According to two notifications issued by the Ministry of Commerce, the government has now granted legal support to the barter trade with Iran and Afghanistan.
SRO.484(I)/2022 and SRO.485(I)/2022, issued by the Ministry of Commerce, revise the Export Policy Order (EPO) 2020 and the Import Policy Order (IPO) 2020 to formally begin barter trading with Iran and Afghanistan.
Pakistan has authorized a legal system to allow for barter trade with Iran and Afghanistan, according to these notifications. Imports and exports will be permitted under the Commerce Ministry’s approved barter trade arrangement.
The cabinet’s Economic Coordination Committee (ECC) discussed a report from the commerce ministry for the “provision of regulatory support for establishing barter trading agreements with Afghanistan and Iran” at a previous meeting. and “by changing relevant sections of Export Policy Order (EPO) 2020 and Import Policy Order (IPO) 2020 gave [the] regulatory cover to barter trading agreements after consultations,” according to the report.
According to the Commerce Ministry, a high-powered committee chaired by the Minister of State for Revenue was established in 2019 to investigate the hurdles to bilateral commerce between Pakistan and Iran. The Iranian side presented a sample barter trade mechanism to Pakistan for discussion and finalization during the 8th JTC, which took place on July 4-5, 2019. The State Bank of Pakistan offered a proposal for creating a barter trade system between Pakistan and Iran as the best viable alternative after extensive discussions with relevant public and private sector stakeholders.
Following that, this Ministry organized a series of meetings with stakeholders, at which it was decided that the Pakistani Quetta Chamber of Commerce and Industry (QCCI) and the Iranian Zahidan Chamber of Commerce and Industry (ZCCI) would sign a Memorandum of Understanding to establish a barter trade mechanism.
In Tehran on November 7, 2021, the MoU/agreement was completed in collaboration with stakeholders such as the FBR, SBP, Pakistan’s Mission in Tehran, FPCCI, and QCCI, and was eventually signed on the margins of the 9th session of the Pakistan-Iran Joint Trade Committee. However, intending to improve bilateral trade and transit, Pakistan and Afghan authorities, among other things, have agreed to establish a barter trade mechanism.
Both Iran and Afghanistan would benefit from the planned regulatory changes, which will cater to barter trade agreements.
The Governments of Pakistan and Iran have agreed to implement adequate regulatory measures to facilitate trade under the barter system, according to the minutes of the 9th JTC read with clause iv of the Barter Trade Agreement. Furthermore, both governments have pledged to take the help of other chambers to extend barter trade agreements.
Exports from Pakistan are usually managed by the Foreign Exchange Regulations of the State Bank of Pakistan, according to para- 3 of the Export Policy Order (EPO) 2020. As a result, existing EPO provisions do not address barter trade agreements; as a result, a modification may be required to bring EPO into compliance with the proposed Barter Trade Agreement.
Similarly, imports are authorized against all ways of payment under para-3(1) of the Import Policy Order (IPO) 2020, subject to the SBP procedure.
In light of the foregoing, the Commerce Ministry has recommended that relevant provisions of EPO 2020 and IPO 2020 be revised to include the following proviso/s: “Provided that exports and imports shall also be authorized through barter trading agreements as approved by the Ministry of Commerce.”