Pakistan and Afghanistan are scheduled to begin the fourth round of negotiations from Saturday, December 19, on the US-supported Afghanistan Pakistan Transit Trade Agreement (APTTA) which, according to Pakistani stakeholders--Federal Board of Revenue (FBR), Foreign Ministry and business community--is against Pakistan's interests.
Sources told Business Recorder that the United States Ambassador in Pakistan, Anne Patterson, recently held a meeting with Commerce Minister Amin Fahim in which she pressed the officials to allow land route transit facility to India for Afghanistan. Pakistan team will be headed by Senior Joint Secretary, Commerce, Shahid Bashir, whereas Adib Farhadi, Deputy Minister for Commerce and Industries, will lead the Afghan panel. The fourth round, scheduled to continue for three days, is being held in a local hotel and will be monitored by US officials.
The Ministry of Foreign Affairs, sources said, is of the view that transit trade agreement with Afghanistan has damaged Pakistan's economy in major ways. It facilitated widespread smuggling, promoted the culture of tax evasion, and undermined Pakistan's domestic industry. It has also made a mockery of Pakistan's import and customs levy regimes.
US Trade and Development Agency compiled a briefing book for South Asia transport and trade facilitation conference in 2006. Discussing data from late 1980s, it states: "according to 1965's Atta, Afghan traders do not pay duty to Pakistan for goods imported from a third country but around 80 percent of goods entering Afghanistan are subsequently smuggled back to Pakistan". Another stakeholder, FBR, has a number of complaints against Commerce Ministry for not taking care of its relevant suggestions with regard to APTTA.
For instance, the Board observed that its proposals regarding safeguards against smuggling back of the transit goods had been consistently disregarded, and excluded from the draft agreement. According to the Board, exclusion of such safeguards is not appropriate at such forums as it provides a proper opportunity to firm up the point of view on longstanding issues.
FRB Chairman Sohail Ahmad in one his letters to former Secretary Commerce Suleman Ghani said that attempts to include airports for use of transit trade goods had been made without taking on board the stakeholders; although, during the Kabul meeting, the Board's representative had succeeded in bracketing the inclusion of airports, but only after lot of argument with the Pakistani team.
"Board is of the considered opinion that although Afghanistan has no access to sea waters, yet it does have access to atmospheric air and needs no Pakistani airspace and airports for transit of goods," Sohail said. He argued that airports, being security-sensitive, have paucity of space to handle even local imports/exports, let alone foreign transit trade goods.
The Board, therefore, opposed the inclusion of airports in the transit regime as it had never allowed airports to other countries like ECO, Saarc, etc, in any multilateral or bilateral agreements. Afghanistan should not be an exception, the Board argued.
Official sources told this scribe that the Afghan side has also attempted to include the phrase 'legal crossing points' in the discussion of transit and trade policy group which, according to them, implies three stations--Torkhan, Ghulam Khan and Chamman. This would mean that all the rest of the existing 18 customs stations would be rendered illegal.
The country's business community, especially General Tyre, tea companies ie Lipton, Brooke Bond, Tapal and Service Shoes, have expressed serious concerns over the current talks on APTTA. These business groups are of the view that one-sided APTTA is creating acute problems for Pakistan's industry.
Smuggling is rampant, and could lead to closure of many industries which could result in loss of thousands of jobs affecting millions of households, besides loss of billions of rupees in terms of duties and taxes. However, Commerce Ministry pointed out that in the operational ATTA of 1965, both imports and exports in transit through Pakistan were available to Afghanistan.
By invoking the provisions relating to security concerns, imports from India to Afghanistan, through land route, was not made operational. According to Commerce Ministry, Indian goods, in any case, can and are imported through Pakistani ports for transit to Afghanistan.
Analysts are of the considered opinion that allowing any transit goods from India to Afghanistan via Pakistan through any route, including Wagah, should not be accepted by Pakistani side, even if there is any pressure from Washington. The third round of negotiations between Pakistan and Afghanistan was held in Kabul November 21-22, 2009.
The Commerce Ministry had hoped that it would conclude the agreement during the third round. However, stiff resistance from FBR, Foreign Ministry and intelligence agencies, on concessions requested by Afghanistan, forced a fourth round to be held, which will continue till December 21, 2009. It is not expected to be final.
The local transport industry has already informed the Ministry of Communication that the APTTA is likely to allow entry of Afghan vehicles for transporting transit trade cargo from Karachi, which would strongly hurt Pakistan's commercial transport industry.
Sources further said that the government is also formulating a new trucking policy, which needs to be amended in view of the proposed APTTA. The government should allow import of trucks on concessionary rate of duties and taxes to facilitate the trucking industry.