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Businesses oppose free trade agreement with Iran

By Salman Siddiqui
March 25, 2016

KARACHI: A leading business association on Thursday opposed the signing of the free trade agreement (FTA) between Pakistan and Iran in haste on the eve of a scheduled visit by the Iranian president. 

“FTA does not necessarily carry advantages for Pakistan,” said Atif Bajwa, chairman of the Pakistan Business Council (PBC), speaking at a forum.

The PBC represents around 48 large local and foreign companies. It organised the forum, in collaboration with the ministry of commerce, to discuss the opportunities of business deals with Iran. 

“A lot of research work needs to be done (before the agreement),” Bajwa said.

He said Iran took far greater advantages of the existing preferential trade agreement.

PBC chief said a great difference between import and export figures reported separately by the two countries has been found. He called for the need of exploring the reason behind the disparity.  He, however, marked the lifting of world sanctions on Iran in January as “a fundamental transformation in the region and economic scene for Pakistan”.  He urged the business community to take full advantage of business opportunities in the neighboring country.

Iran is the second largest economy in the Middle East and North Africa region, with exports of nearly $74 billion and imports of $54 billion in 2014. Pakistan’s top potential exports to Iran include rice, cotton and petroleum preparations with a potential of $1.6 billion, $123 million and $100 million, respectively.  Iran Consul General Mehdi Sobhani said the two countries enjoy good relations for year. “Unfortunately, trade and economic ties are not on equal basis in this era of inter-dependents,” Sobhani said.

He said economic sections were affecting the economic ties, “but they have been lifted now and there will be no hindrances anymore.”

Iranian envoy said Pakistan can put an end to the energy crises after completing the part of the gas pipeline on its side as well as buying electricity from Iran.

Executive Director Operations Ashraf Khan at the State Bank Pakistan said efforts on both the sides of the border have been made to open banks’ branches in each other countries. “Iran has again recently approached to open its bank's branch in Pakistan. We have shared the criteria. The same is from Pakistan financial side,” Khan said.

Despite lifting of sanctions, the two counties have not been allowed to do trade in U.S. dollar. “Asian clearing mechanism can be used for the settlement of trade and investment,” Khan added.  Senior official Rabiya Javeri Agha at the Trade and Development Authority of Pakistan invited Iranian quarantine officials to Pakistan to inspect and conduct audit of Pakistan’s rice and meat processing and exporting firms.

In the past, Iran certified two meat and nine rice processing and exporting companies in Pakistan. However, the time-barred certificates have been expired and need to be renewed.

Agha said annual rice demand in Iran stands at 3.5 million tons. The country produces only two million tons. The deficit of 1.5 million tons provides a big room for Pakistan rice exporters.

Chief Executive Officer and Managing Director Nadeem Karamat of Pakistan Iran Investment Company said Iran is as advanced country as any developed country in the world with per capital income exceeding $5,000.  Karamat said Pakistan’s businessmen must take advantage of the developed business sector in Iran.