Monitoring of Afghan cargo: four customs checkposts non-functional

The four customs checkposts set up by the Federal Board of Revenue (FBR) at Baburloi, Khairabad, Khur Khera and Baleli for monitoring of Afghan transit cargo are almost non-functional. The FTO report on "ISAF containers scam'' revealed that the Customs Department had check posts and mobile anti-smuggling squads operating on the highways but in 2004 the government decided to wind up their operations, mainly due to mounting public complaints against the Customs staff manning them.
In February 2009, however, the FBR decided to establish four check posts at Baburloi (between Khairpur and Sukkur) and Khairabad (between Attock and Peshawar) for transit via Torkham, and Khur Khera (between Hub and Utthal) or Baburloi (between Khairpur and Sukkur) and Baleli (between Quetta and Qua Abdullah) for transit via Chaman. The purpose was to monitor any leakage of transit cargo at these key locations. However, the check posts were not provided with necessary resources, including strong technology support. Nor was it ensured that vehicles transporting transit cargo would essentially be reporting to these check posts for monitoring of their seals, etc. Besides, these check posts were meant only for commercial transit, not for ISAF cargo. In practice, these posts were there largely to collect ''fees'' from the drivers. In view of their almost non-functional status, their contribution in controlling smuggling is at best only marginal.
The FTO report further said that it is correct that under the garb of ATTA huge quantities of items the consumption of which is negligible and limited in Afghanistan are imported in Afghanistan. The cigarettes, fabrics, black tea, diapers, electronic items, tyres, tubes, crockery, ball bearings, telephone sets and LCD TVs are among the items which are imported through transit far in excess of Afghan requirements. (Cigarettes and auto parts are presently on the negative list of Afghan transit through Pakistan. However, these items are imported into Afghanistan either through misdeclaration or through Iran and other neighbouring counties and smuggled into Pakistan.) A change in the incidence of duties and taxes in Pakistan immediately indicates shift of such items in the transit regime of Afghanistan. Higher taxes and tariffs in Pakistan prompt excessive imports of such items in transit to Afghanistan for subsequent smuggling into Pakistani markets. There is ample evidence that truckloads of smuggled goods keep entering Pakistan both through regular and irregular border crossings. The fact that per capita import of Afghanistan is 72 percent higher than the per capita import of Pakistan despite the fact that the former''s per capita income level is almost one-third of the latter''s clearly substantiates that Afghanistan imports goods far in excess of its genuine requirements.
The report further said that the recent detections at Chaman and Torkham are a clear indicator of a very serious phenomenon of misdeclarations, shortages and en-route replacements and diversions of transit containers. Therefore, a package of effective countermeasures needs to be put in place to control the menace of pilferage during transportation of goods from Pakistan to Afghanistan.
The Office of the Federal Tax Ombudsman intends to complete the job through an Inspection Team to be set up under Section 17 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. The Inspection Team will determine both disciplinary and criminal liability of all those involved in cases of serious maladministration/corruption.
The workable and concrete mechanisms to avoid evasion of duties through misuse of Afghan transit are possible with the use of reengineered business processes and use of modern technologies. The key lies in introducing automated operating systems and procedures duly supplemented by the requisite technology input in terms of monitoring, tracking and scanning capabilities. Tariff rationalisation can also help reduce incentive for smuggling. As no amount of technology input or structural and procedural reform can be a substitute for the failings of the human capital of an organisation, it is critical to put in place both short term and long term measures for capacity building of staff through improved training and appropriate financial incentives for good work. A transparent and credible system of infallible accountability of corrupt and collusive staff will certainly make a difference in controlling transit-related scams in Pakistan.
There is no Negative list of goods in transit to Afghanistan for Isaf/Nato/UN cargo under the MoU between the government of Pakistan and Isaf. However, there are tow items namely cigarettes and auto parts which are currently on the Negative List under ATTA. The new APTTA, 2010 does not provide the flexibility to place any item on the Negative list unless the item is also prohibited for import into Pakistan.
The report further said that no duty and taxes or levies are charged by the Government of Pakistan on transit trade goods. Any such charge would be a violation of the UN Convention as well as the bilateral transit trade agreement. However, transportation charges and any en-route tolls are the responsibility of the importer, it added.