Pakistan has issued orders to to allow barter trade with Afghanistan, Iran and Russia for certain goods, including petroleum and natural gas. The order issued by the ministry of Commerce is called the Business-to-Business Barter Trade Mechanism, 2023, which allows for the export and import of several items.
Barter Trade Order to Discourage Smuggling Activities
Experts said that Pakistan can gain a lot from barter trade, particularly from oil and energy imports from Russia and Iran, without adding to dollar demand. “While it may not solve currency smuggling, particularly at the Afghanistan border, it can discourage smuggling of goods from Iran, such as diesel, and Afghanistan which is hurting the economy,” said Sajid Amin, deputy director of the Sustainable Development Policy Institute.
The Ministry of Commerce said Friday that its order, the Business-to-Business Barter Trade Mechanism 2023, “shall come into force at once. The barter trade order lists 26 commodities that Pakistan and privately owned entities can export to Afghanistan, Iran, and Russia. In exchange, they can import crude oil, liquid natural gas, liquid propane gas, chemical products, fertilizers, fruits, wheat, industrial machinery, and vegetables from the three countries. Last month, Pakistan and Iran jointly inaugurated the first of the six border markets the countries are building to enhance bilateral trade cooperation.
Clamp Down on Smuggling
The Pakistan Petroleum Dealers Association complained that up to 35% of the diesel sold in Pakistan had been smuggled from Iran. To curb this issue, the government has ordered a clampdown on the smuggling of flour, wheat, sugar, and fertilizer to Afghanistan. The minister for Petroleum, Musadik Malik, said that the country would buy only Russian crude oil, not refined products, under the deal, saying purchases could rise to 100,000 barrels per day if the first transaction goes smoothly.