ISLAMABAD: Pakistan has decided to initiate a free trade agreement (FTA) with Iran in the wake of lifting of sanctions on Tehran.

In a meeting with the newly-appointed Ambassador of Iran to Pakistan Mehdi Honardoost on Tuesday, Commerce Minister Khurram Dasatgir Khan said Pakistan was interested in negotiating an agreement with Iran.

“The draft of the FTA template will be forwarded to the Iranian authorities concerned as soon as they express their willingness,” the minister added.


The banking sectors of Pakistan and Iran will establish active linkages within weeks to facilitate traders


He said the lifting of sanctions has provided Pakistan with a historic opportunity to raise mutual trade and investment as leaders of the two nations envisioned in a 2014 meeting.

The next logical step after a preferential trade agreement is an FTA and Pakistan couldn’t find a better time to initiate negotiations on a new trade agreement, he opined.

“New circumstances merit new agreements and enhanced cooperation for the mutual benefit of the two neighbours,” he added. The banking sectors of the two countries will establish active linkages within weeks to facilitate traders to channel their payments, the minister said.

“In the past few years, lack of recognised and trustable payment mechanism through banks proved to be the single largest factor hindering bilateral trade,” he added.

Bilateral trade with Iran, which was nearing $1 billion, fell drastically as a result of sanctions and the unwillingness of banks to finance trade.

“The last hurdle in resuming smooth trade relations between the two countries has been removed, providing an opportunity to implement the projects which have been in limbo for the last few years,” the minister opined.

“Pakistan wants more predictability in tariffs on agricultural produce and products from Iran. Iranian duties on agriculture fluctuate widely depending upon the time of harvest ranging from on-seasonal highs to off-seasonal lows. The two sides need to agree on sanitary and phyto-sanitary standards as this proves an unwanted barrier in bilateral trade,” the minister informed the Iranian ambassador.

He hoped the conclusion of an FTA between Pakistan and Iran and inclusion of Iran back into the world trading system would bring more predictability and clarity and the seasonal shifts in duties and trading pattern would give way to surer trading regime.

The commerce minister informed that Pakistan has plans to construct three border posts along the Pakistan-Iran border on modern lines to facilitate the land trade.

“These posts will be linked through a single road which would be further connected with the main arteries leading north,” he explained.

Ambassador Honardoost showed his government’s resolve to reactivate trade relations after the removal of sanctions, in particular with neighbouring countries.

Published in Dawn, January 20th, 2016

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