Direct shipping line prerequisite to Iran-Pakistan trade boost: Senior merchant
A direct shipping line with Pakistan is needed to unlock untapped trade potential between Tehran and Islamabad, a senior Iranian businesswoman said on Saturday, as President Masoud Pezeshkian arrived in the neighboring country for an official visit.
Fahimeh Damroudi, the secretary general of the Iran-Pakistan Joint Chamber of Commerce, told Iran Daily that the lack of maritime connectivity was holding back bilateral trade.
“One of the main obstacles to developing trade with Pakistan is the absence of a shipping line and direct maritime transport for the Pakistani market, which must be established by both sides,” Damroudi said.
Iran’s president, who has made the formation of stronger ties with Pakistan a foreign policy priority of his government, said the two countries aim to increase their annual trade volume to $10 billion, nearly triple the current level.
Damroudi believes the goal is realistic, if longstanding barriers are dismantled and free trade comes into force.
"The two sides have announced that they want to establish free trade. If Iran-Pakistan free trade is established and tariffs on products are lifted, this figure could be achieved," she said.
Damroudi noted that talks had been ongoing for years between the two sides to hammer out the technicalities of a free trade agreement.
At present, Tehran and Islamabad operate under a preferential trade agreement (PTA), she said, but the PTA would become redundant once a full free trade deal was implemented.
According to her estimates, trade could reach the $10 billion mark within five years if key infrastructure and policy measures fall into place.
“They include streamlined customs procedures, improvements in transportation, and easing visa issuance from Pakistan for Iranians.”
The senior Iranian businesswoman said Pakistan ranked as Iran’s fourth-largest trade partner among neighboring states last year.
However, she pointed out that Islamabad would become Iran’s second-largest trade partner if trade hit $10 billion annually.
Pakistan’s main exports to Iran include rice, oilseeds, live livestock, beef, lamb, and tropical fruits such as mangoes. In return, Iran’s exports largely consist of dates and dried fruits.
Iran maintains significant trade surplus
Meanwhile, official data show Iran maintains a substantial trade surplus with Pakistan, with its exports valued at 3.5 times greater than Pakistan's exports to Iran, according to the Trade Promotion Organization of Iran (TPO).
Presenting a report on bilateral trade during an interview with IRNA, Hamid Reza Karbalaei Esmaeili, deputy for the Indian Subcontinent at the TPO, stated, "Tehran-Islamabad trade has an upward trend, increasing by 13.6% in the Iranian year 1403 (began on March 20, 2023) compared to the previous year (1402)."
He estimated the volume of trade between the two countries in the year 1404 at $3.129 billion, adding, "Of this amount, Iran's exports were approximately $2.423 billion, while imports from Pakistan were recorded at $706 million."
The TPO deputy for the Indian Subcontinent noted, "In the first three months of the current [Iranian] year (1404), the total volume of Iran's trade [with Pakistan], including exports, was $594 million. This figure was about $704 million in the same period last year, indicating a decline in trade."
"In the first quarter of this year, Iran's exports to Pakistan accounted for $420 million, showing a 20% decrease compared to the first three months of the previous year. Imports stood at $174 million, reflecting a 4% decrease. This decline is due to regional circumstances," he explained.
The TPO official also stressed the importance of border markets for trade between Iran and Pakistan, stating, "If these border markets are established and activated, it will lead to a boom in trade."
He expressed, "To develop trade relations with neighboring countries, Iran must strengthen its infrastructure. Currently, we are weak in maritime transportation, and the exchange of goods via sea is almost negligible."