Pakistan’s Ministry of Commerce has unveiled significant proposals to amend the country’s Barter Trade Mechanism (SRO 642(I)/2023), a framework introduced last year to facilitate non-cash trade with Iran, Afghanistan, and Russia. The amendments, shaped through consultations with public and private stakeholders, mark an important step toward making the system more practical, transparent, and aligned with international trade standards.
The barter trade framework, first launched on June 1, 2023, was seen as a way to bypass challenges in currency settlement, particularly with countries facing international sanctions or restrictions. However, its implementation revealed practical bottlenecks that discouraged wider adoption by traders. To address these issues, the Ministry of Commerce has collaborated with the State Bank of Pakistan (SBP), the Ministry of Foreign Affairs (MOFA), the Federal Board of Revenue (FBR), and the Pakistan Single Window (PSW) to refine the system.
One of the most important proposed changes is the removal of the fixed list of importable items included in the original SRO. Instead, the system will be aligned with the Import and Export Policy Orders of 2022, thereby broadening the range of goods eligible for barter trade. This move is expected to expand opportunities for Pakistani exporters and importers while reducing administrative complexity.
Another major amendment involves simplifying compliance checks. Currently, Pakistan Missions abroad and MOFA verify sanctioned and non-sanctioned entities involved in trade. Under the new proposal, this requirement would be replaced with self-undertakings from private entities confirming their adherence to UN and international sanctions. The measure is designed to cut red tape, though it still ensures accountability by binding traders under existing laws.
Flexibility is also at the core of the reforms. The original rule that required “import followed by export” is proposed to be replaced with a broader “imports/exports” formula. This change will allow businesses to engage in transactions with greater ease and adapt trade flows based on demand and supply conditions. Furthermore, the amendments permit private entities to form consortia for barter trade. Multiple Pakistani firms will be able to collaborate with foreign partners under a joint framework, provided that the value of goods is netted off quarterly and transactions are concluded within 120 days under Customs’ supervision.
To strengthen oversight, the FBR has recommended that Pakistani traders and foreign chambers of commerce provide undertakings confirming that all contracting parties are not sanctioned. Additionally, a new clause has been proposed to make all consortium members jointly liable under the Customs Act, 1969, and the Imports and Exports (Control) Act, 1950. This measure seeks to enhance accountability across participants.
While MOFA and SBP have expressed agreement with the revised framework, the Pakistan Single Window has voiced concerns regarding the electronic validation of traders’ self-undertakings. PSW suggests that Customs should play a role in verifying the non-sanctioned status of entities through its systems, to ensure stronger compliance.
The draft notification incorporating these proposals has already been vetted by the Law Division. The Ministry of Commerce has now moved to seek Federal Cabinet approval, after which a revised SRO will be issued to operationalize the amended barter trade mechanism.
If implemented, the updated framework could provide Pakistani businesses with new opportunities to expand exports and imports through barter arrangements, while ensuring compliance with international regulations. It also demonstrates the government’s intent to modernize trade governance and offer practical solutions for trading with partners where conventional payment mechanisms remain constrained.
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