THE commitment between Pakistan and Iran to increase their annual trade volume to $10 billion over the next five years is indeed a commendable step towards deepening relations and fostering economic cooperation between the two neighbouring nations. However, it is crucial to acknowledge the ambitious nature of this target, considering the current state of bilateral trade.
Despite the significant boost in trade following the signing of Memorandums of Understanding (MoUs) in January 2023, which aimed to facilitate bilateral trade, the trade volume between Pakistan and Iran stood at about $2.3 billion last year. Several factors have impeded the growth of trade between Iran and Pakistan. International sanctions on Iran have restricted financial transactions and hindered investment opportunities. Security issues in border regions have also disrupted trade routes, causing delays and uncertainties for businesses on both sides. Moreover, inadequate border infrastructure and economic misalignment have further exacerbated the situation. Additionally, banking and payment issues due to the lack of direct banking channels and the necessity to comply with international financial regulations have posed significant challenges to smooth economic interactions. However, while the target may seem daunting, it is not impossible, especially given the geographical proximity and historical ties between the two countries. To achieve the $10 billion trade volume goal, both Pakistan and Iran need to take concerted efforts to address the existing challenges and capitalize on the available opportunities. Firstly, there is a need for enhanced diplomatic engagement to navigate through international sanctions and create avenues for trade facilitation. This could involve leveraging diplomatic channels to negotiate waivers or exemptions from certain sanctions that hinder trade and investment. Secondly, improving border infrastructure and enhancing security measures in border regions are imperative to ensure the smooth flow of goods and services. Thirdly, promoting sectoral cooperation are essential for fostering trade growth. Identifying complementarities in industries and facilitating joint ventures and partnerships can unlock new trade opportunities and promote economic integration between the two countries.
