Rouhani''s upcoming visit: government seeks to persuade Iran to enter into FTA

Pakistan is to urge Iran for early inking of Free Trade Agreement (FTA) during the scheduled two-day visit of Iranian President Hassan Rouhani from March 25, 2016, well informed sources told Business Recorder. Both sides will also discuss progress on a ''five-year strategic plan'' for comprehensive trade and investment cooperation. Last year, Islamabad had shared the draft of a five-year strategic plan with Tehran.
The proposed plan included the simplification of customs procedures, enhanced cooperation between customs authorities of both sides, opening more border points, multi-modal infrastructure development and improved connectivity.
The two sides will make use of all available instruments for trade promotion including participation in trade fairs and exhibitions, dissemination of commercial intelligence and exchange of business delegations. Both Pakistan and Iran will create a business friendly environment for products, services and investment originating from the other side.
Pak-Iran PTA was signed on March 4, 2004 and implemented on September, 2006 and has been operational since.
Under the PTA, Pakistan has granted tariff concessions to Iran on 338 tariff lines (HS 05), while Iran extended concessions on 309 tariff lines. Average tariff concessions are around 8 per cent. Pakistan''s major products covered under the PTA include rice, fruits, cottons, cotton yarn, pharmaceutical products and cutlery while Iranian products include chemicals ,vegetable, fruits ( fresh and dry), spices, sea food etc.
Initially, PTA gave a significant boost to Pakistan''s exports to Iran and increased bilateral trade as well. In 2008-09 and 2009-10, Pakistan''s bilateral trade with Iran crossed the figures of $ 1 billion. Pakistan''s exports touched their peak in 2008-09 at $ 400 million. However, there has been a gradual decline in bilateral trade and Pakistan''s exports to Iran since then due to international sanctions which have been lifted recently. Smuggling of Iranian products to Pakistan especially oil will also come under discussion at the highest level. Iran has already urged Pakistan to strengthen enforcement on the border.
The source said it was decided in the meeting of the 5th Pak-Iran Joint Trade Committee (JTC) held in Tehran in May, 2009 to deepen tariff concessions. Pakistan forwarded a wish list of 45 items to Iran and Tehran also exchanged a list of 68 tradable items. The lists were reduced to 12 priority items from Pakistan and 11 priority items from Iran.
The first meeting of the Pak-Iran Joint Working Group on Trade was held on 16-17 July, 2012 in Tehran wherein deepening of the PTA was also on the agenda. However, during the meeting, the Iranian side expressed their desire to revise the list of 11 and 12 items previously finalised by the experts of the two countries. The Iranian side also assured that it would submit the revised lists for concessions within two months but the lists have not been received to date.
Pakistan during the meeting of JWG on Trade held July, 2012 also submitted a draft text of the proposed Pak-Iran FTA with the request for consideration and exploring the possibility of entering into a FTA.
The Iranian side has now categorically informed us that due to economic hardships, they cannot enter into an FTA with Pakistan. Iran''s only other FTA is with Syria which is also like our PTA, politically viable but economically dysfunctional.