File photo. AFP
The Commerce Ministry on Friday issued a statutory regulatory order (SRO) allowing the import and export of several goods between Pakistan and three countries—Afghanistan, Iran, Russia—through business-to-business barter trade.
In total, per the SRO, 26 items can be exported by Pakistani businesses through barter trade: milk, cream, eggs, cereals, meat and fish products, fruits and vegetables, rice, confectionary and bakery items, salt, pharmaceutical products, essential oils, perfumes, cosmetics, toiletries, soaps, lubricants, waxes and matches, tanning, chemical products, plastic and rubber products, finished leather, textile (intermediaries) readymade garments, textile made-ups, iron and steel, copper, aluminium, tools and cutlery, electric fans and home appliances, electric equipment, motorcycles and tractors excluding components, surgical instruments, furniture items, and sports goods.
In exchange, read the SRO, businesses can import fruits and nuts, vegetables and pulses, spices, minerals and metals, coal and its products, raw rubber items, raw hides and skins, cotton, iron and steel from Afghanistan. From Iran, Pakistani businesses can import fruits, nuts, vegetables, spices, minerals and metals, coal and related products, petroleum crude oil, LNG and LPG, chemical products, fertilizers, plastic and rubber articles, raw hides and skins, raw wool and iron and steel products. Businesses can likewise import pulses, wheat, coal and related products, petroleum oils including crude, LNG and LPG, fertilizers, tanning and dying extracts, articles of plastic and rubber, minerals and metals, chemicals products, articles of iron and steel, and items of textile industrial machinery from Russia.
“Application for authorization of import and export of goods under the B2B barter trade facility shall be submitted online by the trader or their authorized agent through the online system to the regulatory collector,” read the SRO, titled The Business-to-Business Barter Trade Mechanism 2023. It said regulatory collectors having territorial jurisdiction might allow the export and import of goods against an authorization, subject to the conditions stipulated under the order.
“The barter trade facility under this order may be admissible to the state-owned enterprises; and (2) private entities, subject to the following conditions, namely: (i) its name appears on the active taxpayers’ list of Federal Board of Revenue; (ii) it is subscribed to Pakistan Single Window System; and (iii) it possesses a valid import and export contract registered by Customs authorities in the Customs computerized system,” it said.
In an accompanying statement, the Commerce Minister said it had conducted meetings with several high-level delegations of various countries to evolve a mechanism for barter trade. Aimed at stabilizing the country’s economy, it said, the decision would help boost both foreign reserves and the quantum of regional trade. It said trade of goods under the agreement would be allowed on an “import followed by export” principle, adding exports would be required to meet the value of imported goods.
In recent years, the Pakistani business community has been advocating for operationalizing barter trade arrangements with Iran, Afghanistan and Russia, arguing it would prove beneficial for the national economy. In a statement, the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) hailed the move, saying its years of efforts had finally borne fruit. “We pitched barters trade, border markets and currency swap mechanisms very diligently in tens of top-level meetings with the concerned ministries and relevant governmental institutions over the past three-and-a-half years,” said FPCCI President Irfan Iqbal Sheikh.
Sajid Amin, deputy director of the Sustainable Development Policy Institute, told the Reuters news agency that Pakistan could benefit from the barter arrangement, particularly from oil and energy imports from Russia and Iran without adding to dollar demand. It would also help the country amidst an ongoing dollar shortage, he said. “While it may not solve currency smuggling, particularly at the Afghanistan border, it can discourage smuggling of goods from Iran, such as diesel, and Afghanistan which is hurting the economy,” he added.