Breakthrough in bank guarantee issue likely: APTTA talks at Kabul on May 2

Pakistan and Afghanistan would try to bridge the gap on issue of financial securities, particularly bank guarantees during crucial talks to be held at Kabul from May 2-7, 2011 for smooth implementation of the Afghan Pakistan Transit Trade Agreement (APTTA).
Talking to reporters at the Parliament House here on Thursday, Federal Board of Revenue Member Customs Mumtaz Haider Rizvi said that Secretary Commerce Zafar Mehmood would be leaving for Kabul on May 2 to take part in the meeting and it is expected that federal minister for commerce may also visit Kabul during the meeting whereas on behalf of the Federal Board of Revenue Member, Customs would be joining the meeting on May 5, 2011, he added.
He said there is a possibility of breakthrough in talks on May 6 or 7 at Kabul. Both the countries had decided to operationalise the historic agreement few months ago, but during the meeting of Afghan Pakistan Trade Co-ordination Authority held in Islamabad, Afghan side refused to accept the bank guarantee clause of the agreement. This resulted in postponement of the operationalisation of the APTTA for further four-month.
Mumtaz Haider Rizvi explained that we have a clear stance that both the sovereign states have signed the APTTA agreement and this agreement cannot be re-opened, however, both sides can work out the modalities of the clause relating to bank guarantee equivalent to the duty chargeable on goods imported for Afghanistan through Pakistani land route.
The clause relating to financial guarantee aims at depositing of financial or bank guarantee equivalent to the duty chargeable on goods imported for Afghanistan through Pakistani land route by the Afghan importer or his agent.
This can be negotiable in the shape of bank guarantee, insurance guarantee or any other banking instrument that could be en-cashable within Pakistan in case the goods imported under APTTA did not cross the Pak-Afghan border. Afghan side is demanding acceptance of financial or bank guarantee en-cashable in Afghanistan and this demand it not acceptable to Pakistan as this would lead to a status quo, as the encashment of financial or bank guarantee issued by Afghan banks would not be possible for us, he maintained.
It was the landmark clause that has been agreed under the APTTA, which would ensure crossing of Pak-Afghan border the goods, imported for Afghanistan through Pakistani land route. This clause would eliminate any chance of pilferage of goods in transit in Pakistan and would help protect not only local industry and trade but also legitimate revenues of the government, Member Customs stated. Mumtaz Haider Rizvi added that once the issue of financial or bank guarantee is resolved between the two signatories of the APTTA there would be no hurdle in operationalising the agreement.