KARACHI: Pakistan and Iran aim to boost trade to $10 billion, but the bilateral trade plummeted to almost zero during the first 10 months of the outgoing FY24.

The State Bank’s latest trade data showed a decade-long trade decline between the two countries, with exports and imports hitting zero in FY22. Trade picked up slightly in FY23 when exports were $75,000, but imports were zero, showing no interest from both sides despite great potential for trade.

Exports dropped to just $11,000 during the first 10 months of the current fiscal year compared to $74,000 in the same period last year.

The late Iranian President Raisi, during his visit to Pakistan in April, expressed a willingness to increase bilateral trade to $10bn. The financial year FY17 was relatively better for the trade between the two countries as the exports were $29.79m while the imports were $0.22m.

Both countries keen on boosting volume to $10bn

Since the US sanctions were imposed, trade with Iran has fallen drastically to zero. Prime Minister Shehbaz Sharif is willing to boost trade ties with Tehran, but the US pressure will not allow a breakthrough. Reports in the media suggest that a trade delegation is expected to visit Tehran soon.

Despite sanctions, India remained Iran’s biggest trade partner and benefited from low-priced oil imports and exports of Indian products. New Delhi refused to accept any pressure. Iran signed a 10-year agreement with India to run Chahbahar port, which is considered a competitor to Gawadar port in Balochistan, the closest port to feed the Middle Eastern Arab countries.

Illegal trade thrives

However, illegal trade has continued for decades, and recently, it increased to its highest level when Iranian oil found its way into major cities and penetrated deep inside Pakistan. At the same time, the smuggling of dollars to Iran also alarmed the Pakistani authorities, and a crackdown was launched to stop both the smuggling of oil and dollars.

Negligible trade reflects poor political and economic relations between the two countries. Analysts were not hopeful that Pakistan could take a step forward to increase trade with Iran, while the US has recently expressed reservations regarding the possible improvement in trade relations. Pakistan has so far failed to fulfil its part of the work on the Pak-Iran gas pipeline.

Recently, the Public Accounts Committee said the country would have to pay a penalty of $18 billion if it did not go ahead with the gas pipeline project.

Published in Dawn, May 29th, 2024