Pakistan is to put off implementation of the much talked about Afghanistan Pakistan Transit Trade Agreement (APTTA) for two months, as Pakistani insurance companies have refused to accept guarantees of Afghan banks, sources in Commerce Ministry told Business Recorder. Pakistan will also release about 2500 containers, stuck up at Karachi, carrying perishable items, due to dispute, which recently cropped up between Pakistan and Afghanistan.
In official documents, the Afghanistan Pakistan Transit Trade Agreement (APTTA) has been operational from June 12, 2011. Sources said that Commerce Secretary Zafar Mahmood has sent a summary to Prime Minister Yousar Raza Gilani, seeking two months' deferment in implementation of APTTA.
Pakistani insurance companies are worried about the possibility of pilferage of transit goods during the transportation process.
Insurance companies have also conveyed to the government that in case of missing goods, the companies would have to bear high cost of insurance. If the containers did not reach the destination in Afghanistan, there would be very high risk in such cases. Customs department would immediately encash the guarantees equal to the amount of duty/taxes involved in the transit goods as per procedure laid down in the Afghanistan-Pakistan Transit Trade Rules.
Commerce Minister Amin Fahim, who recently visited Kabul, faced criticism for not implementing the Washington-supported pact and creating hurdles for Afghan businessmen and public.
Initially, Afghanistan had agreed to extend financial guarantee of international banks for the consignments but later on it changed the stance, and forced Pakistan to accept guarantees of Afghan banks, through Pakistan insurance companies, with the arguments that banks' guarantee is more expensive than insurance companies guarantee.
Both countries have agreed that financial guarantee equivalent to the amount of customs duty will be applicable on the goods imported under APTTA for Afghanistan. Insurance guarantee equivalent to the amount of customs duty from 'AAA' and 'AA' insurance companies is prerequisite according to the pact.
Recently, Ministry of Commerce and FBR held a detailed meeting to tailor a strategy to convince the insurance companies to promptly issue insurance guarantees to the importers of Afghan transit goods to make the APTTA functional. Commerce Secretary Zafar Mahmood, who took the credit of negotiating the pact beneficial for Pakistan, was not available for comments.
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