ISLAMABAD:
The government has directed the Ministry of Commerce to engage in barter trade with Iran, Russia and Afghanistan with care, diligence and caution because of the imposition of sanctions on different products and entities.
Several entities of Iran and Russia are facing US and UN sanctions, which remain key hurdles in the way of executing barter trade arrangements with Iran, Russia and Afghanistan.
The Economic Coordination Committee (ECC) recently approved amendments to the B2B (business-to-business) barter trade mechanism to promote bilateral trade, which had been stalled due to several issues.
In a meeting, the Ministry of Commerce briefed the economic decision-making body that in pursuance of a decision taken by the ECC, the ministry had issued SRO 642(I)/2023 dated June 1, 2023, whereby the B2B barter trade mechanism was notified for enhancing bilateral trade with Afghanistan, Iran and Russia, along with a list of exportable and importable products.
The forum was informed that since the inception, there had been issues in B2B barter trade, as highlighted by the business community and public stakeholders, which included sanctioned/non-sanctioned products/entities by the United Nations (UN) and others, a limited list of exportable/importable products and certifying contracts by Pakistan’s missions abroad.
Other challenges included the principle of “import followed by export” and netting off the value of goods within 90 days after the issuance of authorisation by the concerned Customs Collectorate.
The ECC was apprised that in order to address gaps in the B2B barter trade mechanism, the Ministry of Commerce held wide-ranging consultations with public and private stakeholders for early operationalisation of the trade mechanism (SRO 642(I)/2023). Following detailed deliberations, the stakeholders comprising the State Bank of Pakistan, Ministry of Foreign Affairs, Federal Board of Revenue and Pakistan Single Window agreed on a set of amendments.
These amendments included the omission of the list of products and aligning them with the Export Policy Order/Import Policy Order in vogue, allowing private entities (two or more) to form a consortium, replacing verification by Pakistan’s missions abroad with an undertaking by the concerned Pakistani private entity/consortium and replacing the import-followed-by-export principle with import/export.
It was explained that comments of the Ministry of Foreign Affairs, State Bank of Pakistan, Federal Board of Revenue and Pakistan Single Window were sought on the proposed amendments and subsequently, based on stakeholders’ consultations, a draft Statutory Regulatory Order (SRO) was shared with the Ministry of Law and Justice for vetting.
The Ministry of Commerce requested that the draft SRO proposing amendments to the B2B barter trade mechanism, duly vetted by the Ministry of Law, may be approved as proposed at para-6 of the summary.
During the ensuing discussion, it was clarified that all stakeholders had supported the proposal. The ECC discussed the case in detail and, while approving the proposal of the Ministry of Commerce, emphasised that utmost care, diligence and caution must be exercised by all concerned organisations while implementing the amended barter trade mechanism.
The ECC further directed that the Ministry of Commerce would submit a detailed implementation and outcome report on the amended mechanism in July 2026.
