ISLAMABAD, Aug 21: Pakistan and Iran have agreed to reduce customs duty on 647 tradable items under the preferential trade agreement (PTA). Official sources told Dawn on Saturday that the senior officials of the two countries finalized the lists of duty concessions and rules of origin for the implementation of the treaty in a meeting held recently in Tehran.

Pakistan and Iran had signed the PTA agreement in Islamabad on March 4, 2004.

According to the officials, it was agreed that Pakistan will give duty concession on 338 items to Iran, while Tehran will give duty concession on 309 items to Islamabad.

Earlier, Pakistan sought duty concessions on around 534 items, while Iran demanded duty concessions on 384 items from Pakistan. This agreement would be finally converted into a free trade agreement (FTA), added the officials.

The agreement, a copy of which was made available to Dawn on Saturday, proposes to strengthen the economic and political relationship between the two countries, promote a more predictable and secure environment for sustainable growth of trade and expand mutual trade through exploring newer areas of cooperation between the two countries.

According to the agreement, Pakistan would also provide technical assistance to Iran for getting accession to the forum of World Trade Organization (WTO).

The two countries would be bound to remove all non-tariff barriers and any other equivalent measures on the movement of goods. They would exchange lists of para-tariffs and would not increase in the existing para-tariffs or introduce new or additional para-tariffs without mutual consent.

They would also not increase their respective rates of preferential tariffs without mutual consent and would consider further liberalization of their bilateral trade through future consultations.

Both countries would also accord unconditional treatment, which was no less favourable than that accorded to any other non- contracting party with regard to all the rules, regulations, procedures and formalities applicable to trade.

Under the agreement, a joint trade committee should be established consisting of officials of the two countries. The committee will be headed by vice-minister or federal secretary of commerce from the two sides. It would meet initially within six months following the coming into effect of this agreement and then at least once a year.

Any dispute arising from the interpretation or application of the agreement would first be settled amicably through bilateral consultations.

In case the dispute was not settled amicably, the joint trade committee would refer it to an arbitration panel. The joint trade committee would determine the procedures for the arbitration panel.