ISLAMABAD, June 2: Pakistan and Iran have agreed to reduce customs duty by an average 18 per cent on 647 tradable items under the preferential trade agreement (PTA). An official told Dawn on Thursday that the federal cabinet had formally ratified the PTA with Iran recently. Following the ratification of the agreement by Iran, it would be formally put into an operation between the two countries.

Pakistan and Iran had signed the PTA in Islamabad on March 4, 2004, which was awaiting the finalization of the list of items and its subsequent ratification by the two governments. Under the agreement, Pakistan would give duty concession on 338 items to Iran, while Tehran would give duty concession on 309 items to Islamabad.

Pakistan offers concession in import duty to Iran mainly on fruits and vegetable, tea, seeds, palm oil, minerals, chemicals, plastics, articles of rubber, article of apparel, glassware, iron and steel and some machinery parts. Iran will give duty concession to Pakistan on fruits and vegetables, pharmaceutical products, plastic products, rubber, yarn, fabrics, articles of apparel, bedlinen, footwear, sanitaryware, cutlery, some parts of machinery, and rice.

According to the PTA, Pakistan would also provide technical assistance to Iran for getting accession to the World Trade Organization. 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.

Both the countries 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.

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