Depleting Trade between Pakistan and Afghanistan


Naseebullah Khan
Despite the cubage of huge potential of 8 to 10 billion UAD (The dawn) bilateral trade, the mutual trade between Afghanistan and Pakistan has not gotten the momentum which it needs. Both states are wasting the opportunities such as cost-effective transportation, short distances, low prices, etc. The first trade agreement (ATTA) Afghanistan transit trade agreement was signed between both countries in 1965, which was replaced by (APTTA) Afghanistan, Pakistan transit trade agreement in 2010. Momentarily, the institutional mechanism with respect to trade is administered through (APTTCA) Afghanistan, Pakistan transit trade cooperation authority, (PAJCCI) Pakistan, Afghanistan joint chamber of commerce and industries, and (PAJBC) Pakistan, Afghanistan joint business council.The mutual trade, which had once touched its height until 2015, is now facing a severe abatement, as it was dropped to 13.81 million USD in 2020 (that was one targeted to 5 billion USD). The weighty juncture was the 2010 trade agreement, in which, Pakistan bestowed reasonable concessions such as access of Afghanistan to Pakistani seaports, land routes to conduct trade with the world for lower tariffs and charges for port and storage. While in return, Pakistan got access to the CARs market through the land route of Afghanistan. During the past 10 years, 832000 containers worth 33 billion USD crossed Pakistan to Afghanistan. Notwithstanding, it has been estimated that 30 percent of the total Afghan trade is crossed through Pakistani soil. The challenges such as illicit trade, infrastructural, Visa, Complaints of the traders about both states custom houses, security threats from non_state actors, bribes on checkpoints in both countries, the unofficial transfer of money, and political disputes have been immense hurdles in the promotion of trade. Smuggling, which accounts for 2 to 3 billion USD, that, on one side deteriorates the tax sector of both countries, on the other side, the high tariff goods such as Vehicles, Cigarette, and electronics impact the local industries of Pakistan. The collection of tax in both countries is further dwindled because of the illegal transmit of money through Hawala and Hundi systems. Furthermore, the security issues, skirmishes on the borders, closure of borders, and political strain have been further decaying the trade. For months, the border has closed which resulted in the suspension of trade between both countries, consequently, trade enfeeblement shocks both economies.Pakistan is the victim of the trade decline, as it was the largest trade exporter to Afghanistan until 2015. Its exports have slumped from 2 billion USD to 746 million USD (until the first nine months of the current fiscal year). Pakistani authorities must overcome the reasons that how its place as the largest exporter to Afghanistan has been taken by Iran, India, and central Asian countries. The export of Cement and Iron, from Pakistan to Afghanistan; which were 50000 and 100000 Tons respectively have dropped immensely. The pharmaceutical items of India have occupied by India, which was once dependent on us. The authorities must ponder about the lowering of tariffs on Cement, Iron, and pharmaceutical goods. The competitiveness might help in increasing the exports of these goods.In 2014, Mr. Ashraf Ghani had said that Afghanistan was a land brigade between Pakistan and Central Asia. Undoubtedly, both states have mammoth strategic importance, by connecting South Asia with Central Asia. On the one side, Mr. Ghani Ghani’s observation carries weight, on the other side, Pakistan is a gateway to the Indian Ocean, which plays a pertinent role in the Afghan trade with the rest of the world. Pakistan is the only viable corridor for Afghanistan to reach Europe, the Middle East, and other countries. The quest for the energy of both countries can be accomplished from central Asian countries, once more projects like that of the TAPI are furnish_ provided that both countries overcome the differences and take pragmatic steps regarding the solution of the mutual issues, based on win_win formula. Notwithstanding, there are massive opportunities for Pakistani investors in Afghanistan in many sectors, but will not be utilized until infrastructural development financial mechanism, and security is ensured. Trade growth between two states always helps in employment, poverty reduction, economic upheaving, etc. In the case of Pakistan and Afghanistan, the more trade increases, the more their people will prosper. Having great strategic importance by connecting South Asia with Central Asia, Pakistan and Afghanistan should capitalize this Benson. Despite this, the ending of trade barriers between both countries with special reference to curbing political turmoil between two neighbours can heft the declining trade.