In a significant effort to combat the persistent issue of smuggling in Pakistan, authorities have taken a crucial step by banning the import of five luxury items through the Afghan transit trade. These items include tea, tiles, fabrics, cosmetics, electronic devices, and luxury vehicles, and they have become magnets for illegal trade due to a substantial increase in customs duties. What’s the impact of this ban on curbing smuggling, and why are these items so attractive for illicit acquisition? The trade of goods imported through Afghan transit into Pakistan has surged from $4 billion to an impressive $6.7 billion in the fiscal year 2022-23. However, what’s concerning is the significant proportion of mobile phones, diesel, engine oil, tires, and auto parts sold in Pakistan that are products of smuggling. This problem is not confined to Pakistan’s Afghan border; it extends to Iran as well. Iran contributes to smuggling, especially in the form of diesel and petrol, which constitute a substantial portion of Pakistan’s domestic demand for these fuels. Smuggled fuels from Iran not only strain Pakistan’s refineries but also force them to operate below capacity. The result is not only pressure on the energy sector but also revenue losses and potential contributions to the underground economy. The issue isn’t limited to goods and fuels; thousands of vehicles, opium, poppy, and even weapons infiltrate the country without going through the proper customs processes. This extensive smuggling network poses economic and security challenges, as it operates outside the law, depriving the government of much-needed resources. Rigorous measures and strategic actions are essential to curb losses, protect revenue, and promote legal trade. The consequences of this widespread smuggling ripple across various sectors. Imports of silk cloth have declined by 48%, while electronics equipment has seen a significant drop of 62%. The automotive industry hasn’t been spared, with vehicle tire imports plummeting by 42%. The tea market in Pakistan has been hit with a 51% decrease, while machinery imports and the trade of vegetables and fruits have witnessed declines of 34% and 46%, respectively. Paradoxically, during the same period, the Pak-Afghan transit trade has seen a remarkable 67% increase. The impact of these losses is extensive and far-reaching. The annual tea consumption in Pakistan, amounting to 225,000 tons, is severely hampered by smuggling through the Afghan transit trade. This results in a staggering loss of 35 billion rupees to the national exchequer in customs duties and taxes. Illegally smuggled cigarettes contribute to an 80 billion rupee loss, while tires and engine oil account for an additional 90 billion rupees. Medicines suffer a loss of 45 billion rupees, and the real estate market drains a substantial 60 billion rupees annually. The cumulative loss amounts to a staggering 310 billion rupees per year. Moreover, the gold market in Pakistan, valued at an impressive 2,200 billion rupees (approximately $7.1 billion), sees only a meagre 1.32 per cent of legally imported gold. The rest is smuggled, adversely affecting small and medium industries and eroding competitiveness. In accordance with international laws, nations lacking sea access and ports rely on their neighbouring countries to provide land corridors for trade. Afghanistan, being a landlocked country without direct sea routes, depends on its neighbours, Pakistan and Iran, to facilitate the import of its goods through their ports and to access the markets of Central Asian countries via Pakistan. During the era of the Pakistan People’s Party (PPP), a landmark moment occurred when a new Pak-Afghan Transit Trade Agreement was forged in the presence of US Secretary of State Hillary Clinton. This agreement entailed Afghanistan granting Pakistan a vital land route to reach the markets of Central Asian countries, while concurrently allowing Afghanistan’s goods to traverse through Pakistan to India. Notably, this pact barred India from exporting its goods to Afghanistan via the Wagah border through Pakistan. Regrettably, the Afghan transit trade facility has been exploited for smuggling into Pakistan rather than serving its intended purpose of importing genuine goods for Afghanistan. This widespread misuse of the transit route has inflicted substantial harm on the national economy, emphasizing the urgency of addressing this issue and restoring the integrity of the trade corridor. As per Caretaker Prime Minister Anwarul Haq Kakar, Pakistan faces an annual loss of 310 billion rupees due to a combination of Afghan transit trade and the smuggling of petroleum products. Economic experts have pinpointed this as a leading driver of Pakistan’s undocumented economy, exerting detrimental effects on the nation’s economic well-being. To tackle these challenges, the Ministry of Commerce has proposed stringent measures, including the requirement of a bank guarantee and 100% insurance covering the duties and taxes for Afghan transit trade imports of luxury goods. Additionally, a 10% processing fee on transit trade could serve as a deterrent to smuggling. Recently, I had a meeting with the Director General of Rangers Sindh, Major General Azhar Waqas, alongside several journalists and business leaders. During this meeting, we delved into pressing issues such as the rampant diesel smuggling through Karachi’s hub, the seizure of thousands of sacks of sugar and luxury items valued at more than 3 billion rupees, and the necessary demolition of illegal hydrants. Within this context, we were informed about the implementation of rigorous measures, encompassing the apprehension of those accountable, strategic operations targeting currency hoarders, the repatriation of illegal Afghan immigrants, and the proactive management of the persistent law and order issues in Karachi. This meeting emphasized the troubling fact that Pakistan’s undocumented and illegal economy has burgeoned to a concerning 60 per cent of the nation’s total GDP, siphoning off a substantial 6 per cent (amounting to Rs 310 billion) each year in taxes and customs duties in just five key sectors. This places an intolerable burden on the nation’s economy, industrial sectors, and the national treasury. Moreover, Federal Commerce Minister Gohar Ijaz has put forth a valuable suggestion to re-evaluate Afghan transit trade in accordance with international law as a means to curb smuggling. This move could hold the key to addressing the longstanding challenge of illicit cross-border trade. In conclusion, Pakistan’s battle against cross-border smuggling demands urgent attention. It affects the economy, security, and governance. Beyond political scoring and differences, it’s crucial for all institutions to collaborate and play their role. Rigorous measures and strategic actions are essential to curb losses, protect revenue, and promote legal trade. To secure a prosperous future, Pakistan must decisively confront this pervasive challenge, safeguard its interests, and regain control of its economic destiny. The writer is a senior journalist and a columnist. He can be reached at FaysalAzizKhan@Hotmail.com