Trade stifled as Iran imposes high tariffs on Pakistani goods

Pakistan and Iran have faced significant challenges in expanding their bilateral trade, primarily due to various economic barriers. Today, reports highlight the ongoing issues faced by 600 Iranian trucks stranded at the Pakistan-Iran border, further drawing attention to the broader systemic issues at play. Economic sanctions from the United States certainly affect trade, but there are additional obstacles stemming from outdated trading practices, high tariffs, and inefficient import procedures within Iran. Iran relies on a cumbersome trade system that necessitates the approval of the Ministry of Commerce for import requests, which includes a permit valid for six months. Compounding this are instances where the Iranian government halts the issuance of permits for certain goods, such as Pakistani rice and kinnow during particular months. Additionally, the high tariffs applied to key Pakistani exports, such as textiles and surgical goods, have discouraged Iranian importers from sourcing these products directly from Pakistan. Instead, many turn to Dubai to acquire Pakistani goods, circumventing the arduous import process, which results in lost revenue for Pakistan. The lack of designated transit points between the two countries exacerbates these issues. Trade routes through Pakistan that would allow for the transport of goods from Central Asian Republics and Iran have yet to commence due to ongoing legal obstacles. The requirement for products to clear through banking channels also complicates matters, particularly for non-Iranian goods re-exported to Pakistan. Moreover, the political and economic context surrounding these trade relationships still needs resolution, as conflicting rules surrounding the origin of goods have raised tensions and uncertainty. To resolve these challenges, it has been suggested that the Ministry of Commerce should consider granting one-time waivers for the banking channel requirement on cargo already arrived at the border, ensuring duties and taxes are paid. This could facilitate better trade conditions and ultimately encourage both countries to work towards eliminating tariff and non-tariff barriers, reinforcing the idea that economic integration is essential for thriving trade relations in the future.