Key Pakistani-Afghan trade deals stall on India, souring ties

Published: September 17, 2015
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An overview of a transit depot where trucks bound for Afghanistan are loaded in Peshawar, Pakistan September 15, 2015. PHOTO: REUTERS

An overview of a transit depot where trucks bound for Afghanistan are loaded in Peshawar, Pakistan September 15, 2015. PHOTO: REUTERS

ISLAMABAD: Pakistan and Afghanistan have shelved a raft of agreements that promised to more than triple cross-border trade, officials said, as economic ties seen as key to regional stability fall victim to rivalry and suspicion.

Afghan President Ashraf Ghani struck the trade deals with Pakistan soon after taking office last year as part of a broader rapprochement that included plans to share intelligence on Taliban insurgents active in both countries.

That cooperation was aimed at tackling the militant movement, which has separate Afghan and Pakistani branches whose violent campaigns kill thousands of people each year and hamper much-needed development.

Read: US, Pakistan to persuade Kabul to resume stalled talks

The trade deals were supposed to be a step towards warmer relations and boosting Afghanistan-Pakistan trade from $1.6 billion now to $5 billion by 2017.

But officials told Reuters that the agreements, which include reducing tariffs and granting each other preferential trade status, have stalled.

“There has been no progress or further meetings for months since those agreements were signed,” said Musafer Qoqandi, the Afghan Commerce Ministry’s spokesperson.

The key bone of contention was whether Pakistan would allow trade from old rival India to cross its territory.

The setback first emerged in April, but neither side was willing to discuss it amid attempts to salvage the agreements and maintain the appearance of unity.

But political relations deteriorated after a spate of Taliban attacks in Afghanistan last month, including several large blasts in Kabul, and the impasse over trade spilled into the open, further complicating efforts to save the deals.

Some Afghans blame Pakistan for supporting the Taliban, charges that Pakistan denies.

As diplomats from the two countries swap blame, some are wondering how they can control militancy together if they cannot make progress on trade.

“If Pakistan and Afghanistan aren’t able to agree on relatively simple trade initiatives that benefit both countries, how can they be expected to make progress in security co-operation?”​ asked Vaqar Ahmed, deputy executive director at Islamabad’s Sustainable Development Policy Institute (SDPI).

Disagreements over India

Muzamel Shinware, Afghanistan’s deputy commerce minister, told Reuters that it was “illogical and unfair” not to include Indian trade crossing Pakistan into Afghanistan.

Under the terms of the agreements, Pakistan was to have been allowed to ship its goods to markets in Central Asia and beyond via Afghan territory.

But the row over Indian goods has jeopardised the deals, with India and Pakistan locked in a decades-old standoff.

“If you put India on the table, then the whole thing stops,” said a Pakistani official, speaking on condition of anonymity.

Read: Pak-Afghan: Trade discrepancies decreased, need to do more

Pakistani Commerce Minister Khurram Dastgir Khan confirmed that progress was stalled and blamed Afghanistan for failing to deliver promised lower levies on Pakistani transit trade and to begin negotiations on a preferential trade agreement.

Afghanistan, in turn, blamed Pakistan.

A senior Afghan official, who asked not to be named, said that the progress on trade made since Ghani’s visit to Pakistan in November “could, frankly, have been made in two weeks if we were serious”.

In November, Pakistan promised faster clearance of Afghan cargo, greater access for Afghan traders to Pakistan’s railway system and to set up ‘parallel track’ Afghan customs at Karachi.

Dastgir Khan says most of those steps have been implemented, although some officials privately concede that progress in recent months has stalled as relations chilled.

Part of the problem is that the military retains the final say in bilateral ties, experts say.

“(The Pakistani commerce ministry’s) hands are too tied,” said an Islamabad-based consultant who has worked closely with the ministry. “(They) need to take clearance on each and every petty issue on Pak-Afghan trade.”

One country benefitting from the chill between Pakistan and Afghanistan is neighbouring Iran.

Afghan transit trade with Iran has increased steadily since 2007. In 2011, it supplanted Pakistan as Afghanistan’s largest transit trade partner in terms of containers shipped, according to SDPI.

“Perhaps Pakistan thinks that it is twisting Afghanistan’s arm by stopping these trade initiatives,” said Ahmed of SDPI.

“But very soon, Iran could make Pakistan irrelevant.”

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Reader Comments (34)

  • Gavin
    Sep 17, 2015 - 11:17AM

    Pakistan, the so called geo-strategically located country with no strategy/plan/thought. The squeaky wheel doesn’t always get greased; it often gets replaced… If Pakistan continue with it’s current policy, she will be made irrelevant by/before 2017. Recommend

  • Begging bowl
    Sep 17, 2015 - 11:20AM

    In today’s times, when all the countries economy are integrated in the world economy, Pakistan is standing out in the cold (with Hurriyats) and henceforth, have to beg for aid or borrow from IMF!Recommend

  • ghazal
    Sep 17, 2015 - 11:21AM

    Pakistan foreign and commerce minister, gen raheel Sharif must have some plan. Hope he is not looking for answers of arithmetics in book of chemistry. Solution of economic problems in military strategyRecommend

  • Pk- World taunts,Osama haunts!
    Sep 17, 2015 - 11:30AM

    Pakistan is not a migraine for neighboring countries like Afghan, Iran, Bangladesh, India, but also for the far away countries like U.K. & U.S.Recommend

  • Amin
    Sep 17, 2015 - 12:04PM

    This is what happens when soldiers do things they don’t have a slight idea of.Recommend

  • SKChadha
    Sep 17, 2015 - 12:18PM

    Well .. well ……. If Pakistan doesn’t allow Afghanistan to import from India (via Pakistan road route), how it can expect that Afghanistan will allow Pakistan to import goods from Tajikistan, Uzbekistan, Turkmenistan etc.? Similarly, if Pakistan refuses Iran’s trade with India (via Pakistan), how it can expect Iran will permit it the trade with West Asia?

    Probably such policy will isolate Pakistan from all its neighbors?Recommend

  • Raghu2
    Sep 17, 2015 - 1:08PM

    Pakistanis have a way of blaming others for their failures. Unable to accede to Afghan legitimate demands that Indian cargo be allowed( no nation can deny other nations partners),it blames Afghans for spoiling the party even after the great extent to which Ghani went in placating Pak. Pak thinks Afghan as a land subservient to Pak interests not an another independed proud nation.Recommend

  • Bilal
    Sep 17, 2015 - 1:17PM

    Gavin, Pakistan isn’t some “cog-in-the wheel” that you can replace. That’s a pretty lame way of viewing international relations. You don’t get to choose neighbours or what you call “wheels”.
    Pakistan has reservation not least of which is related to the fact that the country is being ruled by an implanted administration.
    Trade ties is a two-way thing. There’s nothing India produces that cannot be sourced from elsewhere. Afghan govt isn’t being honest when it places such conditionalities. Pakistan has all the right to allow/disallow anyone to use its territory for trade. Afghans should accept that. Otherwise there would be all new wheels on the cart, no one to pull it through !Recommend

  • Cynic Waheed
    Sep 17, 2015 - 1:28PM

    @Gavin: You Wish mate!!! :) But if this squeaky wheel is taken out, we will make sure the bigger wheel next to us on our east side is rendered useless as well! Insha Allah. :P

    Take it easy mate and stop hating us for the sake of it.

    Best regards,

    A PakistaniRecommend

  • romm
    Sep 17, 2015 - 2:06PM

    All the Nazi Liberals are burning. Burnol immediately needed. Recommend

  • Vectra
    Sep 17, 2015 - 2:06PM

    Well I think this was bound to happen some day or other and now the day seems to have arrived where Afghanistan has reached a point where it has started hardening its stance and may block pakistan to use Afghanistan territory to access Central Asia and beyond as per it earlier warning if the reciprocal gesture are not show by pakistan to Afghanistan. pakistan should consider Afghanistan’s request to allow India to Afghanistan via its territory because if Afghanistan blocks it territory for pakistan then it will be a big loss for pakistan than Afghanistan as pakistan will loose bigger central asian market while Afghanistan can manage and will still have alternatives in its hand i.e Iran’s Chabahar where India has an upper hand.Recommend

  • S
    Sep 17, 2015 - 2:12PM

    @Raghu2:

    “Pak thinks Afghan as a land subservient to Pak interests not an another independed proud nation.”

    We are not forcing them to avoid doing any trade with India. We are exercising our right. How that makes them subservient to us?

    PS. Afghanistan is neither an independent nor they are a proud nation. Recommend

  • romm
    Sep 17, 2015 - 2:13PM

    We won’t allow Indian goods into Afghanistan using Pakistani Route. It’s Final. Can Indians do anything…. Recommend

  • wiserneighbour
    Sep 17, 2015 - 2:14PM

    cynic waheed,you got it all wrong dude.India produces lots of things which others cant at a reasonable rate and good quality.Take medicines for example.India is not going to loose any thing.It will find a way to reach its markets.You are day dreaming!Recommend

  • Furrukh Rao
    Sep 17, 2015 - 3:04PM

    Dear All,

    Pakistan will access Central by Chinese Territory and India will access through Iranian Territory in both scenario the Superiority will remain in Pakistan Side and the Energy from Turkmenistan and Iran from Pakistan to India, Setting up Ties with Russia and China along with trading in Non-Dollar Currencies will hit US economy so hard they will come to their Knees.

    Now please activate your proxies and pay for their visits at conferences ;) Recommend

  • Shuaib
    Sep 17, 2015 - 3:48PM

    This is very biased article. The issue here is not about allowing Afghanistan to trade with India, Pakistan has already allowed that. The issue is allowing Tajikistan trade with India and when Tajikistan itself doesn’t have a problem with India being included then what is the media’s problem?Recommend

  • Hella
    Sep 17, 2015 - 3:49PM

    @Gavin, as far as trade and commerce is concerned Pakistan is already irrelevant. Pakistan with no industry to speak of will only remain a playground of the big powers. Earlier it played to the tunes of the U.S. and became a transit point for men and materials needed during the Afghan wars. Now it plans to become a transit point for Chinese plans to connect to Central Asia. In this, all that Pakistan got was death and destruction. It can now hope that China brings prosperity. Beyond being a cog in the wheels of big powers, Pakistan doesn’t seem to have much going for it.Recommend

  • Adnan
    Sep 17, 2015 - 3:51PM

    Pakistan is not fool to allow India use its territory for business and then use this money to kill Kashmiris. If India really wishes to progress and improve its economy for the sake of over a billion poor population, then it should resolved the Kashmir issue with Pakistan.

    Otherwise, no trade, no cooperation and no agreements. Recommend

  • Awais
    Sep 17, 2015 - 3:59PM

    First of all Indians thank you for your deep interest and insecurities about Pakistan that’s it please don’t reply to my point I have no interest in your arguments…
    Some time all you have to do is to make difficult call.. With India continuously interfering and in absence of truly democratic govt in Afghanistan it very difficult to have positive ties with our Afghan brothers..
    these disputes are as old as of the era of Bhuto and dawod, where dawood and Iran tried to create anarchy in Baluchistan by feeding so called liberation party their and bhuto counter attacking them with ISI….
    Still I feel sorry to see Afghan brothers being badly treated in Pakistan by authorities partially cause of black sheep among them and partially cause of black sheep among us…
    To be honest for Pakistan betterment is upward rather side ways…
    We have started corridor with its extension with Russia and near by countries, these will create another super union InshAllah being China, Russia, Pakistan and our far away friend turkey with us..
    That what these endians fear as well…. Recommend

  • Akhtar
    Sep 17, 2015 - 4:04PM

    Your staff publish more comments of Indians than Pakistanis ? Why ? Tribune.com.pk is a Pakistani registered media group. Why you do this ?

    Just go and check Indian newspapers websites where they hardly publish any comments from Pakistan on their fake stories. Is Tribune more loyal to India ? Recommend

  • Aman Pasha
    Sep 17, 2015 - 4:09PM

    Lets keep it simple. Currently, it is India, which desperately needs an access to central Asia, not Pakistan. Indian economy is swelling; she requires lucrative markets and energy resources and that what makes Pakistan relevant. If Chinese started their operations, through Gawader,and if Iranian and Chinese agreed on gas pipeline, through Pakistan, India would become irrelevant. Plus, if puppet or implanted regime of Afghanistan decided to play Central Asia card with Pakistan, it would only motivate military generals to back and aid Afghan Taliban for complete victory. For how long Indian economic growth will sustain without new markets and energy resources? ;)Recommend

  • Cynic Waheed
    Sep 17, 2015 - 5:20PM

    @wiserneighbour:

    Mate you sound like India has always been a great economy and country and somehow Pakistan is never going to rise from the slumber. Really, its you lot who need to stop dreaming. We are getting back with a vengeance, just wait a couple of years and enjoy the bubble you live in currently.

    Regards,Recommend

  • curious george
    Sep 17, 2015 - 5:59PM

    Pakistan since its inception has been at war – with India – with Afghanistan- with Russia and with itself.peace,stability, economic development are not in its DNA.Intricacies of trade and economic development is beyond their comprehension.Indian trade with central Asian countries is not big loss for India as many Pakistanis perceive,for a country of 1.3 billion, 40 million consumer of central Asian countries altogether is no big loss.Trade through alternative route is going on unhindered.Given the unpredictable nature of Pakistan India is not showing much enthusiasm even in TAPI project.Those who have observed Pakistan over the years know that Islamabad is digging itself into a hole.Recommend

  • Gavin
    Sep 17, 2015 - 6:42PM

    @Cynic Waheed: Good luck with that.Recommend

  • ET reader
    Sep 17, 2015 - 6:50PM

    @Akhtar
    ET seems to be Pro-Truth rather than pro-India. I am a Pakistani business man and in agreement with the last sentence of this article.
    As usual due to emotional thinking we are putting all our eggs in the China basket. If India, Iran and Afghanistan come together we will be irrelevant and left further behind.Recommend

  • cautious
    Sep 17, 2015 - 8:18PM

    @Akhtar: This article isn’t written by ET staff – it’s a Reuters article and likely written by someone who isn’t Indian or Pakistani. Recommend

  • Scientist
    Sep 18, 2015 - 12:42AM

    @romm:

    “We won’t allow Indian goods into Afghanistan using Pakistani Route. It’s Final. Can Indians do anything….”

    Now,

    “Afghanistan won’t allow Pakistan goods into Central Asia using Afghanistan Route. It’s Final. Can Pakistani do anything….”Recommend

  • Tommy Gunn
    Sep 18, 2015 - 3:51AM

    Another perfect example of Pakistan cutting of its nose, to spite its face. Keep shooting yourself in the foot & you’ll soon be overtaken by Afghanistan in every sphere. Recommend

  • Tommy Gunn
    Sep 18, 2015 - 4:00AM

    @Furrukh Rao: Which world are you living in buddy? The portion of trade in the world is less than 0.5% and you talk about bringing the US to its knees, lol, how delusional can u get? Recommend

  • Vivek
    Sep 18, 2015 - 4:58AM

    @romm:
    Nothing dear,take of yourself and we take care of Chabahar of Iran Recommend

  • ajeet
    Sep 18, 2015 - 9:12AM

    If we free Baluchistan, it will link us to Central Asia directly just like how we are able to link to east Asia through Bangladesh.Recommend

  • Gp65
    Sep 18, 2015 - 9:12AM

    @Cynic Waheed: “@Gavin: You Wish mate!!! :) But if this squeaky wheel is taken out, we will make sure the bigger wheel next to us on our east side is rendered useless as well! Insha Allah. :P
    Take it easy mate and stop hating us for the sake of it.”

    This is not about hate. By replacing squeaking wheel all that is meant is that Pakistan will be bypassed on the various trade routes.

    @romm: “We won’t allow Indian goods into Afghanistan using Pakistani Route. It’s Final. Can Indians do anything….”
    Yes. Bypass Pakistan by using Chabahar.Recommend

  • Furrukh Rao
    Sep 18, 2015 - 5:43PM

    @Tommy Gunn, We are helping China and Russia/Central Asia to ditch Dollar and Trade in Chinese Currency.

    This is all what matters to US. US is tilting towards India and shifting the Outsourced Manufacturing to India from China, Making Japanese Army again to corner China, India to Corner Chinese Sea, Philippines failed not Japan will take care. Turkmenistan Pipe Line is helpful for US but Iranian Pipe Line is not Helpful for US.

    This is complex Trade regime few countries in the region like UAE,INDIA,Phillipines,Afghanistan are at US Side, Russia,China,Pakistan at another side and rest of the countries are neutral.

    I hope you will understand now. Paper Money is the real target. Recommend

  • romm
    Sep 19, 2015 - 2:21AM

    Dear indian friends
    We can starve Afghanistan if they don’t allow our goods to Central Asia…
    Anyway Afghanistan is not India therefore we can tolerate little bit of miss calculation on their part.
    Another interesting point is that Indians can’t play cricket with Pakistan but want access to Afghanistan.
    SIMPLY FUNNY!
    Isn’t it???????Recommend

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