ISLAMABAD, Oct 20: Pakistan and Iran have decided to start formal negotiations on free trade agreement (FTA) to increase the current volume of bilateral trade between the two countries.

Well-placed sources told Dawn on Monday that Commerce Minister, Humayun Akhtar Khan would hand over the draft agreement to his Iranian counterpart for seeking their views, suggestions and opinions on the draft treaty.

The minister is leaving for Iran with the Prime Minister on Tuesday.

After the perusal by the Iranian commerce ministry the draft treaty would be returned to Islamabad and a date would be fixed by the two sides to discuss the proposed changes in the agreement, sources added.

The statistics showed that the bilateral trade had remained heavily tilted in favour of Iran in the last few years. Pakistan’s trade deficit with Iran increased by 135 per cent in 2002-03 to $303.308 million against $129.031 million in the previous year.

According to the sources, the commerce minister would also urge the Iranian authorities to lift ban on import of mangoes, kinoos and wheat from Pakistan. The Iranian government had banned import of these items from Pakistan in 2000 for no obvious reason.

The minister would also meet the officials of the government trading corporation (GTC) to discuss measures for importing rice from Pakistan. GTC has already made a request to import around 8,000 tons of rice from Pakistan, which has yet to materialize.

Pakistan has also agreed to provide expertise to develop human resources of Iranian government on the various WTO agreements and related issues.

Islamabad also showed its willingness to establish a common border market, the sources said and added location for setting up such a market was likely to be identified during the visit.

According to the sources, the official delegation would also urge the Islamic Republic of Iran to consider for implementation the much awaited convention for avoidance of double taxation and prevention of fiscal evasion in respect of taxes on income between the two countries.

Pakistan and Iran had signed the agreement for avoidance of double taxation on May 27, 1999, said the sources and added the agreement has not been enforced as the formalities of exchanging of instruments of ratification by the two states was still pending.