Barter trade with Iran, Afghanistan: Senate panel assails MoC for proposing permanent EIF exemption

Business Recorder

07-05-2025

ISLAMABAD: The Senate Standing Committee on Commerce on Tuesday strongly criticised senior officials from the Ministry of Commerce for proposing a permanent exemption from the Electronic Import Form (EIF) for barter trade with Iran and Afghanistan— an act that may breach US sanctions.
Neither Commerce Minister Jam Kamal nor Secretary Commerce Jawad Paul attended the meeting, citing other pressing engagements. Their absence drew further ire from the Committee, which was chaired by Senator Anusha Rahman Ahmad Khan.
The Commerce Ministry's team, led by Additional Secretary Nasir Hamid, declined to share the draft summary intended for the Economic Coordination Committee (ECC) of the Cabinet. Hamid cited procedural rules that prohibit the sharing of such documents at any forum prior to ECC approval.
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However, the Ministry informed the Committee that two separate summaries had been circulated to the Ministry of Finance, Federal Board of Revenue (FBR), and the State Bank of Pakistan (SBP) for feedback.
Officials clarified that no EIF exemption had been proposed for non-Iranian origin goods, as regular banking channels are available with those countries, in line with the SBP's letter dated April 9, 2025.
Currently, imports of Iranian-origin goods are exempt from the EIF requirement until May 15, 2025. This exemption— limited to specific commodities— is being extended for 45 days at a time under High Court directives.
'We need a permanent solution to the EIF issue,' said Additional Secretary Hamid. 'The FIA is pursuing Commerce Ministry officials over alleged complicity in smuggling from Iran and Afghanistan. Pakistani banks are reluctant to process such trade for fear of penalties.'
The Committee expressed strong reservations about the Ministry's request to exempt certain barter transactions from the Import Policy Order (IPO) 2022, the EIF, and financial instruments required under SBP regulations— including Chapter 13 of the Foreign Exchange Manual and Circular No. 5/2-16 dated August 9, 2016. These provisions currently apply to imports of Iranian goods via land routes until formal banking channels are established.
'I don't think the ECC or SBP will approve an EIF exemption due to the sanctions,' said Chairperson Senator Anusha Rahman. 'This request is unjustified. You're asking ECC to do something that falls afoul of US sanctions. If it were legally feasible, we wouldn't have needed the EIF two years ago. You are knowingly proposing a measure the SBP cannot support. Don't embarrass the government by pushing for what cannot be done.'
She urged the Ministry to identify and address the obstacles facing traders and noted that there must either be a clearly defined barter trade policy or compliance with the existing Import Policy Order.
'We formed a sub-committee to explore ways to facilitate barter trade, but its report has yet to be submitted,' she added, demanding a timeline for its completion.
Joint Secretary Waqas Azeem informed the Committee that three meetings had been held and final recommendations would be submitted by next Tuesday.
Additional Secretary Hamid reiterated the Ministry's intent to find a lasting resolution for trade with Iran.
The Committee also discussed the matter of approximately 1,200 trucks stranded in Balochistan, reportedly carrying goods not permitted under the current barter trade policy. Haji Fojan Barech, Chairman of the Dry Fruits Importers Association, claimed the trucks held dry fruits worth millions of dollars. However, the Ministry questioned the authenticity of his claims regarding both the contents and the number of vehicles.
In a sarcastic remark, Senator Saleem Mandviwala suggested writing to the High Court for a 'lifetime exemption' from the EIF if the Ministry fails to find a workable solution. 'Currently, no formal mechanism exists for trade with Iran,' he added. 'There's more smuggling than legitimate trade because of our flawed policies.'
Senator Hamid Ali Khan emphasised the need for formalised trade with Iran and Afghanistan, stressing that smuggling— especially in Balochistan— must be curbed.
The Ministry of Commerce is currently reviewing the existing barter trade SRO in consultation with stakeholders. Three meetings have already been held by the committee established to identify gaps in SRO 642(1)/2023, which governs the B2B barter trade mechanism.
Key decisions from the last meeting held on April 7, 2025, include: (i) elimination of the current list of importable/ exportable items in SRO 642(1)/ 2023 and alignment with the IPO/ EPO 2022 and prescribed conditions; (ii) the Ministry of Foreign Affairs will provide a list of items/ entities sanctioned by the US, UN, and other organisation; and (iii) FBR will propose amendments to enable transfer of credit between contracting parties for netting off goods' value.
Chairperson Rahman remained unconvinced by the Ministry's presentation. 'This issue needs to be addressed at a higher level— beyond the comprehension of those in this meeting,' she said.
After over an hour of discussion, the Committee agreed to hold a joint meeting with the Finance Minister, Commerce Minister, and Governor SBP to resolve the EIF exemption and barter trade mechanism.
A representative from the Policy Research Institute of Market Economy (PRIME) presented data estimating the financial impact of smuggling and the informal economy at Rs 751 billion. However, the figures related to tobacco and pharmaceuticals were contested by Senator Faisal Rehman and representatives from the Pharma Association.
According to a press release, the committee directed the Ministry of Commerce to fast track summaries initiated for barter trade and for the import policy order. The Committee members directed the ministry to resolve the confusion on trade with Iran, Russia and Afghanistan through a barter system, vs the parallel trade ongoing under IPO.
Senator Saleem Mandviwalla reiterated the strategic importance of barter trade in tackling cross-border smuggling, stating barter trade from Iran and Afghanistan will help prevent smuggling. Affected traders added that over 1,200 trucks have been stalled at the border, loaded under barter terms, with sesame and rice exported without involving dollar payments.
The Committee also constituted a Sub-committee comprising of Senators Zeeshan Khanzada, Sarmad Ali and Faisal Rahman to provide recommendation on the tobacco sector. It was also agreed that the issue of counterfeit medicines will be reviewed by the Standing Committee on Health.
Trade and Investment Officers (TIOs) posted abroad also briefed the committee on potential trade opportunities, marking a continued commitment to expanding Pakistan's global trade footprint.
Present at the meeting were Senators Sarmad Ali, Faisal Saleem Rehman, Bilal Ahmed Khan, Hamid Khan, Amir Waliuddin Chishti, Saleem Mandviwalla, Zeeshan Khanzada, and Muhammad Tallal Badar, along with senior officials from the Ministry of Commerce representatives from the private sector, and trade officers posted abroad.
Copyright Business Recorder, 2025