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February 11, 2020

Pakistan, Iran sign accord on electronic trade data exchange

Business

February 11, 2020

ISLAMABAD: Tax authorities of Pakistan and Iran on Monday agreed to develop a mechanism for electronic exchange of bilateral trade data in a bid to curb misreporting and explore optimal economic potential.

The Federal Board of Revenue (FBR) signed a memorandum of understanding (MoU) on electronic exchange of data with Iran Customs Administration. Acting Chairperson Nausheen Javaid Amjad witnessed the ceremony of signing between Member (Customs-Policy/Operation) Javed Ghani and Iranian official Haideh Bagheripour.

Under the agreement, the two countries would exchange values/documents on real time basis in case of the goods to be imported/exported and to roll out a fully automated clearance system, having advance information, about goods/passengers at Taftan-Mirjaveh border stations (as a pilot project) and at other border stations in a phased manner.

Amjad said implementation of the MoU would have a number of benefits for both Iran Customs and FBR as it would ensure availability of advance information about values, descriptions and quality of the goods to be imported into Pakistan from Iran and reduce costs on clearance of goods at the borders.

“Moreover, accurate valuation of the imported goods will lead to realisation of greater revenues,” she said in a statement.

Iran and Pakistan signed a preferential trade agreement in 2006 to boost the bilateral trade. However, the increase was not sustained as it began to fall after 2008 with western sanctions tightening against Iran. As of 2018, the bilateral trade volume stood at $369 million, which was less than the trade value in 2003, according to Pakistan Business Council (PBC).

Pakistan has had a trade deficit with Iran since 2003. Exports peaked in 2008 at $426 million and have been on a decline since then. As of 2018, exports to Iran stood at less than $23 million. More than three-fourth of exports to Iran are generated by a single product i.e. coloured paper. From a peak of almost $956 million in 2009, imports from Iran came down to $374 million in 2018. Only four products constitute more than 56 percent of Pakistan’s total imports from Iran, PBC data showed.

The country exports paper and paperboard, rice and stationary products to Iran while it imports liquefied petroleum gas, other mineral fuels and electrical energy from Iran. The potential for trade between the two countries is immense with the top 20 high potential export items for Pakistan having a potential of $1.9 billion. On the import side, the top 20 items had an import potential of $7.2 billion, according to PBC.

Ambassador of Iran in Pakistan Ali Hosseini said there are a number of important areas wherein both customs administrations could work together in the best interests of Iran and Pakistan.

In 2018, Pakistan and China also agreed to make electronic exchange of data information operational between the customs authorities to check menace of under-invoicing ranging up to $6 billion per annum between the trade partners.

Pakistan and Iran signed the first customs mutual assistance agreement in 2004 under which FBR was to make progress on a number of important areas for protecting economic interests of Pakistan involved in bilateral trade. Subsequently, a series of meetings were held between the two sides.

Ghani said the proposed cooperation through the MoU would go a long way in fostering a long-term relationship between the customs administrations and would enable them to successfully cope up with the challenges that they are facing. “Implementation of this MoU will ensure optimum trade facilitation through quick examination / assessment of the imported goods and more transparency and lesser human interface,” he said.

FBR official assured Iran customs of cooperation from Pakistan Customs on any area pertaining to mutual assistance and collaboration.