Bilateral trade with Afghanistan gets a boost

Pakistani and Afghan government officials, as well as the business community, are upbeat about trade concessions offered to landlocked Afghanistan by Pakistan in a joint ministerial conference over the weekend in the Afghan capital, Kabul. “We welcome this and hope that further concessions will continue in the future,” Afghanistan’s ambassador in Pakistan, Nanguyalai Tarzi, told IRIN in the capital, Islamabad, on Tuesday. “We would like whatever is agreed to be implemented, and we hope that our bilateral trade ties grow further,” he said. According to an official press briefing, Pakistan dropped eight items from the negative list under the Afghanistan Transit Trade Agreement (ATTA). Afghanistan has used Pakistan’s southern seaports for importing goods from other countries since 1950. Current estimates of the annual value of such imports vary from US $100 to $200 million. However, during the mid 1990s, Islamabad compiled a list of products Afghanistan could not import via Pakistan. After the fall of the Taliban in 2001, the abolition of the list continues to be vigorously demanded by Afghanistan. Sixteen items remain on the list, ranging from television sets to motor vehicle spare parts. But the trade barrier has now been lifted from cotton yarn, polyester fibre, ball bearings, tape recorders, juicer/blenders, glassware and video machines, and these can now be legally imported by Afghanistan via Pakistan. In a further sign of improving relations between Kabul and Islamabad, the Afghan government has also agreed to allow in six flights a week from the northwestern Pakistani city of Peshawar and from Islamabad. Earlier, permission had been given for only two flights a week. Moreover, Islamabad has reduced by 22 percent the tariffs on goods imported by rail. It has also offered more storage space at its southern seaports of Karachi and Port Qasim. It is also noteworthy that Pakistan last year donated aid to Afghanistan worth $100 million. Ashfaq Hassan Khan, a spokesman for Pakistan’s finance ministry, told IRIN that these were positive decisions, because Pakistan was in an ideal position to assist in Afghanistan’s reconstruction. “Any strengthening of economic relations between Pakistan and Afghanistan is in the interest of both the countries,” he said. A contract for the reconstruction of Jalalabad and Towr Kham in the eastern province of Nangarhar has already been awarded to a Pakistani firm. Smuggling, or the huge informal cross-border trade between the two countries, has been a major hurdle to improving economic ties. The lucrative trade which has been conducted for generations, prompted Islamabad to impose restrictions on Afghan exports. Afghan traders then switched to Iran, where no such restrictions are in place, leaving Pakistan with a huge revenue loss. According to Khan, the 2,400-km long Pakistan-Afghanistan border is difficult to police. “The smuggling takes place because of higher duties on certain goods in Pakistan,” he said, adding that the government, as part of its tariff reforms, was reducing import duties on many goods to minimise incentives for smuggling. Adil Khattak, a Pakistani trader involved in business with Afghanistan, told IRIN from Peshawar that more needed to be done to improve bilateral trade relations. “It is certainly a positive development, and I feel that for the last two years Pakistan has suffered a lot because of our unsatisfactory response to these issues,” he said. “Whenever I went to Afghanistan, officials and traders there would question this negative list,” he maintained, adding that improvements in bilateral trade would benefit the North West Frontier Province (NWFP) and Balochistan, both bordering on Afghanistan. He observed that myths and assumptions underlay Pakistan’s policy. “For instance, television is one of the items banned by the Pakistani trade restrictions, but if you go to any of the smugglers’ markets you will find more televisions now then there were earlier,” he said. International media recently reported that the government of Iran was developing its southeastern port of Chabahar to be used for the transit trade via the southern Afghan province of Nimruz. Pakistan’s arch rival, India, was investing heavily in this project by developing hundreds of kilometres of roads between Chabahar and Nimruz. But Khattak believed that his country still stood a good chance. “Because of our geographical position, we offer the shortest route to Afghanistan,’ he said, adding that given a free choice, Afghans would definitely choose Pakistan as its main trading partner, provided that harsh and sometimes illogical restrictions were not imposed. “Economic ties should be given the top priority, and naturally they will be followed by good political relations,” he stressed.