Daily Times

The Afghanistan-Pakistan Transit Trade Agreement (APTTA) is a great leap forward in regional economic integration, which will increase bilateral trade provided it addresses the apprehensions of the Pakistani business community. Since time immemorial, the Pakistan-Afghanistan region has remained a highway through which exchange of people, ideas and goods took place. In international politics, a paradigm shift occurred with the collapse of the Soviet Union. In the post-Cold War era, regionalism got more prominence. In this context, conflict management through regional engagement has emerged as a way forward. Central Asia became independent and its rich hydrocarbons attracted the world. The world community helped the Central Asian States to diversify their communication linkages. The red curtain along the Amu River fell and paved the way for the resumption of trade between South and Central Asia. Despite all odds, Pakistan struggled for a win-win situation in the region and never opted for a zero-sum game.

Pakistan had signed an agreement with Afghanistan in 1965 to facilitate the foreign trade of its landlocked neighbour. Economic and political development and a communication revolution in the region underscored revisions in the 1965 Pak-Afghan Transit Trade Agreement. The two friendly countries took a timely step to revise and update the agreement to cope with the new challenges. The agreement was signed between the two countries in Kabul on October 28, 2010. Pakistan and Afghanistan are two neighbours with deep cultural, historical and geostrategic ties. History reflects that the two countries have helped each other in times of need. In 1965, when Pakistan was fighting a war of survival, King Zahir Shah offered support, and when the Soviet Union invaded Afghanistan, Pakistan gave refuge to millions of Afghans.

The previous Afghan transit trade agreement envisaged customs clearance facilities to Afghan traders by Pakistani custom clearing companies and shipping agents, which provided revenue in billions to the Karachi Port Trust besides providing employment to thousands of people. Likewise, Pakistan Railways earned a reasonable amount of freight on the transportation of Afghan transit trade goods. To safeguard Pakistan`s economic and security interests, if the Afghan transport companies were allowed the facility to fetch goods from Pakistani ports, then the same should also be extended to Pakistani companies. Tariff and non-tariff barriers are creating problems for Pakistani exporters who are interested to export fruits, cement, pharmaceutical products, readymade garments and leather jackets to Central Asia.

The Central Asian Republics do the bulk of their foreign trade through other seaports, despite the location disadvantage of thousands of kilometres compared to Pakistan`s seaports. Pakistan has imposed a tax of 0.08 percent on the value of every item transported to Afghanistan. In this way, Pakistan will earn at least Rs 5 billion annually. Is APTTA a legal cover for smuggling along the Durand Line? The agreement has been massively abused by the crooked elements on both sides of the Durand Line to import products way above their actual demand in Afghanistan, meant only to push back the products into Pakistan. The Afghan Transit Trade (ATT) resulted in quasi-legal smuggling in many ways. The majority of the imported products booked for Afghanistan just went through the motions, never to reach Afghanistan after being rerouted to the border areas of Khyber Pakhtunkhwa. Due to the disparity in custom duties and Import Tariff Price (ITP) between Pakistan and Afghanistan, a majority of the goods imported under the ATT were smuggled back to Pakistan, inflicting severe losses due to non-payment of import duty. The Afghan government was earning $ 800 million annually on receiving customs duty on goods imported under the ATT, which are in fact imported only to be smuggled back to Pakistan. The customs duty in Afghanistan is one fourth that in Pakistan, and a low Afghan tariff attracts goods there, which are smuggled back to Pakistan.

Afghanistan is an important trading partner of Pakistan, and the bilateral trade has grown from $ 170 million in 2000-01 to $ 1.49 billion in 2008-09 and now about $ 2 billion. Afghanistan imported eight times more black tea than Pakistan in 2008-09. The misuse of the ATT could be gauged from the fact that right hand cars are imported through transit trade and they are not even in use in Afghanistan. Facilities provided by the government of Pakistan to Afghan traders are also being extended to Pakistani businessmen by the Afghan government in trade with the Central Asian Republics (CARs). Khyber Pakhtunkhwa industrialists who are presently facing the location disadvantage of distance from the seaport would also benefit from the facility.

Like the Afghan authorities retain 100 percent and refund 90 percent of duties on all exports to the CARs, the same treatment should be demanded from the Afghan exports to India via the land route of Wagha. Is APTTA an instrument to give India access to Afghanistan and Central Asia without any economic benefit to Pakistan? It will be worthwhile to address the apprehension that under the cover of trade, India can smuggle whatever it likes to Kabul in its trucks. Apparently, this trade agreement was with Afghanistan but actually, it was to provide a permit to India to utilise Pakistani roads for its trade with Afghanistan and Central Asia. Will it pave the way for low quality Chinese goods with that of India? Pakistan does not want the status quo as it is earnestly striving for improvement in relations with India; nevertheless, it should not be a narrative of one-sided concessions.

The leadership of the country should pay more attention to internal cohesion to cope with the epic challenges in and out. While taking significant decisions in the realm of economics, collective efforts on the part of the people’s representatives, the security establishment and business community will help in overcoming the problem of misperception and trust deficit. For regional peace and development, Pakistan has sacrificed more than 40,000 citizens and its material losses are in billions of dollars. For durable stability in any peace settlement in the region, accommodating its genuine interests will be a quantum jump.

The writer is a professor at the Department of Political Science at the University of Peshawar. He can be reached at zahid_anwar@upesh.edu.pk