Afghanistan-Pakistan Transit Trade: Business community still not convinced

The fear of smuggling continues to cast a shadow over any positive aspects of the deal.

The new Afghanistan-Pakistan Transit Trade Agreement (Aptta) is going to hit customs clearing agents hard, and they are strongly opposed to the new scheme of things, despite Pakistani officials’ optimism that it will provide the country with access to over 17 routes for trade with central Asian countries.

Brushing aside the serious reservations and apprehensions aired by the local business community over the new transit agreement, officials of the Ministry of Commerce have asserted that access to Central Asian states will increase the volume of exports to these countries by $1 billion.

“The Afghan Transit Trade (ATT) is traditionally linked with smuggling. Even the sealing of Pak-Afghan border and the ongoing operations by the US led forces in the areas has failed to make any visible dent in the nefarious activities which is still going on- costing $15 billion loss to remittances, which translates into a $120 billion dent to the Gross Domestic Product and $3 billion loss to the revenue”, said Engg Nauman Wazir, an industrialist who had attended a briefing on Aptta in Washington.

He said that besides discouraging local manufacturing and legal imports, the transit trade is causing industrial stagnation.

The local business community is not really opposed to the transit trade agreement. “The government should see to it that with the signing of a new agreement, an inbuilt mechanism is established to check the misuse of transit trade with a view to minimise losses to the national economy” commented Zahid Ullah Shinwari, a Gadoon-based manufacturer.

A monitoring forum consisting members of the business communities of both the countries, he said, may be formed to look into the smuggling-related issues and to monitor that the goods transported through transit trade mechanism are genuinely consumed in the neighbouring country.

The commerce ministry said that to ensure effectiveness and proper implementation of the transit trade agreement the Afghanistan-Pakistan Transit Trade Coordination Authority is being set up, along with arbitration tribunals to mediate and solve any possible conflicts between the two countries.

The local border and clearing agents suggest that the import duties on smuggling-prone items which are mostly traded in ATT should be unified in Pakistan and Afghanistan. The tariff structure of these items should be the same in both the countries. This will discourage the re-entry of these goods in the local market.

Moreover, the new Aptta should have facilities for the local importers to import raw materials and finished goods from the Central Asian States.

The traders claim that any agreement in which Afghan trucks are given access to transport goods to Wagah border and Karachi ports and say that this step is counterproductive and may damage the national economy on various counts.

Listing the possible damages, they reveal that Aptta will cause revenue loss to the Pakistan Railway to the tune of Rs3 billion while NLC will suffer a loss of Rs18 billion annually and more than 5,000 Pakistani transporters would lose a sizeable income from the transit trade business.

The government of Pakistan has, however, clarified that they will not allow entry of Afghan origin vehicles for transportation of transit goods under the new Afghan Transit Trade Rules 2011 in cases where the customs authorities refuse to issue Road Transit Temporary Admission Document (TAD) to Afghan carriers.

The Federal Board of Revenue is believed to have introduced a new provision ‘temporary admission of documents’ into the Afghan Transit Trade Rules 2011. The government of Pakistan will issue the TAD to vehicles registered in Afghanistan and temporarily brought into Pakistan for transportation of transit goods under the new Afghan Transit Trade Rules 2011.

Published in The Express Tribune, July 18^th, 2011.