The Federal cabinet’s Economic Coordination Committee (ECC) on Thursday approved amendments in Export Policy Order 2020 and Import Policy Order 2020 to provide regulatory cover to barter trade arrangements with Afghanistan & Iran.
According to sources, the ministry of commerce presented a summary for grant of regulatory support for establishing barter trade arrangements with Afghanistan and Iran. And, the ECC after discussion allowed regulatory cover to barter trade arrangements by amending relevant provisions of EPO 2020 and IPO 2020.
As per details, ministry of commerce has solicited ECC approval to amend EPO 2020 and IPO 2020 to cover the barter trade arrangements with Afghanistan and Iran as the federal board of revenue (FBR) and State Bank of Pakistan (SBP) have so far supported this proposal while the Prime Minister, being Minister-in-Charge of the commerce division, has authorized submission of a summary in this regard to the ECC.
According to sources of commerce ministry, though the ECC has granted its approval to formally start barter trade with Iran and Afghanistan, however, the modalities for operationalization of the barter trade arrangement(s) would be finalized and notified by ministry of commerce separately for each agreement in consultation with the stakeholders, said sources.
As per section 3(1) of the imports and exports (Control) Act, 1950, federal government is empowered to prohibit or restrict import into or export from Pakistan of any commodity, and /or (to) “regulate generally all practices (including trade practices) and procedure connected to the import or export of such good”.
Sources said that Commerce ministry has proposed that relevant provisions of EPO 2020 and IPO 2020 may be amended to provide regulatory cover to barter trade arrangements by adding following proviso/s thereto: “Provided that export and imports shall be allowed under barter trade arrangements as approved by the ministry of commerce”.
Afghanistan and Iran have been important trading partners of Pakistan since independence. Pakistan signed a Preferential Trade Agreement (PTA) with Iran in 2006. Pakistan’s export to Iran reached $399 million after operationalization of the PTA in 2008-09, but then declined gradually, due to imposition of regulatory duties and non-tariff measures on Pakistani exports and then US sanctions on Iran. Similarly, Pakistan’s export to Afghanistan declined sharply due to the non-existence of the banking system and freezing of the assets belonging to the Central Bank of Afghanistan after political events of August 2021. To overcome stagnation in bilateral trade, barter trade arrangements have been proposed with Afghanistan and Iran.
The ministry of commerce arranged multiple meetings with stakeholders wherein it was decided that Quetta Chamber of Commerce & Industry (QCCI) from Pakistan side and Zahidan Chamber of Commerce & Industry (ZCCI) from Iran side would sign an MoU to establish barter trade mechanism. The MoU was finalized in consultation with stakeholders including FBR, SBP, Pakistan’s Mission in Tehran, FPCCI and QCCI and finally the agreement on barter trade between QCCI, Pakistan and ZCCI, Iran was signed on the sidelines of 9th session of Pakistan-Iran Joint Trade Committee at Tehran on 7th November 2021.
The sources said that with an aim to improve bilateral trade and transit, Pakistan and Afghan authorities among other things, have agreed to establish a barter trade mechanism.
They added that the proposed regulatory amendments will cater to barter trade arrangements both with Iran and Afghanistan.
It is pertinent to mention that as such, existing provisions of EPO do not cater to barter trade arrangement. Hence, an amendment was needed to align EPO with the above referred barter trade agreement. Similarly, under para-3 (1) of Import Policy Order (IPO), 2020, imports are allowed against all modes of payment subject to the procedure prescribed by SBP.
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