As the two-month waiver for non-submission of financial guarantees for Kabul-bound transit goods expires on Wednesday, Pakistan and Afghanistan constituted three committees on Tuesday, to resolve the Afghanistan Pakistan Transit Trade Agreement (APTTA)-related issues on a priority basis.
Finance Minister Dr Abdul Hafeez Shaikh held a meeting with Afghan Minister for Commerce Dr Anwarul Haque Ahadi where both sides constituted three committees for the integration of the two economies.
Under APTTA, the importer will have to submit insurance guarantees equal to 100 per cent duties on the imported items in order to curb smuggling and dumping of goods in Pakistan.
Earlier, insurance companies had refused to extend the guarantees due to high premium costs, compelling Prime Minister Yousaf Raza Gilani to waive the condition on July 7, for two months.
Analysts say that the United States is using all available means to make APTTA successful.
The prime minister had then directed the finance minister to resolve the issue within the stipulated time. The issue remains unresolved to date.
After the new APTTA became operational in June, it soon became redundant due to operational difficulties, resulting in a blockade of cargo at Karachi ports.
The features that make the new treaty different from the 1965 transit treaty are insurance guarantees and a tracking system. However, these two clauses of the agreement have not been invoked.
The Federal Board of Revenue (FBR) in a testimony to the Senate Standing Committee on Commerce has recently claimed that insurance companies have finally agreed to issue guarantees for Afghanistan-bound goods. These companies will start issuing guarantees after September 7 - the day the two-month waiver comes to an end.
New Jubilee Insurance Company, National Insurance Corporation Limited and EFU Insurance have agreed to extend guarantees while Adamjee Insurance has given its consent in principle, a tax official said.
It was also decided during the meeting that the Planning Commission would sum up the proposals and recommendations of the three committees and present to both ministers before the conclusion of the Afghan delegation’s visit to Pakistan.
The three committees will have three members from each side. The Pakistani side will have representatives from FBR, communications and finance, who will focus on the issues of security, insurance and bank guarantees to remove bottlenecks in APTTA.
Bilateral trade between the two countries currently stands at $1.7 billion.
Trans-loading and transshipment issues were also discussed during the meeting. The two sides agreed in principle to ease the customs procedure for quick clearance of consignments to and from Afghanistan.
Published in The Express Tribune, September 7th, 2011.