Iran links FTA with purchase of its petroleum products

ISLAMABAD: Though Tehran has indicated positive signals to enter into five-year strategic plan for trade and investment cooperation, but it has linked Free Trade Agreement with purchase of its sizeable petroleum products by Pakistan, a senior official privy to the development told The News. 

Pakistan currently purchases all the petroleum products from Kuwait Petroleum Company meaning that Islamabad authorities have put all the eggs in one basket and Iran wants Pakistan to also buy petroleum products from it and introduce diversification in import of POL products. 

However, Commerce Minister Khurram Dastgir Khan said Iranian authorities have verbally asked Pakistan to first purchase POL products and then initiate process to ink FTA, but Iran has not placed this demand in writing. 

The top sources said under proposed five-year strategic plan for trade and investment cooperation, Pakistan will also import oil and lubricants. They said the willingness by Iranian side to enter into five-year strategic plan for trade and investment cooperation is of paramount importance ahead of much touted visit of Iranian President Hassan Rouhani, which is scheduled on March 25-26. 

The importance of the Iranian visit has gained more momentum particularly in the wake of lifting of the US and UN economic curbs in phased manner, and the visit of Iranian president will herald the initiation of trade between the two countries in the Euro currency not in dollars as there still exist some US sanctions on Iran which will be phased out with the passage of time. 

Pakistan currently imports 74 MW of electricity from Iran and will also sign agreements for import of more 100 MW and 1000 MW of electricity from Iran. However, under existing PTA (preferential trade agreement), the trade with Iran is touching lowest ebb. The trade volume between Pakistan and Iran, which was at $1.163 billion in 2009 had drastically dwindled to just over $200 million in 2013. 

The official sources said Pakistani exports to Iran have tumbled to just $62 million in 2013 from $424 million in 2010. For the last one and half year, our fruits and vegetables are banned and now Iran has almost banned all the items. 

China being a sincere friend of Pakistan and to make its centerpiece of China-Pakistan Economic Corridor initiative successful at all costs, has advised top leadership of Pakistan as well as establishment to ensure friendly and peaceful ties with immediate neighbouring countries of Iran and Afghanistan. 

Top brass of Pakistan’s establishment has acknowledged the viewpoint of China owing to which Pakistan has kept itself away from Yemen uprising even after the pressure exerted by countries from Middle East to ensure peace with the neighbouring countries and avoid Shia-Sunni polarisation in Pakistan. 

Iran has banned the import of rice, kinno and other products from Pakistan owing to which the trade volume has tumbled to just $40 million and the minister is going to get PTA revived with the hope that the trade volume will increase to $400 million in one go. 

The official said in case the PTA gets restored, Pakistan’s meat export could immediately swell up to $100 million. The data and graph pertaining to the export of rice to Iran available with The News also shows that in 2008-09, rice export to Iran stood at $400 million which has alarmingly gone down to just $45 million in 2013-14. 

  Sensing the increasing influence of China in the region particularly after the resolve of Beijing to make Gwadar port commercially viable to make the CPEC a success, India recently sent a high-powered delegation comprising 14 officials headed by Indian commerce secretary Rajiv Kher to Iran. After the visit both the countries have decided to sign a Free Trade Agreement. In addition, India has prevailed upon Iran to allocate separate berth and cargo facilities at Chahbar Port for India so that it could have easy access for its goods to Central Asian States.