Iran and Pakistan finalize their free trade pact as the US issues a sanctions warning

ISLAMABAD: Following the US’s warning to Pakistan about the possibility of penalties for doing business with Iran, Islamabad and Tehran decided on Wednesday to “expeditiously finalize” a free trade agreement (FTA) and schedule the next meetings of business and trade organizations.
The two nations released a joint statement after Iranian President Ebrahim Raisi’s three-day visit, in which they said that they had examined all aspects of bilateral ties.

Raisi’s visit came as the two countries attempted to patch up their damaged ties after Iran’s raids on Pakistani territory in unrest-plagued southwest Baluchistan earlier this year targeted purported strongholds of the militant organization Jaish al-Adl. The Pakistani military launched retaliatory attacks in Iran on what it said were “hideouts used by terrorist organizations” in less than 48 hours.
As the first Iranian president to visit Pakistan in eight years, Raisi had meetings with key figures in the nation, including President Asif Zardari, Army Chief General Asim Munir, and Prime Minister Shehbaz Sharif. Additionally, he invited PM Sharif and President Zardari to visit Iran on formal business.

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A joint Iranian-Pakistani statement stated, “They (Pakistan and Iran) reiterated the importance of cooperation in the energy domain, including trade in electricity, power transmission lines and Iran-Pakistan gas pipeline project,” reiterating their goal to boost bilateral trade from the current $2 billion to $10 billion over the next five years.
The handout said, “To facilitate economic and commercial activity, there was consensus to fully operationalize barter trade mechanisms between the two sides.”
The project including the gas pipeline has been stalled for over ten years because to political unrest and international sanctions.
Islamabad was forewarned by the US State Department on Tuesday of the possibility of penalties after its pledge to increase security and commercial cooperation with Iran during President Raisi’s visit.
“We caution everyone thinking about doing business with Iran about the possibility of sanctions. However, the Pakistani government is ultimately in a position to discuss its own foreign policy objectives, US State Department spokeswoman Vedant Patel said at a press conference.
As noted by observers, Pakistan is facing economic hardship and is turning to its allies for financial support, particularly significant allies like the US, Saudi Arabia, and the United Arab Emirates—three countries that are perceived as Iran’s adversaries. As a result, the implied threat of sanctions comes at a difficult time for Pakistan.