Commerce Ministry has been empowered to impose country or commodity specific conditions or restrictions for imports/ exports of goods under the B2B Barter Trade Mechanism, official sources told Business Recorder.
Sharing the details, sources said that pursuant to the decision of the ECC/ Cabinet, Commerce Ministry issued SRO 484(1) 2022 and SRO 485(1)/2022 on April 1, 2022 whereby provisions with respect to barter trade had been incorporated into Import Policy Order (IPO) and Export Policy Order (EPO) thus providing a legal framework for carrying out trade transactions through barter mode. Only to the extent of Pak-Iran trade, Ministry of Commerce had notified a comprehensive procedure (SOPs) for operationalization of Barter Trade Mechanism between Pakistan and Iran. Quetta Chamber of Commerce & Industry (QCCI) from Pakistan side and Zahidan Chamber of Commerce & Industry (ZCCI) from Iran side were responsible for registration of importers and exporters and recording and monitoring of trade transactions etc. under the barter system.
According to sources, Commerce Ministry felt that a standardized procedure, with due safeguards, for the regulation of Barter Trade through B2B should be notified. In consultation with stakeholders, Ministry of Commerce prepared a draft SRO for affecting B2B barter trade, and shared it with State Bank of Pakistan (SBP) and Federal Board of Revenue (FBR) for seeking their comments thereto.
Both FBR and SBP supported the proposal of establishing a mechanism/ procedure for B2B barter trade system with an oversight to ensure sanctions screening (commodities and entities), dispute resolution, and accounting/ settlement of transactions, trade balance and time to time updating of operational modalities.
Ministry of Commerce proposed that a general B2B Barter Trade Mechanism, through a notification, may be approved by the competent forum.
The sources maintained that when the proposal was put before a Committee headed by Finance Minister, the case was discussed threadbare and the initiative based on extensive consultations was welcomed. It was noted that barter trade would encourage regular channel and also considered that trade with Afghanistan, on the pattern of Iran, may also be regularized.
The Ministry responded that Pakistan had taken all the necessary steps towards this end; however, the Afghan side was working on their side for developing the relevant rules and mechanism and had solicited some time from the Pakistan side. It was also recommended that only a Negative list should be shared and the remaining items be allowed. The forum also discussed the need for clearing house.
In response to a query, it was noted that general rules shall be made by the Ministry of Commerce and for valuation existing mechanism adopted by FBR shall be followed. The Ministry further suggested that Sub Section 4 of Section 2 of Draft SRO of the Summary may be replaced as under: