Pakistan and Iran: Future of Trade Relations

Pakistan and Iran have been strengthening their bilateral relationship over the past year, which has recently translated to trade relations. Trade growth between Pakistan and Iran would lead to significant domestic and regional development for both countries, and could also lead to potential new alliances in different sectors of the economy. However, border tensions between Pakistan and Iran are ever- present, and even more pertinent after the recent kidnapping of numerous Iranian guards at a border point. This border tension may cause a strain on the developing trade conversations, which could lead to the diminishment of the new initiative.

Iran Consul General Reza Nazeri recently spoke on the topic of trade relations to the Lahore Chamber of Commerce and Industry, mentioning the two countries’ shared borders and cultural links in his address. Nazeri stated, “Oil, chemical, gas and other sectors of the economy should be focused for mutual trade… Pakistan has a distinguished status in milk production and Iran’s experience in dairy sector can be beneficial in this regard.” He also discussed Iran’s budding construction potential, and how both countries could work together to further this initiative. The joint promotion of tourism could be another venture, due to the prospective future in that sector as well.

Iran’s Chamber of Commerce, Industries, Mines, and Agriculture chief Gholamhossein Shafei and Pakistan’s Ambassador to Iran met last Monday to discuss ways that trade can increase between the two countries. Shafei mentioned that the Gwadar port in Pakistan and the Rajaee port in Iran can be included in this bilateral trade development. He stated in his meeting with the Pakistani ambassador, “most trade transactions conducted between Iran and Pakistan are in the form of unofficial trade". If Pakistan re-examines and changes its custom tariffs on Iranian commodities, trade could be easier managed between the two nations. Pakistan’s ambassador to Iran, Rifat Masood stated that Pakistan is also committed to establishing stronger bilateral trade relations, and will work to overcome any hurdles that may be facing this development. Pakistan’s tariffs for Iranian imports are high, which is contributing to less trade between the nations. Iran however also needs to do their part in creating a better environment for trade, as Masood established.

Earlier this week, Pakistan and Iran also agreed to compose a trade committee to address the potential expansion of rail connections for increased trade. Quetta Customs Collector Ashraf Ali and Iranian delegation head Nadir Mir both chaired this meeting, which focused on the two nations’ banking sector as well. The increased trade relations would help the conditions of the Pak- Iran bordering provinces, particularly Balochistan, Sistan, and Baluchestan.

 There has been an immense level of tension present on the border between the two nations for many years, which may serve as a hurdle in regard to increased trade. Most recently, there was a number of Iranian guards who were abducted at the border point of Mirjaveh this past week. Iran’s Foreign Minister Javed Zarif and Pakistan’s Foreign Minister Shah Mehmood Qureshi spoke on the incident, and the Iranian foreign ministry called in the Pakistani envoy in Tehran to discuss the abduction. An Iranian separatist organization called Jaish al- Adl took responsibility for the kidnapping. Qureshi stated that this abduction was the “handiwork of our common enemies unhappy with the existing close, friendly relations between Pakistan and Iran.” He also stated that the two countries usually have a “border of peace and friendship.”

 There has been rising animosity in Iran on this issue, specifically with Iran’s Shi’ite Muslim authorities. They have stated that these militant groups operate from Pakistan, which serves as a ‘safe haven’ for the organizations. In previous cases regarding the border conflict, Iran has threatened to act against militant bases in Pakistan unless there was action taken to resolve the conflict.

 This tension on the border raises concern when considering increased trade between the Iran and Pakistan, as the success of the trade initiative is dependent on stable routes of transportation. The expansion of trade connections can be significantly affected if tensions on the border continue to increase, particularly regarding railroad development and tourism. While both countries are currently willing to furthering their bilateral relationship, Pakistan’s response to this incident can affect the future of this initiative.