TTA with Afghanistan may harm Pak economic sovereignty in future

KARACHI - A plausible difference has been found in the transit trade agreements (TTA) between Pakistan and
India with Afghanistan and Nepal which indicates the inefficiency of the Pakistani government to shield its
sovereignty from future threats in economic prospects, The Nation has learnt.
Indian transit trade agreement with Nepal shows that none of such fine details are present in Pakistan transit
trade agreement with Afghanistan, as India prior to signing a transit trade agreement with Nepal insisted on
signing a bilateral trade agreement, which was called India-Nepal foreign of treaty trade. Under the agreement
it was restricted that only goods of Nepalese origin were allowed to be moved into India from Nepal for this such
strict conditions were imposed.
The goods must involve a manufacturing process in Nepal that brings about a change in classification, at four
digit level, of the harmonized commodities description and coding system 70% of ex-factory price of the article
produced and final process of manufacturing is performed within the territory of Nepal.
All Nepalese goods entering into India must accompany a mutually agreed certificate of origin duly authenticated
by Nepalese Government, and even this excludes certain items where Indian industry is threatened, fixed quota
had been allocated which MFN status and duty relaxation was not applicable to Nepal.
Although same conditions apply to Indian origin goods entering into Nepal, but being leading industrial state
India has effectively achieved the objectives that Nepal become totally dependent on goods manufactured in
India and any transit trade from a third country should only serve to fulfil any balance requirements.
A second agreement related to transit trade which was called treaty of transit trade had been signed
separately under which that in case of any Import from a third country other than India, a compulsory condition
given in the agreement is that import will be allowed against import licenses issued by Government of Nepal and
against letter of credit opened through a commercial bank.
Both the bilateral trade and transit trade agreement then carries an Injury Clause which means significant
damage to the domestic producers or like or similar products resulting from substantial increase in imports
under the treaty in situation of which causes substantial losses in terms of earning, production or employment.
A third agreement under the heading Control of Unauthorized Trade has also been signed, which restricts each
country not to let re-export of goods imported or exported under Bilateral or Transit Trade.
On the contrary, Pakistan signed a Transit Trade Agreement with Afghanistan and only significant clauses
include that no distinction shall be made which is based on the flag of vessels, the place origin, departure, entry,
exit or destination or any other circumstances relating to the ownership of goods, of vessels or of other means of
transport.
Under the 1965 agreement, there have been very few clauses which could compel Afghanistan to facilitate
Pakistan manufactured goods as an equal trading partner to enter to its territory or transit to central Asian states.
Nor it puts any binding on Afghanistan to take the responsibility of deflection of goods from its territory back into
Pakistan The Karzai-led Afghan government has adopted discriminatory policies towards Pakistan.
It resulted in reducing the Pakistani exports to Afghanistan from 1.67b to $600m last year. Afghan Government is
charging high rate of tariff on Pakistani goods such as steel products, plastic goods, PVC goods, cement and
citrus fruits etc. At the same time, goods imported from China and India via Pakistan are being charged with
concessional rates of tariff, resulting in their illegal sales in Pakistan.
Under the AnA, Kabul is bound to facilitate Pakistan transit trade with Central Asian Republics (CARs), but it has
instead imposed a number of restrictions on Pakistanis trading with CARs via Afghanistan. The Afghan
government has made it mandatory for Pakistani traders to get their trade contracts with their central Asian
counterparts, registered with various Afghan ministries.
A Pakistani trader has to pay $2000-3000 per contract and it takes more than 15 days to complete
cumbersome formalities. Similarly, the Afghan government charges $300 from Pakistani traders per truck on
transit consignments through Afghanistan from or to CARs.
Moreover, an amount equivalent to 110 per cent Afghan custom duties has to be deposited with the Afghan
customs at the time of entry of Pakistani transit goods into Afghanistan, to be refunded after deducting 20 per
cent of the deposited amount and presentation of crossed border certificate. This practice takes too much time,
as a Pakistani trader has to wait for 2-3 months to get his deposited amount refunded from the Afghan
government.
Pakistani traders suffer the Afghan Transit Trade (An) recorded 71.45pc growth at Rs 25.763b during first sixth
month (July-Dec 2008). Imports of machinery and electronic items registered the highest growth of up to
192.31pc at Rs 4.027b against Rs 1.377b over last year.
Similarly, there is tremendous growth of 39.99pc in import of iron and steel and other metal under ATT at Rs
746.56m from Rs 533.28m recorded in the same period last year. Imports of fabrics under ATT also increased
by 28.90pc at Rs 5.143b during July-Dec period as against Rs 3.990b recorded in the same period last fiscal.
Foodstuff imports under ATT increased by 32.21pc during first six months of current fiscal at Rs 6.227b
compared to Rs 4.706b last year. During July-Dec period vehicles worth Rs 933.70m were imported compared
to Rs433.12m earlier registering growth of 78.37pc. Other items are households goods, tiles, paper, chemical,
plastic etc worth Rs 9.684b were imported during period under review as against Rs 3.985b during last fiscal
year.
The imports of cosmetics under the ATT for Afghanistan with the population of around 32m imported cosmetics
worth Rs 117m in 2005-06 in the following year it recorded an increase 48pc to Rs 218m in 2007-08.
The past agreements have resulted in massive smuggling of black tea, tyres, electronic goods, kitchen items,
home appliances and other such goods into Pakistan. This happened despite the fact that Afghans prefer to
drink green tea and not its black variety and the fact that the Afghan market was just not able to absorb the
quantity of electronics and other goods booked in great volumes by the unscrupulous elements.
The aggregate value of the international trade in Afghan opiates is approximately $ 40b. A rough estimate is
Pakistan looses approximately USD 2 to 3b in tax revenue i.e. custom duties, GST & others, up against a total
estimated volume of illegal transit trade which is approximately and estimated to be USD 10b, which has badly
damaged its industry & trade.