Afghanistan Transit Trade: Pakistan to abolish cash guarantee clause for 60 days

Afghanistan asking to make this exemption permanent.

ISLAMABAD:

In a major concession, Pakistan has proposed to abolish for 60 days the provision of insurance guarantee on all goods, except those which appear on the sensitive items’ list in the Afghanistan-Pakistan Transit Trade Agreement (APTTA), documents available with The Express Tribune revealed on Monday.

Sources told The Express Tribune that a high-level meeting will be held soon to finalise the proposal. They added that the meeting will be attended by the representatives of the customs department and the ministry of commerce.

Afghanistan also proposed to make this one-time exemption given by President Asif Ali Zardari permanent through an amendment to the APTTA. Sources said that the exemption was given in response to an appeal made by Afghan President Hamid Karzai.

The proposal says that the bank guarantee, insurance guarantee and cash guarantee on all goods that Afghanistan imports under the APTTA should be abolished.

Under the previous agreement, importers or brokers of Afghanistan bound goods had to extend financial guarantees equivalent to the amount of duties on import of such goods, which will be returned after confirmation that the goods have crossed into Afghanistan and are not dumped in a Pakistani market, which is a common practice.

The ministry of commerce expressed its reservations over the proposal to abolish insurance guarantee for all trucks transporting goods to Afghanistan from Pakistani ports under the APTTA.

Pakistan in the new proposal has proposed to limit the insurance guarantee to about 70 specific items which are most likely to be smuggled.

The volume of smuggling is in the range of $1.5 billion to $2 billion per annum, according to rough estimates given by an official of the commerce ministry. The major smuggling prone items are tea, tyres and electronic goods.

Sources added that the APTTA had virtually brought the trade between the two countries to a standstill, as not a single consignment had been cleared since its implementation.

Published in The Express Tribune, August 16^th, 2011.