Pakistan: Iranian Tariff Increase Unlawful in PTA

The Iranian government is making the export of kinnow from Pakistan in-viable by refusing to renew import permits and raising customs duties.

"It is an indirect ban on import of kinnow from Pakistan. There is demand in Iran for Pakistani kinnow and the change in policy would encourage illegal border trade between the two countries", a source in the commerce ministry said over the weekend.

These actions come despite the existence of the preferential trade agreement between the two nations. The move is thought to stem from a desire in Tehran to redress the balance in return for Western sanctions imposed upon Iran recently.

There has been no official confirmation of this, though the Iranian government had failed to communicate changes in duty requirements to Pakistan.

During a recent inter-ministerial meeting held in Islamabad Additional Secretary for Commerce, Fazal Abbas Maken took stock of the problem of export of kinnow to Iran, Central Asia, Afghanistan and Indonesia.

The chairman of the Citrus Growers Association of Pakistan informed the inter-ministerial meeting that Iranian government had imposed a ban on import of fresh fruit including kinnow from Pakistan.

He also stated that Iran had increased customs duty to 90% from 45% on import of kinnow, which is encouraging smuggling of the fruit.

Delegates at the meeting were informed that since kinnow features as part of the preferential trade agreement, Iran could not legally raise the tariff in this way.

It was suggested that the State Bank of Pakistan (SBP) should workout arrangements for transfer of payments and even explore the possibility of negotiating a currency swap mechanism with Iran.

Pakistan exported 70,000 to 80,000 tons of kinnow to Iran last season, but the sharp increase in duty had almost stopped citrus export through official channels, causing revenue loss to both countries as larger quantities were being smuggled.