September 19, 2006	Tuesday	Sha'aban 25, 1427

ISLAMABAD, Sept 18: Iran's substantial increase in customs duties on various products before ratification of the preferential trade agreement (PTA) has neutralised the benefits of the accord for Pakistani export- oriented products.

Well-placed sources told Dawn on Monday that the pre-PTA customs rates, as negotiated and agreed by both sides, had been raised upward before considering for actual reduction to promote import of products from Pakistan under the agreement.

The sources said that Iran had increased tariff on some products mostly of Pakistani interests. Besides, all kinds of duties had been merged into a single tariff, which might also result in increase of overall rate of duty on all importable products.

When contacted the commerce ministry official spokesperson Additional Secretary Nasim Qureshi said that the ministry had not so far received any official intimation in this regard. "We are still negotiating. I am not in a position to comment right now," he added.

Pakistan and Iran had notified reduction in customs duty on 772 items to be imported under the PTA, which became effective from September 1, 2006.

The two countries had already finalised and ratified the rules of origin and other instruments of the agreement.

The sources said that Iran had raised the tariff without informing the contracting partner--Pakistan. It would substantially reduce the margin of preferences for Pakistani products like Kinno and rice etc under the PTA.

Pakistan has already offered maximum concessions in PTA to Iran on a large variety of products. These include shrimps and prawns, eggs for hatching, natural honey, vegetables and fruits, black tea, soyabean seeds, sunflower seeds, betel leaves, RBD palm oil, sweetmeat, mineral water, aerated water, salt, concrete aggregates, petroleum bitumen, marble, granite, chemicals, acids, automobile parts and textile related products.

The concession on these items would further increase the trade deficit as the current trade is already heavily in favour of Iran. The sources said that it would be very difficult for Pakistan now to convince the Iranian government for further expanding the PTA to reduce the trade gap.

They said that Iranian exports enjoyed a smooth access to the Pakistani markets, while Pakistani exporters were facing a number of difficulties to have an access to the Iranian market, which needs to be addressed to achieve the trade target.

The sources said the only way to reduce the trade gap was for Iran to simplify visa procedure, remove tariff barriers, improve attestation of documents and facilitate fruit and rice exports from Pakistan.