Transit trade: Insurance firms refuse to provide guarantees

No consignment has been cleared since accord came into effect: official.

Irshad Ansari July 01, 2011


Insurance companies have refused to provide guarantees for Afghan trucks coming to lift cargo and goods imported under the new Afghanistan-Pakistan Transit Trade Agreement, causing a halt in trade, a commerce ministry official said.

“Since the new agreement came into force on June 13, no consignment has been cleared as insurance companies are reluctant to extend guarantees due to high risk involved in the trade,” he said.

Afghan transporters and traders have also termed the cost of insurance guarantees “unbearable” as this will increase their import cost.

To review and resolve the problem, the official said, a meeting of Transit Trade Coordination Authority, which was constituted to monitor and make the agreement effective, is expected to be called. Earlier, the two countries struck the new accord in a bid to check massive smuggling under the garb of transit trade, which caused losses of billions of rupees to Pakistan’s economy.

According to officials of the Federal Board of Revenue (FBR), Afghan transporters and importers have the responsibility to provide insurance guarantees. In the new agreement, it was agreed that bank guarantees would be provided for trucks coming from Afghanistan for lifting transit cargo and for value of duty on goods imported for the purpose. However, on the insistence of Afghanistan the bank guarantees were replaced with insurance guarantees, which would be returned on arrival of trucks and goods at Afghan destinations.

The new transit trade agreement has been put in place for a period of five years with extension of another five years on completion of the first term. However, the difficulties encountered at the very beginning are a cause for concern.

Published in The Express Tribune, July 2nd, 2011.


Muhammad Anwar | 10 years ago | Reply Dear Readers, Why Insurance companies are being blamed for not providing insurance guarantees to Afghan Transit trade from Karachi and vice-versa. The APTA requirements are bank or insurance guarantees to give protection for Pakistani exchequers. It would be arranged by the importers/exporters of Afghanistan not by the Pakistani trucking companies. This guarantee is must if the Afghan traders want to use Pakistani ports. Karachi port is facilitating Afghan trade in accordance with APTA and before it was facilitating in accordance with ATTA.. The agreements can be cancelled or suspended if they are not beneficiary to facilitator. Arranging guarantees for transit goods is sole responsibility of Afghan Traders not Pakistan. Afghan traders or government should negotiate with Pakistani Insurers. Muhammad Anwar - International Trade Development Activist.
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