ISLAMABAD: Prime Minister Shehbaz Sharif on Thursday said Pakistan would “soon" finalize a free trade agreement with Iran to further strengthen economic ties between the two countries, the state-run Associated Press of Pakistan (APP) said.
A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them, where goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions. In August 2022, Syed Naveed Qamar, Pakistan's commerce minister, said Pakistan desired a free trade agreement with China to enhance bilateral trade with the country.
The development comes as cash-strapped Pakistan is desperately looking to increase its exports and bolster trade relations with other countries to shore up its depleting foreign exchange reserves. The country has been waiting for the approval of a bailout program from the International Monetary Fund (IMF) to stave off the possibility of default but has so far been unsuccessful in finalizing an agreement with the global lender.
“Pakistan and Iran have decided to finalize the free trade agreement soon to exploit the immense potential in trade and investment,” Prime Minister Shehbaz Sharif said after holding a meeting with Iranian President Ebrahim Raisi.
The two had earlier inaugurated the Mand-Pishin border market, according to the APP. During the meeting, the two sides also discussed enhancing cooperation in power transmission and solar energy sectors.
“PM Sharif also put forward suggestions regarding the China-Pakistan Economic Corridor (CPEC) and said the two sides would take measures for the implementation of the decisions taken in the meeting,” the report said.
Sharif also invited the Iranian president to visit Pakistan, which he accepted.
Pakistan and Iran share a 959-kilometer frontier that begins at the Koh-i-Malik Salih mountain and ends at Gwadar Bay in the Gulf of Oman. The trade volume between the two countries currently stands at approximately $2 billion, and Iran exports around 100 megawatts (MW) of electricity to the areas of Pakistan that border.
Iran is currently struggling to maintain its economic relations with the world due to sanctions imposed on it by the United States and several other countries in response to the Iranian nuclear program, its support for armed groups in Palestine, and the violations of human rights in the country following the death of a Kurdish woman in the custody of the morality police last September.
