). Mian Anjum Nisar, President, FPCCI said the level of economic relations between the two countries was insufficient keeping in view the existing capacities and cultural closeness between the two sides.

“Although the two countries have signed a preferential trade agreement a few years ago, none of them has used this opportunity properly,” Nisar regretted.

There are growing realization that the US sanctions against Iran are a major part of the obstacles to the development of economic cooperation between the two countries, and both sides need to take serious measures to resolve this issue. 

During the visit to Pakistan, the Iranian delegation also met with Arif Ahmed Khan, Chief Executive, Trade Development Authority of Pakistan (TDAP) in Karachi.

In the meeting, the two sides emphasized the need to use solutions such as the preferential trade agreement, free trade agreement, and removing customs barriers for boosting trade relations between the two countries. 

Speaking on this occasion, the head of the Tehran chamber pointed out some of the obstacles in the development of economic cooperation between the two countries. Annual trade between Iran and Pakistan is as paltry as US$1.5 billion. 

Ahmad Khan noted that both Iranian and Pakistani authorities should realize that the development of trans-regional trade is subject to a boom in regional trade. Therefore, the two countries must take operational steps to improve trade relations.

Exempting Iranian Chabahar Port from US economic sanctions

It seems certain that the United States will not impose any sanctions on movement of Afghan transit goods through Iranian port Chabahar. This exemption will be aimed at consolidating Afghan-Indian economic relations.

The port has been constructed with the Indian assistance to boost trade between one of the largest regional economies, India, and landlocked and war ridden Afghanistan.

The exemption will be aimed at facilitating Afghanistan in reducing its dependence on Pakistan. If a contrary decision is made, it will increase the transit costs of Indian commodities and put further restrictions on Afghan merchants.

Some analysts believe reveal that imposing sanctions on Iran as the most secured and less expensive access route for Afghanistan implies imposing sanctions on Afghanistan as well.

As far as the India is concerned, the significant point is that the India’s commodities to be transit to Afghanistan are not extensive and voluminous enough to rationalize marine and road transportation expenses and to create a significant growth in India’s balance of trade.

Indian analysts are of the view that bearing in mind the trade volume of Afghanistan, Russia and Central Asian countries which altogether are more than 16 million tons and the insignificant share of Afghanistan, it could be concluded that without making possible the transportation of all India’s merchandise to above mentioned countries through Chabahar Port, the exemption of this port will not make any noticeable change in India’s trade.

Therefore, Chabahar Port’s exemption will only be a competitive advantage for India, if all Indian merchandise toward Afghanistan, Russia and Central Asian countries could be transported through Chabahar Port without any restriction in banking and insurance transactions.

The noteworthy point about Afghanistan is that the exemption of Chabahar Port will only be fruitful, if there is no restriction on entering and leaving Chabahar Port for vessels carrying Afghanistan’s merchandise; as well as commercial transactions of cargo owners, merchants and shipping lines, particularly banking transactions are done without limitation.