KARACHI - The refusal to accept the letter of credit of Iranian banks by banks in Pakistan have almost halted the trade between two countries, a factor that has encouraged the smuggling of goods, the exporters and importers told The Nation on Wednesday. The rejection by Pakistani banks to accept the LCs of Iranian banks was causing great problems for the exporters and importers who were compelled to opt to indirect shipment of goods to Iran through Dubai, they said. The Pakistani importers and exporters were paying extra commission to the indenting agents in Dubai because the Dubai agents have established Letter of Credits there in favour of Pakistani exporters and importers. The Iran is one of the major buyers of Pakistani commodities and is loyal traditional buyer but the restrictions are compelling the traders of both the countries to deal indirectly which was resulting in unnecessary extra communications and additional expenses. Chairman of Pak-Iran Business Council and Vice Chairmen of FPCCI Zubair Tufail while talking to The Nation said the restrictions on Iran imposed by the United Nation has halted the trade between Pakistan and Iran. Following the path of sanctions of UN on Iran, the State Bank of Pakistan has strictly restricted all the banks in Pakistan to not accept the Letter of Credit of Iranian banks, he said. The restriction was resulting in shipment from Dubai to Iran as direct trade has almost stopped since March 2008, he pointed out and added, at least 3 percent cost has been increased due to shipment from Dubai. Zubair informed that mostly trade between two countries was in form of imports from Iran as total imports had been registered at $381 million dollars in 9 months of last fiscal 2007-08 over target of $450 million dollars. The imports have been stopped from April 2008 as restrictions of UN on Iran were fully applied by Pakistan. The president of Union of Small and Medium Enterprises Zulfikar Thaver while talking to The Nation said that Pakistan government should allow Pakistani banks to accept the Iranian banks' letter of credit and should not take dictations of foreign powers. He was of the view that trade between two countries was bona-fide and genuine so we should not lose the business as Iran was a good buyer country. These restrictions encourage the smuggling of goods between two countries which was resulting in great losses to national exchequer in term of various duties and taxes, he said and suggested to the Pakistan government that Iranian banks could open the letter of credit in Euro rather than any other currency because the restriction of reimbursement of dollar as Indian government has facilitated its traders to ship to Iran and prepare bills in Euro. He pointed out that the opening of the branches of banks in major cities of Pakistan and Iran could be another solution to overcome this problem and both countries can trade in their own currency.