Islamabad, Tehran agree on text of proposed FTA

ISLAMABAD: Pakistan and Iran have agreed on the text of proposed Free Trade Agreement (FTA) aimed at enhancing bilateral trade and now list of items are being exchanged on which tariff will be reduced to zero or lowered.

This was disclosed by Ministry of Commerce while giving a detailed briefing on trade with Iran, issues of barter trade and non-tariff barriers. Commerce Ministry’s team, led by Commerce Minister, Jam Kamal Khan, Secretary Jawad Paul and other senior officials shared their views on the proposed agenda and questions raised by the Committee presided over by Senator Anusha Rahman.

Initially, a disagreement was witnessed between Chairperson Standing Committee and Secretary Commerce on several points which actually related to Federal Board of Revenue (FBR) on closure of Badini crossing point.

President, Quetta Chamber of Commerce and Industry(QCCI) shared concerns of Balochistan based businessmen who are facing problems in barter trade with Iran and impact of closure of Badini crossing point in trade with Afghanistan.

Secretary Commerce, Jawad Paul and Joint Secretary (FT-II) Maria Kazi acknowledged that Iran has imposed seasonal ban on some Pakistani items like mangoes and rice to protect its own growers. They said that these issues have already been raised with Iranian authorities. Pakistan’s exports to Iran worth $ 700 or $ 800 million are not being reflected in the country’s total exports as these items are traded through third country or informal trade.

On the issue barter trade with Iran, Secretary Commerce stated that the Ministry has drafted a new SRO in place of existing SRO 642(1) 2023 to facilitate barter trade in which five issues of business community have been sorted out as per their demand and recommendations of Joint Senate Standing Committee on Commerce and Finance in its meeting held on July 30, 2025 in Quetta.

The following issues were highlighted by the private sector: (i) verification of sanctioned/non-sanctioned products/entities by respective Pakistan Mission abroad; (ii) limited list of exportable/importable products; (iii) principal of “import followed by export; and (iv) absence of multiparty contract (s), ie, consortium.

Secretary Commerce informed the Committee that five amendments to the SRO 642 have been made which are as follows: (i) restriction of annexure of items under barter trade is being done away with and trade of whatever items is allowed under IPO/EPO are also being allowed in barter trade; (ii) Earlier, single entity was allowed for barter trade with Iran but now a consortium can also be established for this purpose; (iii) the condition of NOC for unbanned item from the Mission is being removed and now a private entity or consortium will issue requisite certificate; (iv) the clause of first import and then export with any form of trade (export or import); and (v) and net of goods has been extended to 120 days from existing 90 days. He, however, urged President QCCI, Muhammad Ayub to ensure that trade under barter system with Iran will flourish.

Commerce Minister Jam Kamal said he would also visit Iran next month to attend Joint Economic Commission (JEC) in which all trade related issues will be discussed.

Joint Secretary (FT-II) Maria Kazi stated that Federal Board of Revenue has agreed to give some allowance on the valuation of products to be traded under barter trade agreement with Iran.

Commerce Ministry also expressed willingness to resolve the issue of Badini cross point like Angoor Adda as an amount has already been approved by the CDWP for construction of infrastructure by 2027. However, trade can be restarted through containerization like it was done before closure. Commerce Ministry will also offer financial assistance to Afghan government for infrastructure inside Afghanistan.

Commerce Minister and Committee, however, opposed giving a role to Balochistan Development Authority (BDA) in the project because of its repute. The building of Chaman crossing point is ready for inauguration next month. Chairperson Standing Committee expressed her serious annoyance at the leadership of Federation of Pakistan Chamber of Commerce and Industry (FPCCI) for not initiating paper work to establish a joint trade chamber in China to facilitate the Pakistani exporters.

According to official press release the committee echoed the demand of chambers for the reopening of the Badini Border, which was opened and closed within 3 months of its opening in 2021 - Senator Anusha Rahman stressed that it is a significant matter requiring resolution at earliest and remarked that the border should be re-opened to facilitate trade that will improve livelihood of local communities as well.

Secretary of Commerce explained that trade was suspended due to Afghanistan’s government decision of withdrawal of customs staff. Regarding road infrastructure, he informed the committee that the budget for road construction has been approved.

The Committee recommended that the Ministry of Commerce and the Quetta Chamber of Commerce take up the matter with Afghan officials for the immediate resolution of the Badini Border re-opening issue.

She said facilitation of barter trade with Iran is essential to achieve the target of $ 10 billion bilateral trade as envisaged by the Prime Minister, Shehbaz Sharif.

On Pakistan-Iran trade, on the recommendations of Senate Standing Committee and Chambers of Commerce, amendment on Barter trade SRO on Barter were trade finalized to facilitate traders for barter trade with Iran, Afghanistan and Russia. This will allow not only individuals and companies but also consortia to engage in barter transactions. Imports and exports both will be allowed and the net-off period has been extended from 90 to 120 days. Moreover, the limited list of commodities to be imported or exported has been removed. Federal Minister for Commerce emphasized the need to expand Pakistan-Iran trade and involve the private sector to promote economic activity in border regions. It was highlighted by the chamber of commerce Quetta, that Pakistan imports around 150 items from Iran and exports only five items in return.

Senator Anusha Rahman highlighted that due to special attention of PM office, the protocol for maize and nuts has now been approved, and the subsequent export potential for Pakistan’s maize to China has been identified.

Trade and Investment Officer (TIO) in Beijing further informed the committee that the protocols have been sent for approval to the Joint Cooperation Committee (JCC), after which the process for company registration will begin.

While discussing the possibility of constructing cold storage facilities and an LPG terminal at the Chaman Border was also discussed. Chambers of Commerce were advised to submit proposals to the EDF for the construction of cold storage facilities. In attendance were Senators Bilal Ahmed Khan, Amir Waliuddin Chishti, Rahat Jamali, Federal Minister for Commerce Jam Kamal Khan, Secretary for Commerce Jawad Paul and other concerned officials of relevant department.—MUSHTAQ GHUMMAN