The Ministry of Commerce (MoC) has outlined a new mechanism for barter trade with Iran as part of ongoing efforts to enhance bilateral trade. This decision follows consultations with various stakeholders, including the State Bank of Pakistan (SBP), which has been reluctant to support formal trade with Iran due to US sanctions.
Under the proposed mechanism, amendments will be made to the existing SRO, expanding the list of items eligible for barter trade and bringing them closer in line with the Export Policy Order. However, issues surrounding the “certification authority” for verifying transactions are yet to be resolved.
Commerce Secretary Jawad Paul shared the update with the Senate Standing Committee on Commerce on Wednesday, where the committee expressed full support for the initiative.
The committee emphasised the need for action to ensure that Pakistan’s exports to Iran, which are currently zero, can commence under the new system.
The Ministry of Commerce had previously notified the B2B Barter Trade Mechanism (S.R.O 642/2023) for enhancing trade with Iran, Afghanistan, and Russia. Since its inception, the mechanism has faced challenges, particularly in its operationalisation.
In response, the Senate Standing Committee recommended forming a committee with both public and private stakeholders to address these issues, which led to a series of consultations with relevant parties.
Among the key issues identified were the verification of sanctioned and non-sanctioned products, the limited list of exportable and importable goods, and the lack of a multiparty contract system. As part of the solution, amendments to the SRO have been drafted to allow for a more streamlined process, including removing the need for verification by Pakistan’s missions abroad. Instead, Pakistani entities will be required to submit an undertaking that the entities involved in barter trade are not sanctioned by international authorities.
The revised mechanism will also eliminate the “import followed by export” rule, replacing it with a more flexible system allowing for direct imports and exports. Additionally, Pakistani traders will be required to settle the value of goods quarterly, and the formation of consortiums for joint contracts will be allowed.
Once the proposed amendments are approved by stakeholders, the Ministry of Commerce will issue a final notification. This would mark an important step in institutionalising barter trade and expanding Pakistan’s export capacity to Iran.
