Islamabad, Tehran agree to fine-tune PTA

Pakistan and Iran have agreed to streamline dysfunctional Preferential Trade Agreement (PTA) and expand its scope prior to finalisation of Free Trade Agreement (FTA), well-informed sources told Business Recorder. This consensus was evolved at a recent meeting of Pak-Iran Joint Economic Commission (JEC) held in Tehran. Pakistani team comprising 16-17 officers was led by Minister of State for Frontier Regions, Lieutenant General Abdul Qadir Baloch (Retd), in place of the commerce minister.
The sources said an Iranian Trade Negotiating Committee (NTC) is expected to visit Islamabad in June to make the dysfunctional existing trade pact active and expand its scope. According to sources, talks on FTA, which have been pending for the last one year, will be held after elections in Iran. Pakistan has also urged Iran to remove non-trade barriers which are discouraging Pakistani products.
Iran, sources said, however, has agreed to allow import of Pakistani mangoes during the next season after an Iranian team will inspect hot water treatment facility. Iran has also agreed to import Pakistani rice, scope of which is very wide. The sources said both countries have not finalised the names of correspondence banks in the meeting because central banks chiefs of both the countries were in Washington to attend spring meetings of the World Bank and the International Monetary Fund (IMF).
State Bank of Pakistan (SBP) signed a Banking and Payment Arrangement (BPA) with Iran's central bank, Bank Markazi Jomhouri Islami Iran (BMJII), on April 14, 2017 in Tehran. Deputy Governor SBP Riaz Riazuddin and Vice Governor BMJII signed the agreement on behalf of their central banks.
The BPA agreement will be effective not later than two weeks and will remain valid for twelve months from its effective date while being extendable upon mutual written consent of the both countries. According to sources, central banks of both countries have sought applications from banks which are interested in opening of branches, adding that this process is expected to be completed within weeks.
"Opening of branches by Pakistani and Iranian banks is a key to start formal trade which was suspended due to restrictions on Iran," the sources maintained. The issue of Rs 20 billion of Khadim Ali Shah Bukhari Bank also came under discussion. This issue has been soaring since long and Iran is concerned over it due to non-resolution of the matter.
Pakistani delegation also informed the Iranian side that as restrictions are removed on Iran, Pakistan will soon start work on suspended work of Iran-Pakistan Gas Pipeline after it hires a company for this purpose. Pakistan was of the view that it suspended work on the basis of force majeure clause.
On the issue of Iranian crude oil procurement for refineries, Pakistan took the stance that PSO procures oil on the basis of tenders. Iran was offered to take part in tendering process. The sources said both sides also discussed issues related to electricity. Presently, Pakistan renegotiated tariff of 104MW of electricity presently being imported from Iran. Pakistani officials also negotiated transmission line issues for additional 100MW. However, Pakistan did not express enthusiasm on purchase of 1000MW and 3000MW electricity from Iran.
According to sources, both sides will also discuss ways and means to reactivate Pak-Iran Investment Company. Co-operation for SMEs and issues with Iranian ministries of health, agriculture and ports and shipping corporation will also come under discussion.
Both sides also discussed opening two more land border stations, improvement of infrastructure at Taftan and co-operation in railways, besides laying of optic fibre cable. Pakistan has also urged Iran to take measures to discourage smuggling of livestock and rice from Pakistan, the sources said, adding that massive duty on rice and livestock has made smuggling a profitable business.