The seventh round of talks between commerce officials of Afghanistan and Pakistan is underway in Islamabad. It appears that an agreement might be inked soon, given the US pressure and the upcoming international conference in Kabul.
Afghan Transit Trade Agreement is a bilateral agreement between the two countries since 1965. Its primary objective is to allow landlocked Afghanistan imports through Pakistans sea and land routes. Trade between the neighbours has reached $1.5 billion comprising mostly of imports by Afghanistan.
Several points of contention on either side of the negotiating table prevent the finalization of the regime.
Afghanistan has been pressing for opening up the trade corridor to Indian exports via Wagah border. In a recent note, BR Research shed light on the disadvantages to the Pakistani economy of such a policy, in the absence of normalized trade relations between India and Pakistan. And the real possibility of flows of arms to the Taliban which could be used to wage war against UN/Nato forces in Afghanistan.
On the other hand, Pakistan argues that a significant portion of the goods imported and transiting through Pakistan, end up in markets in Pakistan. The smuggled goods drive down prices in local markets, hurting both margins for honest local traders and increasing slippages in the government revenues.
There are differences between the two governments on how to go about curbing the menace that smuggling has become.
Officials from Kabul reject Pakistans offer to collect customs duty in Karachi, which would be transferred to the Afghan government once the border clearance certificates have been received.
On the regulatory front, tariff structures on either side of the Durand line need to be harmonized to reduce incentives to smugglers. Taking the much quoted example of black tea, Pakistan imposes duty amounting to 10 percent, 17 percent GST, 6 percent withholding tax and 2 percent for customs clearance for imports into Pakistani market.
But goods under ATTA are free of duties. It costs about 11 percent to transport black tea to Afghanistan.
The differential amounts to roughly 24 percent, which naturally is too mouth watering for businessmen in Pakistan to not avail. Imports destined to Afghanistan have increased from Rs50 billion to Rs205 billion in the past 3 years, at a time when the Afghan economy has largely remained stagnant.
At present, only 5 percent of Afghanistan bound containers are examined. Karachi port as well as Port Qasim have scanner installed for export of containerized goods to USA. These scanners can be utilized for Afghanistan bound cargo as well.
Afghan government has agreed to the Pakistani demand that LCs have to be opened up in Kabul for Afghan imports. All such transactions need to be monitored strictly by US authorities that are legally bound to curb funding of terrorist activities the world over.
A more focussed checking of those LCs is needed to curb the profit on these smuggled goods going for terrorist funding.
Technological gadgets such as GSM chips embedded in containers to track their location, electronic seals to ensure that the containers reach the destination in sealed condition and are not unloaded within Pakistan should be employed. Bonded trucks should only be allowed to stop at government controlled area within Pakistan and unloaded in government controlled area in Afghanistan.
After all, Natos containerized cargo is already being moved with all the tracking devices. If 3,000 containers of Nato a month can be handled with added vigilance and security, the same can be done for 120-140 containers per day.
All that needs to be done is creating the tracking infrastructure already available within the country and create a monitoring setup at customs house Karachi.
Pakistan must dig its heels in and safeguard interests of the local economy without faltering under pressure from the US, India or Afghanistan.
Comments
Comments are closed for this article.