Slim chances of a drop in smuggling

FBR says no concession given to India

The business community has expressed disappointment over a new Afghanistan-Pakistan Transit Trade Agreement (APTTA) and has slim hopes of a reduction in smuggling under the arrangement.

Pakistan and Afghanistan signed record notes on Sunday which can prove the basis for an agreement on transit trade. Under the deal, Islamabad has permitted Kabul access to Wagah border for supply of goods to India. In return, Afghanistan has allowed Pakistan access to Central Asian markets.

Besides, they have agreed to seek financial guarantees from authorised brokers and customs clearing agents to check unauthorised trade. These deposits will be released after the goods exit the country. Annual smuggling under the transit facility is estimated at around Rs250 billion.

CEO General Tyres and Rubber Company Limited, Mohammad Shahid Hussain, told The Express Tribune that the new arrangement will not help control illegal flow of goods between Afghanistan and Pakistan.

“We don’t have any problem with legal trade between Afghanistan, Pakistan or for that matter India. What is disturbing is the high smuggling of tyres under the transit trade arrangement,” Hussain added.

Tyres are one of the five major items smuggled under transit trade. Other products are tea, electronic items, spare parts and garments and fabrics.

“Our concerns were not addressed in the new agreement, though it has been a thorough year of discussion with stakeholders,” he said, adding that the government has tried to monitor Afghanistan-bound containers but smuggling is still a big challenge.

On the issue of access to Central Asian markets, Hussain said this is a potential option for Pakistani exports but there is already a big untapped market in Pakistan.

Some businessmen aired concern over providing a trade corridor to Afghanistan through Wagah border, saying this will only benefit India and smuggling of Indian goods will also increase. However, a Federal Board of Revenue (FBR) official said “Pakistan has not given any concession to India in the new agreement and the government wants to curb smuggling.”

“There has been a status quo in the new agreement as far as giving trade corridor to India is concerned,” he said while brushing off concerns of businessmen.

President Karachi Chamber of Commerce and Industry (KCCI), Abdul Majid Haji Muhammad, said Pakistan should stop smuggling prior to signing any agreement with Afghanistan.

In a press release, the KCCI expressed fears over the damaging repercussions of the new Afghanistan-Pakistan Transit Trade Agreement for the local industry. “KCCI firmly believes that a huge quantity of imported goods for Afghanistan come back into Pakistan, damaging the local industry,” Muhammad said.

He was of the opinion the quantum of smuggling and involvement of unscrupulous elements will multiply. “This will hurt honest importers of goods as well as the manufacturing sector, we believe before taking any decision the government should take the private sector’s input.”

However, he praised the move to give concessions to Afghanistan to trade with India through Wagah and in return gain access to Central Asian states.

Published in The Express Tribune, July 20^th, 2010.