Iran’s flag is seen above its consulate building, with Pakistan’s flag in the foreground, in Karachi, Pakistan, January 18, 2024. PHOTO: REUTERS
Islamabad:
The government has instructed the Department of Commerce to engage in barter transactions with Iran, Russia and Afghanistan with care, diligence and caution due to the imposition of sanctions on different products and entities.
Several Iranian and Russian entities face US and UN sanctions, which remain key obstacles to how trade deals with Iran, Russia and Afghanistan can be carried out.
The Economic Coordination Commission (ECC) recently approved amendments to the B2B (business-to-business) exchange mechanism to promote bilateral trade, which had stalled due to several issues.
In a meeting, the Ministry of Commerce informed the economic decision-making body that, following a decision taken by the ECC, the ministry issued SRO 642(I)/2023 dated June 1, 2023, which notified the B2B exchange mechanism to enhance bilateral trade with Afghanistan, Iran and imported products of Russia.
The forum was informed that since its inception, there have been issues in B2B barter trade as highlighted by the business community and public bodies, which included products/entities subject to sanctions/non-sanctions by the United Nations (UN) and others, limited list of exportable/importable products and certification agreements by missions of Pakistan abroad.
Other challenges included the principle of ‘import followed by export’ and clearing the value of goods within 90 days of the issuance of the permit by the concerned Collectorate of Customs.
The ECC was informed that in order to address the gaps in the B2B trade mechanism, the Ministry of Commerce has been conducting wide consultations with public and private sector bodies for early operationalization of the trade mechanism (SRO 642(I)/2023). After detailed discussions, stakeholders comprising State Bank of Pakistan, Ministry of Foreign Affairs, Federal Board of Revenue and Pakistan Single Window agreed on a series of amendments.
These amendments included omitting the list of products and aligning them with the Export Policy/Import Policy Order in vogue, allowing private entities (two or more) to form a consortium, replacing verification by Pakistan’s overseas shipments with a commitment by the concerned Pakistani private entity/consortium and replacing authority-importex-port with authority-importex-port.
It was explained that comments were sought from the Ministry of Foreign Affairs, State Bank of Pakistan, Federal Board of Revenue and Pakistan Single Window on the proposed amendments and then, based on stakeholder consultation, it was shared with the Ministry of Law and Justice for review.
The Ministry of Commerce has requested approval of the draft SRO proposing amendments to the B2B trade exchange mechanism, duly vetted by the Ministry of Law, as proposed in paragraph 6 of the summary.
In the discussion that followed, it was clarified that all interested parties had supported the proposal. The CEC thoroughly discussed the case and while approving the proposal of the Ministry of Commerce, emphasized that utmost care, diligence and care should be exercised by all the organizations involved in the implementation of the modified exchange mechanism.
The ECC further directed that the Ministry of Commerce shall submit a detailed implementation and outcome report on the amended mechanism by July 2026.
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