KARACHI – Despite a 37.5 percent decline in export of rice to Iran during the last financial year, Pakistani exporters are still not availing the 10 percent duty relaxation under the Pakistan-Iran Preferential Trade Agreement (PTA) for what the sources refer to as lack of awareness.
Though Pakistan exports almost 80 percent of its rice to Tehran, the country’s exporters are, interestingly, not availing the concession in import duty, which the neighbouring country has increased by 50 percent, Pakistan Today learnt. According to sources, the 10 percent duty concession was being neglected not due to any technical reasons but lack of relevant information as most of the exporters are simply unaware of the duty facility under Pak-Iran PTA which has been available since 2006.
Furthermore, Iran, on the other hand, has gained from the PTA to export various valuable items to Pakistan. Both countries had given concessions in import duty on 647 items under the PTA to boost existing bilateral trade relations. According to sources, Iran’s annual import requirement of rice of between 0.8-1.0 million metric tonnes is mainly imported from Pakistan, India, Vietnam and Uruguay; however, the better quality rice i.e. basmati and sela is still imported from Pakistan.
As Pakistani export of rice has drastically fallen by almost 73.5 percent during 2009-2010 due to the increase in import duty from 25 percent to 50 percent by the Iranian government, Islamabad’s exporters should at least avail the 10 percent duty concession to avoid losing further share in the foreign market where Pakistani rice faces tough competition with countries, mainly India, Vietnam and Uruguay, vying for the lucrative market.
Iranian government had increased the ad valorem safeguard duty on import of various goods by 100 percent during 2009-2010. Pakistan’s export which was recorded $360 million during 2008-2009 was reduced to around $225 million thus showing a decline of 37.5 percent during the last fiscal year. They said that the value of basmati rice, which the major export item of Pakistan to Iran has reduced to $117.4 million in 2009-10 from $260.4 million in 2008-9.
The export of other varieties of rice was also decreased from $68.4 million to $25.6 million affecting the badly over all export of the country. The reasons for the huge decline in export were the increase in foreign duty and the reduction of price of rice in international markets. It is worth mentioning here that Pakistan and Iran had signed the PTA on March 4, 2004, which, with the approval from cabinet on May, 25 2005 was become operational from September, 1 2006.
Under the agreement, Pakistan has offered concessions to Iran on 338 tariff lines, whereas Iran has given concessions on 309 tariff lines. Preferences granted by both countries to each other cover approximately 18 percent of MFN tariff of both countries.
