LAHORE - The restart of rice export to Iran will remain ineffective until detailed mechanism is evolved and appropriate currency transfer arrangements are made through State Bank of Pakistan, which has not been implemented so far.

Pakistan’s rice export is stagnant for the last many years, both in quantitative and value terms and is hovering around 4 million tons in quantity and $2 billion in worth.

“Although Iran could be a huge market for Pakistani rice but country’s rice sector is not ready to take advantage of this opportunity yet, because energy crisis and lack of research & development, which leads to development of new seeds, have turned us regionally uncompetitive,” said Rice Exporters Association of Pakistan chairman Ch Shafique.

He appreciated the lifting of sanctions on Iran, as it will provide Pakistan with a historic opportunity to raise mutual trade and investment. REAP chairman demanded that the banking sectors of the two countries should also establish active linkages within weeks to facilitate traders to channel their payments.

“In the past few years, lack of recognised and trustable payment mechanism through banks proved to be the single largest factor hindering bilateral trade,” he added. Bilateral trade with Iran fell drastically as a result of sanctions and the unwillingness of banks to finance trade.

“The last hurdle in resuming smooth trade relations between the two countries has been removed, providing an opportunity to implement the projects which have been in limbo for the last few years,” REAP chairman opined.

Pakistan once was the largest exporter of rice to Iran before imposition of sanctions on Iran, but now almost 80 per cent of rice is going to Iran from India though import from Pakistan is more economical, he said.

The REAP chairman also appreciated the move of government to initiate a free trade agreement (FTA) with Iran in the wake of lifting of sanctions on Tehran, as Commerce Minister Khurram Dasatgir Khan a few days back had stated that Pakistan was interested in negotiating an agreement with Iran.

Ch Shafique also welcomed the Pakistani plan to construct three border posts along the Iran border on modern lines to facilitate the land trade. The next logical step after a preferential trade agreement is an FTA and Pakistan couldn’t find a better time to initiate negotiations on a new trade agreement, he opined. “New circumstances merit new agreements and enhanced cooperation for the mutual benefit of the two neighbours,” he added.

“Pakistan wants more predictability in tariffs on agricultural produce and products from Iran. Iranian duties on agriculture fluctuate widely depending upon the time of harvest ranging from on-seasonal highs to off-seasonal lows. The two sides need to agree on sanitary and phyto-sanitary standards as this proves an unwanted barrier in bilateral trade,” he said.

Ch Shafique hoped the conclusion of an FTA between Pakistan and Iran and inclusion of Iran back into the world trading system would bring more predictability and clarity and the seasonal shifts in duties and trading pattern would give way to surer trading regime.