Pakistan and Iran’s $10 Billion Trade Dream: A Game-Changer or Just a Mirage?
Pakistan and Iran have set their sights on a bold and ambitious goal: to push their bilateral trade to a staggering $10 billion in the coming years. This pledge comes as both nations recognize the untapped economic potential lying between their borders. To solidify this vision, both countries have emphasized the urgent need to sign a Free Trade Agreement (FTA), aiming to overcome bureaucratic hurdles and enhance business engagement. The Preferential Trade Agreement (PTA) signed in 2004 laid the foundation, but leaders from both sides agree that an FTA is the next crucial step. Their joint commitment signals a new era of cooperation, one that could redefine their economic partnership and bring prosperity to the region.
In a significant move, the Centre for Afghanistan, Middle East & Africa (CAMEA) at the Institute of Strategic Studies Islamabad (ISSI), in collaboration with the Iranian Embassy in Islamabad, recently hosted a seminar titled, “Pakistan-Iran Ties: Prospects for Trade and Connectivity.” The event underscored the importance of economic collaboration, highlighting how trade and connectivity are vital for both nations’ growth. Iranian Ambassador to Pakistan, Reza Amiri-Moghaddam, stressed the strategic importance of investing in transit corridors. With Pakistan and Iran serving as trade bridges between Asia and Europe, he emphasized the need to dismantle bureaucratic obstacles, enhance transport infrastructure, and deepen bilateral cooperation.
Ambassador Amiri-Moghaddam provided critical insights into recent bilateral initiatives aimed at boosting trade. These include the opening of border crossings, the establishment of border sustenance markets, and the introduction of new targets for trade and connectivity. However, a striking revelation emerged: Pakistan, once Iran’s fourth-largest trade partner until 2023, has now been relegated to fifth place, with Afghanistan taking the fourth spot. This shift has intensified the push for stronger economic ties, with both sides recognizing the urgency of reversing this trend and reclaiming Pakistan’s former standing.
Pakistan’s Ambassador to Tehran, Mudassir Ali Tipu, echoed similar sentiments, underscoring the untapped trade potential between the two countries. He highlighted key sectors like agriculture and infrastructure development as areas ripe for collaboration. Ambassador Tipu stressed the importance of signing an FTA without delay, improving border facilities, and creating a business-friendly environment. His call to action reflects a shared understanding that enhanced economic ties will not only boost trade figures but also fortify political relations and regional stability.
Adding to the momentum, Ambassador Sohail Mahmood, Director General of ISSI, shed light on the tangible progress made since 2021. This includes the operationalization of border markets, energy cooperation through the Polan-Gabd transmission line, and the expansion of barter trade. He pointed to key commitments made during President Raisi’s 2024 visit, such as expediting FTA negotiations, setting a $10 billion trade target, and establishing economic free zones. Mahmood emphasized the role of regional platforms like the Economic Cooperation Organisation (ECO), Developing-8 (D-8), Shanghai Cooperation Organization (SCO), and the Belt and Road Initiative (BRI) in advancing trade and infrastructure projects, particularly the strategic collaboration between Gwadar and Chabahar ports.
Despite the promising outlook, several challenges loom large. Sanctions, informal trade routes, and logistical constraints pose significant hurdles to achieving the $10 billion target. However, both nations remain resolute. The focus now shifts to enhancing border infrastructure, formalizing trade networks, and exploring alternative financial mechanisms to bypass sanctions. Ambassador Mahmood reinforced Pakistan’s shift to a geo-economic approach, stressing that sustained dialogue and targeted policies can transform these challenges into opportunities. As Pakistan and Iran march forward, the road ahead will test their resolve, but with mutual trust and strategic planning, the $10 billion dream could very well become a reality.
