ISLAMABAD: Pakistan and Iran have agreed to initiate talks on the much-awaited free trade agreement (FTA) with an aim to finalise the treaty by end-December 2017.

The talks on FTA, which will cover trade in goods, services and investment, will start in June this year. The objective is to boost bilateral trade to $5 billion by 2021.

The agreement is part of the five-year strategic trade cooperation (2016-2021). Commerce Minister Khurram Dastgir Khan and Iranian Minister for Industry and Trade Mohamad Reza Nematzadeh have inked the strategic document in this regard.

On Saturday, it was agreed that the Joint Working Group (JWG) established in April 2015 will act as trade negotiation committee (TNC) for the FTA.

Both sides also agreed on the composition of the TNC, which will be headed by Iran’s deputy minister of industry, mine and trade and Pakistan’s commerce ministry’s additional secretary.

The first meeting of JWG will be held in June in Tehran to discuss the framework agreement. The rules of origin, tariff reduction modalities and ratification procedures will be agreed upon in the subsequent rounds of negotiations.

Before the meeting, Pakistan will share a draft framework of the FTA with Iran by the end of April 2016. The Iranian side will convey the response on the draft text by the end of May 2016.

The framework agreement will deal with subjects such as trade in goods, trade facilitation, rules of origin and dispute settlement. The FTA framework will set modalities for tariff reductions on 80pc of tariff lines. The rules of origin, concession lists and negative lists shall be accordingly exchanged and finalised within the agreed timeframe.

The FTA will take care of the monitoring and implementation mechanisms. It will be ensured that an inbuilt mechanism is provided for dispute settlement as well as administrative coordination in addressing operational issues after the implementation of the FTA.

The concessions as agreed earlier under the preferential trade agreement (PTA) will continue to operate till signing of the FTA.

For the free trade agreement to deliver desired results, both sides will eliminate non-tariff barriers. Both sides will strengthen cooperation on sanitary and phytosanitary (SPS)-related matters. An agreement on cooperation in the field of veterinary and animal health between will also be finalised and signed preferably during the first half of 2016.

The two countries will enter into a mutual recognition agreement (MRA) so the standards used by one country are given recognition in the other. The negotiations on the proposed agreement will start in three months.

Both sides under the strategic plan agreed to try to open two more crossing points on Pakistan-Iran border, preferably by the end this year. Two potential crossing points are at Gabd (Pakistan) — Reemdan (Iran) and Mand (Pakistan) — Pishin (Iran).

Moreover, compliance with international standards by trucks entering into the territory of the other country will also be ensured.

A memorandum of understanding for enhanced cooperation between the Customs’ administrations of Iran and Pakistan will be signed within one year of the approval of the five-year trade cooperation plan.

Published in Dawn, March 27th, 2016