THIS is with reference to the report ‘Trucks stuck at Iranian border irk Senate panel’ (Feb 27). The recent incident of 600 Iranian trucks being stranded at the Pakistan-Iran border highlights that the economic sanctions imposed by the United States and the lack of banking channels are not the only barriers hindering bilateral trade between the two countries.

In reality, several other factors are preventing trade growth between these neighbouring countries, which otherwise share numerous commonalities. First, Iran’s trading practices remain somewhat outdated, relying heavily on both tariff and non-tariff barriers. Furthermore, Iran has not yet become a member of the World Trade Organisation (WTO) and has largely failed to adopt modern trading procedures.

Under Iran’s trading system, importers must first register their import requests with the Ministry of Commerce, which then issues an import permit valid for six months. In some cases, approval from other ministries or departments is also required. The Iranian government occasionally halts the processing of import permits.

For example, no import permits are granted for Pakistani rice and kinnow from July to December. Tariffs on goods like rice are set at approximately Rs11,440 per tonne, while various seeds are taxed at Rs15,564 per tonne.

It is unfortunate that despite being one of the largest importers of denim, Iran’s imports of textiles and garments from Pakistan are minimal.

The Iranian government has imposed high tariffs on Pakistan’s key export products, including textiles, garments, surgical goods and pharmaceuticals, where Pakistan holds a significant comparative advantage. Due to these high tariffs, many Iranian importers are compelled to source Pakistani goods through Dubai.

In addition, the lack of economic integration and regional connectivity negatively impacts bilateral and regional trade. The two countries have not yet designated transit stations, and issues, such as truck transport, clearance obs-tacles, gate closures, and visa requirements for drivers, continue to exacerbate the situation. The trade from Central Asian Republics and Iran through Pakistan has not yet commenced due to these and other legal hiccups.

Against this backdrop, the latest chall-enge as to whether or not the non-Iranian goods imported from abroad in Iran for subsequent re-export to Pakistan could qualify for the normal barter trade has further disturbed the trade affairs, casting negative implications for the national economy.

The non-clearance of cargo that has already arrived at the border, based solely on the origin of the goods, can be resolved by the grant of a one-time waiver of the banking channel requirement by the Ministry of Commerce subject to payment of applicable duties and taxes. It is noteworthy that all the shipments entering from Iran are exempted from the requirement of the payments made through banking channels, treating it as a barter trade.

As for the future consignments, senior officials from both countries should address the issue and resolve the conte-ntious rules of origin, which require the submission of an import form issued by banking authorities.

Ultimately, bilateral trade between the two countries will thrive only if they work to promote economic integration, remove tariff and non-tariff barriers, and ensure a smoother flow of goods, services and people. Without these measures, past initiatives between the two countries will fail to yield any meaningful result.

Shahid Ali Abbasi
Karachi

Published in Dawn, March 18th, 2025