Pakistan and Iran aim to boost trade to $10 billion, but bilateral trade has nearly collapsed in the first 10 months of FY24.
The State Bank’s latest trade data reveals a decade-long decline, with exports and imports dropping to zero in FY22. Trade slightly revived in FY23 with exports reaching $75,000, but imports remained zero, indicating limited interest from both sides despite significant trade potential.
Exports plummeted to just $11,000 in the first 10 months of the current fiscal year, compared to $74,000 during the same period last year.
During a visit to Pakistan in April, the late Iranian President Raisi expressed a desire to increase bilateral trade to $10 billion. The trade situation was relatively better in FY17, with exports at $29.79 million and imports at $0.22 million.
Both countries are eager to raise the trade volume to $10 billion.
US sanctions have significantly reduced trade with Iran. Prime Minister Shehbaz Sharif is interested in strengthening trade ties with Tehran, but US pressure hampers progress. Media reports suggest an upcoming trade delegation visit to Tehran.
Despite sanctions, India remains Iran’s largest trade partner, benefiting from low-priced oil imports and exports of Indian goods. New Delhi has resisted external pressure. Iran signed a 10-year agreement with India to manage Chabahar port, which competes with Pakistan’s Gwadar port.
Illegal trade persists.
Illegal trade has thrived for decades, recently peaking as Iranian oil infiltrates major Pakistani cities. Concurrently, dollar smuggling to Iran has alarmed Pakistani authorities, prompting a crackdown on both oil and dollar smuggling.
The minimal trade reflects poor political and economic relations between Pakistan and Iran. Analysts are skeptical about Pakistan’s ability to enhance trade with Iran, especially given US reservations about potential improvements in trade relations. Additionally, Pakistan has yet to fulfill its obligations on the Pak-Iran gas pipeline.
The Public Accounts Committee recently noted that Pakistan could face an $18 billion penalty if it fails to proceed with the gas pipeline project.
