Pakistan seeks upgrading of Afghan Transit Trade Agreement

ISLAMABAD: Islamabad has sought renegotiation of Afghan Transit Trade Agreement (AFTTA) during the visit of Afghan President Ashraf Ghani, a senior official told The News.

The agreement signed in 2010 had expired in 2015. Kabul historically keeps on lingering the issue; however, the expiry of agreement doesn’t suit Pakistan which is why it is seeking upgradation of the ATTA.

Pakistan argues that under the current arrangement containers of some goods get opened on the way or get smuggled into its territory after getting in Afghanistan which is why its industry was facing colossal losses.

Afghanistan wants imports from India under the ATTA through the Wagah border, but Pakistan is not allowing it. Export of black tea to Afghanistan under the ATTA has increased three times despite the fact that green tea is massively used in Afghanistan and the black tea gets smuggled into Pakistan.

Pakistan also wants to save its pencil industry, as most of the consignments exported to Afghanistan are opened on the way to Afghanistan or smuggled into Pakistan after being exported to Afghanistan.

This is how the country’s pencil industry is sustaining too much loss. The Pakistani authorities have also expressed concern over the smuggling of cigarettes into Pakistan which is again damaging its industry.

Islamabad wants Kabul to help manage the border to scale down smuggling to the minimum level. “We are fencing the border on our part but it will take time to complete the task. We are also working to increase the cost of process of smuggling sothat the cost of smuggled items increases to a level where it could not injure the local industry,” the official privy to the development said.

The official said trade under the ATTA had reduced to Afghanistan mainly because of withdrawal of Nato forces, and more importantly the Kabul administration has diversified imports and started importing goods under ATTA through Port Abbas in Iran.

According to the data available with The News Pakistan’s exports to Afghanistan have dwindled by 41.57 percent. Exports to Afghanistan drastically tumbled to just $1.4 billion in 2018-19 from $2.6 billion in 2010-11 showing how fast Pakistan was losing its one and only captive market from its influence.

This captive market of Pakistan has massively slipped to Iran and India mainly on account of frequent closures of trade borders between Pakistan and Afghanistan and escalating diplomatic tensions.

However, year on year basis, according to the latest trade data of Islamic Republic of Iran Customs Administration, Iran’s exports to Afghanistan have increased to $2.8 billion out of which in first ten months of financial year of Iran the exports to Afghanistan have climbed to $2 billion as of June 20, 2019. However, Iranian exports to Afghanistan in 2011 stood at $1.88 billion which now has risen to whooping $2.88 billion with surge of $1 billion in exports, says UN COMTRADE database on international trade.

Currently, Iran holds 22 percent share ($2.5 billion) of Afghanistan’s $11.5 billion consumer market. Pakistan’s export which once in 2010-11 stood at $2.6 billion has alarmingly decreased to $1.4 billion as Iran has snatched the Pakistan captive market to a large extent.

The official said closure of trade borders between Pakistan and Afghanistan in the wake of terror activities in Pakistan had provided an opportunity to Iran to make inroads into the Afghan market.

“Diplomatic tensions between the two countries have also forced the landlocked country to diversify its import regime.” “If we look at Indo-Afghanistan trade, in 2010 exports from India to Afghanistan stood at just $115.6 million and trade between the two states is also growing up which currently stands at $1 billion out of which India’s exports to Afghanistan stand at $873 million showing that the export from India has increased by 655 percent. However, both the countries have shown the commitment to grow the trade between them up to $2 billion by 2020. Currently, India is trading with Afghanistan through Chabahar port in Iran and two air cargo routes linking New Delhi and Mumbai to Kabul.”

The senior official at commerce ministry said that Pakistan’s exports to Afghanistan witnessed a mammoth decline due to the decrease in aggregate demand as a result of withdrawal of Nato forces from Afghanistan, increasing trust deficit, worsening law and order situation, frequent closures of the Pak-Afghan border and diversion of Afghan trade to Iran.

More importantly, Afghanistan which is a landlocked country has diversified its import regime and started importing items from other neighbouring countries reducing the import reliance on Pakistan because of the rise in trust deficit.

According to the details, Pakistan exported items valuing $1.271 billion to Afghanistan in 2016-17 as compared to exports of worth $2.6 billion in 2011-12. However, the bilateral trade was in 2011-12 at $2.6 billion which has now squeezed to just $1.4 billion.

Interestingly, imports from Afghanistan have grown up to $414 million which stood at $199 million in 2011-12 whereas Pakistan exports have dwindled by 41.57 percent. Pakistan often exports cereals and cereal preparations (wheat & wheat flour), raw sugar and refine rice, cement, petroleum products such as kerosene type jet fuel other than JP-1 and JP-4, potatoes other than seeds, vegetables and vegetable preparations, medical and pharmaceutical products, edible brassicas other than cauliflowers. Kabul administration is heavily under the influence of India and has started importing items from other countries despite the fact that the cost of importing from Pakistan is much less than that the importing cost from other neighbouring countries, but Afghanistan has done this reducing the reliance on Pakistan.