By Sidra Iqbal
Geography binds Pakistan and Afghanistan as neighbouring states. Both have a long sustained relationship for sharing not only one of the world’s longest and most porous borders but also the Pashtun heritage and its tribal culture which have bound them into a seamless relationship. Both the countries have many commonalities. They have a long history of being trade partners. In recent years the authorities of both the countries agreed to develop the volume of their mutual trade and signed many MOUs. The most important is Afghan-Pak Transit Trade Agreement (APTTA) which was signed in July 2010. According to this MoU both states agreed on construction of rail tracks in Afghanistan to connect with Pakistan Railways, which has been in the making since 2005. In October 2010, Pakistani Commerce Minister Makhdoom Amin Fahim and signed this agreement. This APTTA allows Afghan trucks to drive inside Pakistan to the Wagah border with India, including to the port cities of Karachi and Gwadar. The APTTA was made operational in June 2011.
Almost from last seven years, the trade between Afghanistan and Pakistan has increased from $0.83 billion to $2.83 billion. In which opium, fruits and nuts, hand-woven carpets, wool, cotton, hides and pelts, precious and semi-precious gems are Afghanistan’s main items of export while the main items of imports are capital goods, food, textiles, and petroleum products.
The decline in the ratio of trade was observed after 2011 when the number of imported commercial containers fell to 28,813 from 60,338. Hence, Afghan transit trade declined in fiscal year 2012 by over 54 per cent.
This year in February, the meeting of Joint Economic Commission (JEC) of both sates have agreed to strengthen trade ties and double this annual bilateral trade. The agreement is to raise bilateral trade to US $5 billion by 2015. Here the question arises that whether this goal is achievable or not and how? Answering these questions President of Khyber Pakhtunkhwa Chamber of Commerce & Industry Mr. Zahid Ullah Shinwari said that it is achievable as far as the potential is concerned, but the hurdles have to be removed. There are many bottlenecks which need to be addressed.
It is perceived that trade between the two countries is likely to decline in 2014–15 because the mutual trade between the two countries in the first quarter of 2014 has fallen by 15% due to tariff and non-tariff barriers. Mr. Zahid Ullah Shinwari shared several reasons of this decline. He said, “Because of announcement of NATO forces withdrawal, the general sentiments are pessimistic. Almost all the construction activities have come to a halt. Projects by WGO/Government are closed. Secondly, Afghanistan government suddenly increased duties by more than 200% which resulted into informal trade and smuggling. Policy and infrastructure weaknesses on Pakistan side are ultimately showing the negative affects over Pakistani exports is also significant.” He also shared some important steps to overcome this decline by immediately resolving issue of transit trade agreement, which is creating distrust and bad feelings in Afghanis Traders against Pakistan. Moreover, immediate release of stuck-up refunds and rebates by Regional Tax Office, Peshawar and FBR to exporters so that their liquidity problems is resolved. Appointment of efficient Commercial Counsellors in Afghanistan is also important, who can help our trade and services sector to infiltrate in Afghanistan Market and recover projects for Pakistan companies.
Pakistan is still the major export partner of Afghanistan as it contributes 48% of total exports of Afghanistan and only 14% of its total imports. Afghanistan's economic growth is likely to slow due to declining inflows of foreign aid and the worst security situation. The ongoing political and economic condition of both states also play significant role. Pakistan should build good image by supporting all the political parties and governments in Afghanistan. Pakistan should also work on some general public benefit projects like schools, hospitals etc. The Police in Pakistan should be ordered not to harass Afghani visitors. Visa on arrival and medical tourism should be allowed to Afghanis who are having valid doctor appointment in recognized hospitals. Smuggling is also one of major concerns. He said that it is purely the job of Pakistani agencies to control smuggling. Pakistani authorities should reduce tariff smuggling prone items.
Mr. Zahid Ullah Shinwari is hopeful for better relations in future. He remarked, “Increasing bilateral trade is beneficial for both the countries. People are sick of wars. Pakistan should grab the opportunity by resolving transit trade issues and extensive dialogue on enhancing bilateral trade.”