D-8 states raise trade bar to $500b by 2018

Eight Islamic countries also plan to boost investment inflows

Eight Islamic countries have set a big, $500 billion target to push their mutual trade by 2018. They also plan to increase their investment inflows. They will have to work hard to meet the target, but their commerce ministers, meeting in Islamabad this week, are upbeat to achieve it. This is despite the fact that  several of them are hit by many difficulties. These include: nuclear-related UN and US sanctions on Iran which are just removed, international recession, global financial crisis, business sluggishness in EU, and international oil prices crash. However, the Islamic Ministers decided to go ahead and meet the target.
The Trade Ministers' Council, or TMC, represented the D-8 group of Islamic countries including: Bangladesh, Egypt, Indonesia Iran, Malaysia, Niger, Pakistan, and Turkey.
The TMC Ministers resolved  to immediately make  operational their plans to adopt and trade on the basis  of their Preferential Trade Agreement, or PTA, effective July 01,2016. In this context they decided to raise the volume of their mutual trade to $500 billion a year  by 2018. Their present mutual trade is $120.5 billion. The ministers were quite upbeat, fully resolved and committed to raise the present trade level by more than four times within three years. The decision of the D-8 was high lighted by the fact  that it co-incided with the United Nations announcing lifting of its own set of sanctions imposed on Iran Under Security Council Resolution 2231. The removal of UN-US-Westrn sanction will have a multiplier effect on foreign trade by Iran and the D-8 group of Islamic countries as well as other nations across the globe.
Pakistan alone, for instance, will see a major gain in foreign trade not only with Iran but with all the Islamic countries, and across the world. The UN announcement was  immediately followed by Finance Minister Ishaq Dar declaring: "Pakistan has officially lifted sanctions on Iran and decided to revive economic and commercial relations with our neighbouring country - Iran." This decision was taken by the top-ranking Inter-Ministerial Council on Economy, Dar said.
The key to the high trade volume hopes of Pakistan and other countries is the fact, that it will also enlarge the investment inflows on bi-lateral and multilaterally funded  projects which were stalled by the sanctions. In the case of Pakistan, the bilateral projects, with international funding, include Iran-Pakistan  gas Pipeline, Iran-Pakistan Electricity Supply Grid, and Iran - Pakistan Railway system connecting Gwadar port located on the lip of the Arabian Sea, the UAE and on to the China Pakistan Economic Corridor, stretching all the way to Shanghai, Eastern China.
The ministry of finance said the decision of revival of trade and economic relations will be officially notified by the Ministry of Foreign affairs, or MoF. The MoF, in its statement said "economic and commercial relations with Iran, in various fields, including trade, investment, technology, banking, finance, and energy have been revived with immediate effect and all the previous notifications with regard to UN sanctions on Iran stand repealed."
Abid Qamar, chief spokesman of the State Bank of Pakistan, or SBP, said: "Now after the issuance of instructions to banks, all permissible transactions with Iran will be possible. The decision of Pakistan lifting all restrictions on business with Iran will be intimated to the Iranian central bank soon."  
SBP, over the week end did announce: "All banks and financial institutions have been communicated the decision that all restriction, under the sanctions, have been removed and normal business activities can be commenced with immediate effect," the official announcement said.
"As a result of the ban, Pakistan's exports to Iran had declined to only $43 million in 2014 from $182 million in 2010. But we are working on a strategy to raise this bilateral trade to $5 billion over the next five years," said commerce ministry officials.
"Besides trade enhancement, Islamic countries of D-8 also a have number of  investment and various projects, some with funding from multinational institutions, which were kept on hold, but will now get quickly implemented. Of course trade is our no. 1 priority," said Aisha Abubakar, Minister of State for Industry, Trade and Investment. "We know our governments and our financial sector are keen to invest in our own region," she said.
The D-8 group announced their decision in the form of "Islamabad Deceleration."  Reading the deceleration Pakistani Commerce Minister Khurram Dastgir, who hosted the conference, announced "The D-8 group member countries will  implement Preferential Trade Agreement, or PTA, from July 01, 2016. Bangladesh and Egypt will implement the PTA after ratification from their governments." The next meeting of the Trade Ministers' Council will be held in Malaysia in 2017.
Faith Metin, vice-minister of Economy of Turkey, referring to the declaration underlined the fact that the eight-point decisions included in it, said, it has been decided: "to enhance efforts to increase the intra trade of D-8  member States to 15 per cent to 20 per cent of their global trade or about $500 billion in three years to 2018. It is feasible and achievable as most of our countries have reached the stage of their industrial capacity, potential and maturity of fully and successfully achieving it," said Metin. In industrial and economic development Turkey is one of the top nation in D-8.
Khurrum said: "The  commercial integration among our eight countries will boost development through trade and investment which will lead to reduction in poverty and uplift of millions of people  to a brighter and mutually prosperous  future. The target of enhancing trade between the D-8 countries to the level of $500 billion a year by 2018 is also set to encourage more and modern industries in member countries."
He said Pakistan is focused on its foreign trade policy reforms and removing non-tariff barriers on  some 4,000 product areas. The maximum tariff has also been brought down to 20 per cent as a result of this rationalisation process. Pakistani exports to D-8 were $1.602 billion in fiscal year-2015, while imports were $3.67 billion.
Views expressed by the author are his own and do not reflect the newspaper's policy.