Pakistan is revising trade exchange mechanism with Iran, Russia and Afghanistan

• Trade-in period extended from 90 to 120 days.
• Private companies are allowed to form commercial joint ventures.
• The ECC approved amendments to the mechanism earlier this month.

Pakistan has implemented a revised Business-to-Business (B2B) Mechanism with Iran, Russia and Afghanistan following key amendments aimed at making bilateral trade more business-friendly.

The Ministry of Commerce issued a notification, which eased several conditions for barter trade with the three countries.

The requirement for mandatory exports before imports has been relaxed, allowing simultaneous import and export transactions. Private actors have also been allowed to form trade facilitation consortiums under the revised framework.

The settlement period for swap transactions was extended from 90 to 120 days, while the list of specific items allowed under the mechanism was removed.

The updated framework has been aligned with the general mandates of the export and import policy to improve consistency and implementation.

Pakistan’s ambassador to Iran Muhammad Mudassir Tipu wrote to X today: “I am happy to share that Pakistan has issued a new SRO aimed at promoting barter trade between Pakistan and Iran.”

In a detailed post, he said: “After an exhaustive consultation process — many concerns of the business community of both Iran and Pakistan have been taken into account and are being addressed in the new SRO.”

“We hope it will significantly elevate Pakistan-Iran trade and diversify its base. I urge the industry and business community of both countries to take full advantage of the new SRO and help expand bilateral trade. I also urge Pakistan-Iran Chambers and trade bodies to share this SRO with their members, enabling them to gain mutually beneficial commercial dividends.”

The measures are aimed at making the trade exchange mechanism more practical and business-friendly, sources said Geo Newsadding that Pakistan had initially implemented the B2B Exchange Mechanism with the three neighboring countries in June 2023.

However, its enforcement faced multiple operational challenges, as various business groups and stakeholders identified problems associated with restrictions on approved and non-approved products and a narrow list of tradable goods.

Stakeholders also raised concerns over the requirement of contract verification from Pakistani shipments abroad, the condition of export before import and the 90-day settlement limit for customs-approved transactions, which had slowed down trade activities and created difficulties for traders.

To address these challenges, the commerce ministry held consultations with public and private bodies, including the State Bank of Pakistan (SBP), Ministry of External Affairs, Federal Board of Revenue (FBR) and Pakistan Single Window (PSW), before finalizing the amendments.

The Economic Coordination Committee (ECC) of the federal cabinet reviewed and gave its nod to the draft Statutory Regulatory Ordinance (SRO) based on the ministry’s recommendations earlier this month.