Tapping regional trade potential
Non-tariff barriers and illegal smuggling of goods continue to impede growth in Pak-Afghan bilateral trade
Torkham border PHOTO: AFP
In a welcome move, Pakistan and Afghanistan have decided to constitute a committee for discussing issues of visa, road permits and guarantees in order to benefit from the International Road Transport (TIR) Convention, which is a multilateral treaty establishing an international customs transit system with maximum facility to move goods in sealed vehicles from a customs office of departure in one country, to a customs office of destination in another country, without requiring extensive and time-consuming border checks at intermediate borders. Truckers making use of the TIR procedure must first obtain an internationally harmonised customs document, which is valid internationally and which describes the goods, their shipper and their destination and represents a financial guarantee.
The trade potential between Pakistan and Afghanistan is much bigger than currently estimated, however, non-tariff barriers and illegal smuggling of goods, and other hurdles on both sides, continue to impede growth in bilateral trade. The disturbing aspect of Afghan transit trade has been a major difference in Pakistan’s and Afghanistan’s reporting in value of the transit trade. In case the TIR Convention is successfully introduced between Pakistan and Afghanistan, Pakistani trucks carrying export goods to Central Asian markets could cross the Afghan border without hindrance and trucks carrying goods from Central Asian countries could also cross over to Afghanistan, Pakistan and India. The same trucks could then carry, on their return, Indian goods for Pakistan, Afghanistan and Central Asian markets, creating a vibrant regional trading zone. However, for this to happen, the enormous trust deficit that exists between India and Pakistan on the one hand and on the other, between Pakistan and Afghanistan, would first need to be removed. Next, in view of the enormous economic potential of such a trading zone taking shape, Pakistan in its own economic interests should be prepared to allow India overland transit trade route facility to reach Afghanistan and beyond, in return for a political and/or economic quid pro quo from a willing India.
Published in The Express Tribune, March 13th, 2016.
The trade potential between Pakistan and Afghanistan is much bigger than currently estimated, however, non-tariff barriers and illegal smuggling of goods, and other hurdles on both sides, continue to impede growth in bilateral trade. The disturbing aspect of Afghan transit trade has been a major difference in Pakistan’s and Afghanistan’s reporting in value of the transit trade. In case the TIR Convention is successfully introduced between Pakistan and Afghanistan, Pakistani trucks carrying export goods to Central Asian markets could cross the Afghan border without hindrance and trucks carrying goods from Central Asian countries could also cross over to Afghanistan, Pakistan and India. The same trucks could then carry, on their return, Indian goods for Pakistan, Afghanistan and Central Asian markets, creating a vibrant regional trading zone. However, for this to happen, the enormous trust deficit that exists between India and Pakistan on the one hand and on the other, between Pakistan and Afghanistan, would first need to be removed. Next, in view of the enormous economic potential of such a trading zone taking shape, Pakistan in its own economic interests should be prepared to allow India overland transit trade route facility to reach Afghanistan and beyond, in return for a political and/or economic quid pro quo from a willing India.
Published in The Express Tribune, March 13th, 2016.