In order to diversify its export markets, it is being reported that Pakistan is negotiating a transit trade agreement with Kyrgyzstan and Tajikistan. This is essential given how we desperately need to boost our exports, especially in light of our current account deficit. Restricting imports can only be a temporary measure and given our dependence on foreign goods for certain key sectors, the only long term solution is to scale up our exports.

Traditionally, Pakistan has depended on the export markets of the Middle East, United States and European Union (EU). However, Central Asian countries offer immense potential for exports which remains untapped despite many attempts over the years to operationalize this avenue. Federal Minister for Commerce and Investment Syed Naveed Qamar has stated that the government’s vision is to make Pakistan a trade, transit and shipment hub, ensuring connectivity with Afghanistan and beyond. Islamabad has already signed a transit trade agreement with Uzbekistan and is in the process of negotiation another agreement with Kazakhstan and Tajikistan.

This push for connectivity must be sustained as there are mutual dividends to be reaped. Pakistan is the best option for the landlocked Central Asian countries; likewise, the Gwadar Port offers trade opportunities for Central Asian states and Russia. In addition to this, following the launch of CPEC, both Beijing and Islamabad are looking towards Central Asian markets for their trade potential. For instance, bilateral trade between Pakistan and Kyrgyzstan stood at $4.27 million during fiscal year 2021-22, which does not reflect the true potential of trade between the two countries.

The main reasons for low trade levels with Central Asian countries are limited knowledge of each other’s markets and the absence of sound banking channels. These barriers are being addressed through greater cooperation and the signing of agreements such as the Quadrilateral Traffic and Transit Agreement (QTTA) between Pakistan, China, Kyrgyzstan and Kazakhstan. However, in order to truly tap into the potential for scaling up trade, Afghanistan’s role as a transit node will be key. The deteriorating situation in the country has resulted in the stalling of key projects such as the CASA-1000 project which aims to allow Tajikistan and Kyrgyzstan to sell excess energy to Pakistan and Afghanistan in the summer months. Therefore, it is imperative that some semblance of stability returns to Afghanistan in order to operationalize this connectivity enterprise.