News ID: 202077
Published: 0308 GMT October 09, 2017

Pak-Iran FTA draft almost finalized

Pak-Iran FTA draft almost finalized

Pakistan and Iran are close to finalizing the draft of free trade agreement (FTA), a trade officer of the Commerce Ministry of Pakistan said, adding that the next meeting is expected to reach an understanding on the remaining issues.

The non-availability of a payment mechanism casts a shadow on the viability of the much-awaited agreement, reported.

In April 2017, officials of State Bank of Pakistan’s (SBP) visited Iran and signed a banking payment agreement. Based on this agreement, the central banks of the two countries will have to authorize banks for undertaking trade transactions.

The Iran-Pakistan Preferential Trade Agreement (PTA) was signed on March 4, 2004. The agreement came into force on Sept 1, 2006 and has been operational since then.

Under the existing PTA, Pakistan utilized concessions on 17 tariff lines out of 334 tariff lines in 2016. Due to this utilization, Pakistan has provided a wish list of 153 tariff lines to Iran and requested deepening the margin of preferences (MoP) on 22 items which are already in the PTA.

To reciprocate, Iranian also provided a wish list of 80 items seeking an MoP from Pakistan.

Rice has the highest trade potential among Pakistan's exports to Iran. In 2009, rice exports constituted 80 percent of Pakistan's total exports to Iran.

Other products with a high trade potential are medical instruments, cotton fabric and woven fabric of cotton.

The data compiled by Pakistan showed exports worth $36 million and imports of $284 million.

Currently, 'hundi' and 'hawala' are the most popular mode of payment used for trade between the two countries.

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