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Iran, Pakistan sign MoU in step towards formal banking channels

Iran and Pakistan on Tuesday signed a Memorandum of Understanding (MoU) agreeing in principle to open channels in their respective central banks for bilateral trade transactions.

The Ministry of Commerce – under the supervision of Commerce Minister Khurram Dastgir – signed the MoU with the Iran’s Ambassador to Pakistan. Additionally, the two sides agreed to materialise the proposed Free Trade Agreement (FTA) between Pakistan and Iran.

“The two sides agreed in principle to open banks accounts in their respective central banks for trade transactions in their local currencies,” said a senior officer in the Ministry of Commerce, who was part of the Tuesday’s meeting.

The officer said that the two sides had also agreed to take further steps for bilateral trade and investment promotion including materialising the under-consideration FTA. He said that the Iranian side had returned the initial FTA draft with their input, which had earlier been handed over to the Iranian authorities.

Absence of banking channel between the two countries was the key hurdle in payment mechanism for bilateral trade after lifting of sanctions by the international community.

“This will help the business communities of the two sides address their basic concern regarding absence of formal payment mechanism and will ultimately enhance the bilateral trade,” the officer added.

Meanwhile, in another meeting, Assistant United States Trade Representative (AUSTR) for South Asia Michael Delaney led a delegation to Islamabad to discuss the on-going US-Pakistan Trade and Investment Framework Agreement, known as TIFA, from August 28 to 30 with members of the government of Pakistan.

The inter-sessional meeting covered a broad range of trade and investment-related issues, including expanded market access for Pakistani goods in the United States, business-to-business ties, intellectual property and progress on the Augmented Joint Action Plan for Trade and Investment.

“Pakistan and the United States share a relationship based increasingly on trade and investment and have a five-year action plan to continue to do so,” Michael Delaney said.

“The United States sees Pakistan’s prosperity as good for the region and good for the United States.”

Published in The Express Tribune, August 31st, 2016.

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