Afghanistan transit trade agreement: MoC allows transportation of goods already landed at Karachi

ISLAMABAD: Ministry of Commerce has allowed transportation of fabrics, tyres, black tea, cosmetics, toiletries, nuts, fruits, vacuum flasks and home appliances CBUs to Afghanistan under APTTA which landed at Karachi prior to imposition of ban.

Commerce Ministry, in a Statuary Regulatory Order (SRO) 1397(1), 2023 has stated that in exercise of the powers conferred by sub-section (1) of the section 3 of the Imports and Exports (Control) Act, 1950 (XXXIX of 1950), the Federal Government has issued the new SROs which states that the items, i.e., fabrics, tyres, black tea, cosmetics and toiletries and nuts and fruits, vacuum flasks and home appliances CBUs which have already been imported will be allowed to be transported to Afghanistan.

According to the Commerce Ministry “provided that the new measures under S.No.2A to 2 G shall be subject to the following conditions namely (i) they shall not apply to the transit cargo already arrived at Pakistani airports. The cargo at high seas shall have the option for re-export upon arrival at Pakistani ports and (ii) they shall not be applicable on the transit cargo meant for foreign grant-in-aid to Afghanistan.

Afghan transit commercial goods: FBR slaps 10pc processing fee on 5 categories

According to Commerce Ministry, as the volume of Afghan Transit Trade (forward) via Pakistan increased by 67% during FY 2022-23 to USD 6.71 billion from USD 4.016 billion during FY 2021-22, the huge trade deficit created by the surge in Afghan imports is neither plausible nor understandable keeping in view its limited export potential and other funding sources especially after the imposition of multiple types of sanctions on the interim Afghanistan government.

“Comparative analysis of the major forward Afghan Transit Trade items of previous two years clearly shows that the increased volume of major import items of Afghanistan transiting via Pakistan, i.e., fabrics, tyres, black tea, home appliances, toiletries and cosmetics, etc., is attributable to low volume of imports by Pakistan of these very items due to imposition of import restrictions by Pakistan on import of non-essential and luxury goods during the same period,” said Joint Secretary Commerce.

The MoC further stated that substantial increase in incidence of smuggling of these items has not only caused loss of revenue but has also rendered import curtailment measures of the government ineffective, curtailed revenue and caused injury to the domestic industry.

The Ministry of Commerce is submitting a summary to ban fabrics, tyres, black tea, home appliances, toiletries and cosmetics, etc., under Afghan Transit Trade, for which the SRO will be issued after approval of the competent authorities.

Moreover, as Customs duty in Afghanistan is extremely low as compared to Pakistan, and this facility is being misused with the connivance of businessmen from both sides, the FBR should to take the following measures to curb the misuse of Afghan Transit Trade: (i) the requirement of Revolving Insurance Guarantee for all Afghan Transit goods has to be substituted by the FBR with bank guarantee at 100% of the assessed value; and (ii) processing fee at 10% ad valorem shall be imposed on the Afghan Transit goods showing unjustified increase in forward transit cargo Afghanistan’s Customs duties on these goods are negligible.

The SIFC Executive Committee had directed Secretary Commerce and Chairman FBR to propose a mechanism for curbing smuggling of following identified smuggling prone items including the financial impact for adopting such a mechanism: (i) fabric of all sorts (respective all headings); (ii) machinery (chapter 84 & 85); (iii) tyres (PCT 40,11); and (iv) black tea (0902.3000-4090).

Copyright Business Recorder, 2023