More items banned under ATT

Rs. one billion TFCs by SSGC EPB hopeful to meet exports target More items banned under ATT

The import of these items was proving harmful for the domestic industry

From Shamim Ahmed Rizvi
 Islamabad
July 23 - 29 , 2001

The Pakistan government has banned seven more items being imported under the Afghan Transit Trade (ATT) agreement with immediate effect aiming to protect the domestic industry. These banned items include Television sets, VCRs, Video cassettes, Razor blades, Juicers/Blenders, Glassware/Dinner sets and Tape Recorders.

Confirming the ban, a source in the Ministry of Commerce confided with this correspondent that the ban was a part of the trade policy of 2001-2002 announced a few days ago. However the government avoided making it public with the trade policy. Following new restrictions by the government, the total number of banned items has reached 24. Earlier, 17 items namely cigars, cigarettes of tobacco or tobacco substitutes, tyres and tubes, yarn, PVC and PMC material, dichloride chemicals, polyester materialized films, black tea, refrigerators, air conditioners, television parts, ball bearing, soap and shampoos, auto parts (all sorts), timer / capacitors, art silk fabrics, vegetable ghee and cooking oils were banned in 1996 under the ATT agreement.

Sources added that the import of these items under the Afghan Transit Trade was proving harmful for the domestic industry .After reaching the soil of Afghanistan these items were smuggled into Pakistan and not only damaged the local industry but deprived the country from taxes.

Import of 17 items under ATT was banned last year after prolonged discussion with the Afghan Trade Mission which visited Pakistan in June 2000. Afghan delegation responded sympathetically when Interior Minister Moinuddin and Commerce Minister Razzak Dawood explained to them that Pakistan trade and industry was facing serious problems because a large volume of goods purchased by Afghan Government under the transit trade agreement (ATT) were neither required by Afghani people nor they ever reached their markets and the same were illegally finding their way into Pakistani markets. Pakistan wanted to delete all such items from the import list under ATT which were not meant for sale in Afghanistan. The idea of common custom union also came under discussion. Under such an arrangement either Pakistan can collect custom duty on Afghan government's behalf or it can have its own staff to collect the duty at the port of entry of transit trade goods. It was suggested that all those items which have been identified as being not required in Afghan markets and suspected to be smuggled in Pakistan will carry the same rate of duty as applicable to Pakistan importers. The Afghan delegation agreed to revise the list as desired by Pakistan in a gradual way. Pakistan had suggested 58 such items, Afghan leader, however, readily agreed to drop 17 and promised to consider the rest in due course.

This agreement will help a lot in the on going efforts of government of Pakistan to curb smuggling and eliminate Bara culture of tax evasion. The issue of smuggling and transit trade are two sides of the same coin. Under an agreement signed in 1995, Pakistan have been providing trade facilities to the land locked Afghanistan. But this facility has been grossly misused. Many of the items imported in the name of Afghan Transit Trade ATT) are not meant for sale in Afghanistan, but for marketing in Pakistan. Hence, during the supposed transit process these items make a U-turn to be sold in the local Bara Markets. Not surprisingly the items thus imported include things that are either unusable in Afghanistan like (air conditioners which have an extremely limited usage there as fabrics, including chiffon saree lengths that certainly have no place in Afghan women's sartorial habits) and are imported in large quantities for sale in Pakistan. ATT is thus the biggest single source of smuggled goods on which our so-called Bara Markets thrive, and the local industry suffers. The problem has persisted mainly because of the Afghan government's failure to ensure that the trade facility does not turn into the illegal smuggling activity that it does.

The bulk of the over growing volume of goods imported for Afghanistan not only find their way into border areas of this country, but also flood the markets in almost all cities where special bazaars have sprung up which freely sell a wide varity of smuggled goods at relatively low prices, driving the locally manufactured or legally imported items of the same kinds out of the market. Pakistan has always been generous to the needs of its landlocked neighbour to the point of sacrificing the interests of its own trade and industry and even paying a heavy price itself in terms of revenue losses. The extent of losses on this account can be seen, from the fact that during the last three years Afghan transit trade has recorded a phenomenal increase of about 300 per cent despite the absence of any revival in economic activity in that country. The inflow includes goods which have absolutely no demand in that war-torn country where electricity is scarce and where the use of razor, razor blades, cosmetics, cigarettes etc. is no longer common these days as a result of the strict edicts of the orthodox Taliban regime in Kabul. Eliminating smuggling-prone items from the transit trade list is only a part of the solution. Since the sanctions imposed by the UN on Afghanistan regime and stricter supervision of transit trade on the Pakistan side, Afghan traders and their collaborators on this side of the Durand Line have succeeded in finding alternative routes for the import of goods which Pakistan has placed on the negative list. Press reports suggest that goods are being imported either directly by air from Dubai to Jalalabad or by sea and land route via Iran. The bulk of these goods then find their way into Pakistan. The remedy thus lies in strict vigilance on both sides of the border.

Nowadays goods from Afghanistan into Pakistan are not carried on donkey and came backs as in the past but by convoys of vehicles moving on well-marked tracks. Smuggling by this means of transport is not possible without the custom staff and para-military personnel who are posted on these routes being in collusion with the smugglers. These services should be cleansed of corruption and law must be strictly enforced. It is encouraging to know that decisions in respect of those matters have been taken for the first time.

Pakistan and Afghanistan had discussed smuggling issue in several meetings at different levels to curb smuggling of imported items but the meetings remained fruitless. Afghan officials always take the argument that it is the responsibility of Pakistan government to check smuggling into their country.