ISLAMABAD: Iran said on Tuesday negotiations on a long-discussed free trade agreement (FTA) with Pakistan were progressing well and could be concluded “in the near future,” as senior officials from the two neighboring countries met in Islamabad to deepen economic ties and advance a target of increasing bilateral trade to $10 billion.
Pakistan and Iran have sought for years to expand economic cooperation despite sharing a 900-kilometer (560-mile) border and longstanding cultural and political ties. Bilateral trade has remained well below the two countries’ ambitions because of security concerns along the border, international sanctions on Iran, banking restrictions and limited transport infrastructure. During late Iranian President Ebrahim Raisi’s visit to Pakistan in April 2024, the two countries agreed to increase annual bilateral trade to $10 billion and accelerate work on a free trade agreement.
On Tuesday, the 10th Pakistan-Iran Joint Trade Committee, co-chaired by Pakistan’s Commerce Minister Jam Kamal Khan and Iran’s Minister for Industry, Mine and Trade Mohammad Atabak, was convened to review progress on trade initiatives, customs cooperation, transport links and investment while advancing negotiations on the proposed FTA.
“As you’re aware, negotiations on Iran and Pakistan free trade agreements are progressing well and we hope that they will be concluded successfully in near future,” Atabak said in his opening remarks.
He said bilateral trade had grown to more than $3 billion, adding that Tehran viewed its economic relationship with Pakistan as “a long-term strategic partnership.”
Atabak said Iran was also interested in expanding cooperation through Pakistan’s ports of Karachi and Gwadar.
“We likewise are interested in expanding cooperation through the ports of Karachi and Gwadar, an alternative gateway for the export of Iranian goods and for import of industrial raw materials from third countries for Iran and Pakistan,” he said.
Another priority discussed during the talks was improving cross-border trade through operational border markets and longer operating hours at key crossings.
Pakistan and Iran have opened several joint border markets in recent years to encourage legal trade and improve livelihoods in remote frontier communities, where informal and undocumented commerce has long flourished. The two countries have also been working on expanding barter trade arrangements that allow businesses to exchange goods directly without relying on conventional banking channels, an approach seen as particularly useful given financial restrictions affecting trade with Iran.
“Extending working hours at key border points will definitely increase and speed up the trade processing, while operationalizing joint border markets is vital for boosting local livelihoods, curbing informal trade and expanding formal economic activity across our shared border regions,” Khan said in televised remarks.
He added that businesses in both countries were ready to expand trade and it was now the responsibility of governments to provide “a seamless, structured and predictable environment.”
The ministers said the committee would also review measures to facilitate cross-border trade, strengthen customs and banking cooperation, improve transport and transit connectivity, and expand commercial and investment links between the two countries.
The meeting also came against the backdrop of improving political relations between Islamabad and Tehran following months of heightened tensions in the Middle East.
Atabak thanked Pakistan for what he described as its “principled and brotherly support” during the ongoing US-Israeli war against Iran and expressed appreciation for Islamabad’s diplomatic efforts to help bring the conflict to an end through dialogue and mediation.
“We are equally grateful for Pakistan’s constructive diplomatic efforts and the sincere endeavor to help bring the conflict to an end through dialogue and mediation,” he said.
