Call for exploiting non-sanctioned areas of cooperation between Pakistan and Iran

ISLAMABAD, AUG 8 /DNA/ – The Institute of Regional Studies, Islamabad, organized an event titled “Pak-Iran Economic Cooperation: Challenges and Opportunities” in Islamabad. Mr. Fraz Naqvi of the Iran Program, initiated the session by discussing trade relations between Pakistan and Iran.

He noted that despite cultural similarities, geographical proximity and a common border, both Pakistan and Iran could not fully utilize their trade potential, primarily due to the imposition of US sanctions on Iran.

Mr. Naqvi proposed that Pakistan might benefit from drawing inspiration from the development models of China, South Korea, Japan and other countries to establish alternative mechanisms for enhancing economic ties with Iran.

Mr. Mohsen Shahshargi, an expert on South Asian economy from Tehran, stressed that economic cooperation between Iran and Pakistan was essential to cultivating the partnership on the basis of comparative advantage. Taking a cue from the $10 billion trade goal set between Pakistan and Iran in April this year, Mr. Mohsen emphasized on exploring alternative solutions such as establishing a systemic barter mechanism or conducting trade in third-party currencies like the Chinese Yuan.

Adding on, though the Preferential Trade Agreement (PTA) was still in place, it remained unimplemented for several years which further restricted the signing of Free Trade Agreement (FTA) between the two countries, Mr. Mohsen noted. To evade the US sanctions, Mr. Mohsen highlighted certain areas where the cooperation could be carried out without invoking the US response. Those areas included the transportation, agriculture and services sectors.

Lastly, he concluded by stating that developing border markets, revising visa requirements and ensuring the development and safety of Baluchistan province on both sides could significantly enhance trade and offshore investments between Pakistan and Iran. 

Ms. Noor Fatima, Senior Research Associate at the Research Society of International Law (RSIL), examined the legal dimensions of trade relations between Iran and Pakistan. She asserted that sanctions had been significant tools of foreign policy employed by states or organizations to influence the behavior of other states or entities without resorting to armed conflict.

In Iran’s case, sanctions had been mostly applied unilaterally by countries like the US, UK, Canada, and Australia etc. Subsequently, the Iran-Pakistan gas pipeline project which aimed to supply Pakistan one billion cubic feet gas per day was stalled due to US unilateral sanctions on Iran, she added. Ms. Noor further elaborated that in any case, Pakistan had to comply with the sanctions.

However, Pakistan could adopt the transit mechanism of Transports Internationaux Routiers (TIR) with Iran on which sanctions do not apply, Ms. Noor recommended. Lastly, Ms. Noor concluded that both states must develop a coherent policy prioritizing economic security in line with international trading regimes, ensure uniform policy application and build internal capacity for deeper economic engagement with each other.