Stepping up on TIR

Next year in January, after the internal debate that lasted for ten years, Pakistan will finally become the operational member of Transports Internationaux Routiers (TIR). The TIR convention is one of the major international transportation conventions in the world and now, fifty-eight countries are operational members to the agreement from five continents including Afghanistan, Iran, Central Asian countries, and Turkey.
For the uninitiated, TIR is a framework under which the contracting countries can transit goods without involving the payment of customs duties and taxes along with providing customs authorities with the required security and guarantees.
Pakistan enjoys the excellent geographic location, where it has access to Iran, Central Asian region, China, West Asia and beyond from the Far East to the Middle East and conversely Europe including Russia and Turkey. However, while the regional trade is one of the important factors in the economic success of many countries, the regional arrangements of which Pakistan is a member, intra-regional trade accounts for less than 5 percent.
On the other hand, within most trading blocs, according to a report by USAID intra-regional trade composes 40 percent or more of these countries’ individual trade. By becoming a member of TIR, Pakistan can certainly benefit from transit advantage and can use this for its benefit by expanding transportation network to gain a barrier-free access to the regional trade.
Over the years ahead, the country will also be trying to become a transit hub. The current government’s Vision 2025 has further emphasized the importance for Pakistan to achieve the objective of becoming a regional leader in transit movement. However, for Pakistan to reach these milestones, especially in becoming a regional transit hub, it needs to have a mechanism to enable such conventions.
TIR will be significant. It is an international transit system that has the backing of United Nations, and it allows seamless transport connectivity between its member countries. Also, it would facilitate the movement of all the goods carried between ten ECO countries under ECO Transit Transport Framework Agreement (TTFA).
Under Pakistan’s APTTA bilateral transit agreement with Afghanistan, both parties are using insurance guarantees that are cumbersome and expensive process and have been responsible for diverting transit business from Pakistan to the ports of Iran. Under TIR convention, both countries can use TIR Carnets as financial surety for transit goods. It would considerably facilitate traffic in transit and bring back the transit business to the ports of Pakistan.
Another agreement, of which Pakistan is a member, is the Central Asian Regional Economic Cooperation (Carec). Carec also requires accession to the TIR convention for cross-border transport of persons, vehicles, and goods. Similarly, TIR convention may also be a game-changer for other regional agreements like CBTA and QTTA.
It is quite regrettable that it took ten years for Pakistan to come to terms regarding this important convention. In 2002, the Federal Cabinet had resolved to accede to TIR along with Istanbul Convention. However, Pakistan successfully got entrance into Istanbul Convention but the TIR convention was rejected owing to a reservation made by the Foreign Office.
The FO was worried that “acceptance of TIR Carnet by the Customs office means that national legislation allows the transit of such goods to and from a particular country”. The matter came up again on the agenda of the cabinet in 2009, but the FO requested for postponement of the item due to implications related to transit rights.
Nevertheless, the discussion that has led the country into the convention started during 2012. While some reservations from a few stakeholders once again surfaced, the government finally approved the TIR.
With that said, according to subject matter experts it is too early to celebrate and much has to be done on the ground before Pakistan will see any benefits come out this partnership. The TIR requires the transportation system of the member country to meet specific quality standards with particular specifications.
Among other things, it would require the modernisation of Pakistani truck fleet. According to the industry insiders currently, the long-haul trucking sector is by and large composed of old and underpowered two- and three-axle rigid trucks, which currently don’t fuel efficiency and environmental standards. That is why the trucking modernisation policy that was approved by cabinet 2007 needs implementation.
Besides, training of customs officials has not started yet. The government has to designate TIR-trained Customs offices. FBR is responsible for the implementation of TIR, but according to the sources which involve with the matter that FBR is unable to understand the technical knowledge that works behind the convention. The whole process needs the coordination of several governmental agencies, but so far that has not taken place.
TIR convention is critical for the future of Pakistani trade. The government has to do its part by implementing trucking policy, building required infrastructure and inculcating proper training for the stakeholders involved.