The Iran-Pakistan Gas Pipeline project, which was once a media-hype like the China-Pakistan Economic Corridor is today, went to oblivion after sanctions were imposed on Iran by the so-called ‘international community’. However, the situation has changed now and Iran is ready to enter the world economic market with full might. High hopes are pinned on the visit of Iran President Hassan Rouhani to Pakistan at the end of this month in which the matter of the gas pipeline project will also be taken up. The project was to be commissioned over a year’s ago, but it could not go ahead according to the schedule in the wake of sanctions. According to experts, Pakistan can face penalties worth millions of dollars if it fails to start work on the project. A delay can also upset bilateral relations between the two countries. Iran also wants Pakistan to honour international commitments with regard to the pipeline project as it has already given in the form of LNG pipeline contract.
Apart from the gas pipeline project, there is a huge potential between the two countries to enhance trade, business and investment as Iran is free of the economic sanctions and opportunities are knocking the doors of the two countries. The State Bank of Pakistan has already eased restrictions on trading through formal banking channels with Iranian companies. In the absence of a legal channel to enhance formal trade between the two countries, the corrupt elements on both sides of the border took full advantage of the situation. As a result, smuggling is rampant and Iranian goods are dumped in every city of the country. According to available figures, the volume of trade between the two countries is overwhelming in favour of Iran. Pakistan’s exports to Iran remained $185 million last year but exports were recorded at $837 million. There is no assessment of illegal trade between the two countries as the Customs Department of the country is chasing smugglers who are especially active in Sindh and Balochistan.
To curb illegal trade, the government will have to revise tariffs for the Iranian goods as well as encourage the local businessmen to find opportunities in the Iranian markets. Both the countries are connected through land routes and promotion of legal channels of trade will automatically give a severe blow to smuggling in the region. As Pakistan-Iran trade had been shrinking for the last five years, China emerged as major trading partner. In 2014, China imported goods worth $9.2 billion from Iran while its exports to Iran remained $12.5 billion. Ironically, the volume of trade between Iran and China increased when Tehran was passing through the ordeal of international sanctions.