Pakistan has agreed to accept financial guarantee of Afghan Banks'' duly endorsed by Pakistan''s top insurance companies instead of international banks'' guarantees as was originally stipulated in the Afghanistan Pakistan Transit Trade Agreement (APTTA).
A Pakistani team headed by the Secretary Commerce, Zafar Mahmood is leaving for Kabul for two days of talks under the umbrella of Afghanistan Pakistan Transit Trade Co-ordination Authority (APTTCA) from May 31, 2011. The APTTA is expected to be operational from June 12.
Secretary Commerce, however, made it clear that the agreement will not be operational until the reservations of FBR are removed. This is the crux of National Assembly''s Standing Committee on Commerce, presided over by Engineer Khurram Dastgir Khan, MNA of Pakistan Muslim League (N) from Gujranwala. Commerce Ministry was represented by Secretary Commerce whereas Federal Board of Revenue''s team was led by Member Customs- Syed Mumtaz Haider Rizvi.
Both countries have agreed that bank guarantee equivalent to the amount of customs duty applicable on the goods imported under APTTA for Afghanistan, insurance guarantee equivalent to the amount of customs duty from AAA and AA rating insurance companies which are seven in number would be accepted by Pakistani authorities. In reply to a question, Secretary Commerce said that Pakistan has not given any side letter to Afghanistan with regard to India as was agreed in the agreement.
FBR, Member Customs, however, clarified that the financial guarantee is for the vehicles meant to transport consignments from Pakistan to Afghanistan and not for the goods. "The decision regarding guarantee of goods to be imported under the APTTA will be taken up during APTTCA meeting," Rizvi added. "Afghan importers will give financial guarantee to Pakistani insurance companies through Afghan banks as bank guarantee is very expensive," he added.
He clarified that FBR will not release the financial guarantees of Afghan importers until they clear all duties and taxes and a certified copy of invoice showing that imported goods have crossed the Pakistani border. Customs security for goods explained in the agreement means en-cashable financial guarantee acceptable to customs, submitted by the trader or through authorised broker, on transit goods, for an amount equivalent to the import levies of contracting parties.
Commerce Secretary and Member Customs FBR acknowledged that the issues regarding installation of tracking system on trucks and biometric system at the entry points have not yet been resolved. But both the top officials were apparently not ready to postpone the scheduled meeting of APTTCA despite a justified demand of woman MNA, Sheerin Arshad who maintained that APTTA implementation should be postponed until both the major issues, ie tracking system and biometric system, are made completely functional. Her reservations, however, were not given proper weight.
The issue of smuggling also came under discussion and Chairman Standing Committee observed that the APTTA is hurting Pakistan''s local industry as most of the goods destined for Afghanistan are smuggled back into Pakistan which is unfair for those who pay duties and taxes.
"We have agreements and laws but unfortunately on ground situation is totally different from what is agreed on paper. Is this a way to run the system?" he questioned. Secretary Commerce stated that smuggling across the Pak-Afghan border dates back to 1965 and has continued since then. Pakistan''s position on customs security for goods is that financial guarantee shall be negotiable instrument issued by a scheduled bank and en-cashable in Pakistan. While position on customs security for vehicles is that bank guarantee or revolving bank guarantee shall be issued by scheduled bank.
Former Minister for Textile Industry, Rana Faroooq said that initially there was only one "Bara market near Peshawar, but now such markets have opened in all big cities. Rana Farooq who hails from Faisalabad also revealed that most of the textile industry is selling Indian "Dopata" smuggled through China. Secretary General Pak Afghan Traders Association, Farooq Ahmad stated that financial guarantee should be sought from transporters instead of importers.
Iqbal Muhamamd Ali, MNA (MQM) advised caution to ensure that a scam like the National Insurance Company Limited (NICL) is not repeated. According to the commerce ministry''s presentation, Afghan side has agreed to allow 13 land routes for bilateral trade and these routes will be operationalised on a later date to be agreed mutually.
Pakistani side will facilitate Afghan exports to India through Wagha. Afghan trucks will be allowed access on the designated routes up to Wagha. Afghan cargo will be off-loaded on Indian trucks back to back at Wagha and the trucks on return from Wagha will not carry Indian exports to Afghanistan.
Pakistan has also gained a transit facility for Central Asian Republics (CARs) markets and entry and exit points for Pakistani exports have been secured on permanent basis and a legal cover has been secured. These routes include Torkham to Hairtam with Uzbekistan, Torkham to Torghundi with Uzbekistan, Torkham to Sher Khan Bandar with Tajikistan, Torkham to Aqina with Tukmanistan, Torkham to Torghundi with Turkmenistan, Chaman to Islam Qila with Iran and Chaman to Zaranji with Iran.
When the issue of smuggling came under discussion, Hafiz Muhamamd Anees, a senior officer of FBR who is investigating missing containers in the light of the Supreme Court''s directive informed the committee that the FBR has placed around 100 FBR officials on ECL whereas investigations are underway on the assets of 100 officials. FIRs have been lodged against many officers.
"We questioned eight officers of grade 22 and officers of grade 20-21 have also been investigated," he maintained. He disclosed that 3491 containers dispatched from Karachi did not reach Chamman and Iman Garh border as these were released on fake documents. These figures may rise to include more than 6000 trucks. The FBR revealed that it would take disciplinary and criminal action and recover the losses. According to him, FBR has issued notices to importers, clearing agents and NLC for their reported involvement in the case as the amount of Rs 7 billion is involved in this case.
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