Pakistan signed an agreement 37 years ago with
Afghanistan to facilitate foreign trade of its land-locked neighbour.
Better known as ATT — Afghan Transit Trade — the agreement has been
massively abused by the unscrupulous elements to import products way
above their actual demand in Afghanistan meant only to push back the
products into Pakistan.
By now most of us are aware how the agreement has
resulted in massive smuggling of black tea, tyres, electronic goods,
kitchen items, home appliances and other such goods into Pakistan. This
happened despite the fact that Afghans prefer to drink green tea and not
its black variety preferred by tea-guzzling Pakistanis and the fact that
the Afghan market was just not able to absorb the quantity of
electronics and other goods booked in great volumes by the unscrupulous
In short, the ATT resulted in a quasi-legal smuggling
in more ways than one: The majority of the imported products booked for
Afghanistan just went through the motions never to reach Afghanistan
after being rerouted in the border areas of the North West Frontier
Province (NWFP) bordering with the country. A big quantity also find its
way back into the country flooding the markets in the major urban
centers of the country with the goods imported under the ATT.
With each passing year the abused increased pushing
products into the local markets which not only undermined the local
manufacturing but also the legal imports. The first hurt the
manufacturing sector tremendously forcing many foreign investors to
close their operations in the country while the second discouraged the
legal imports of many items, particularly tyres and spices, due to
in-competitive prices. This, in turn, deprived the government of
substantial loss in terms of investment, corporate taxes and duties.
The agreement was abused to such an extent that an
otherwise necessary service extended to the land-locked country turned
it into the major cause for smuggling into Pakistan. It was all the more
troubling as it was hard to keep track of the movement of imported goods
bound for Afghanistan due to rampant corruption and political influence
during all stages of transit from Karachi, the nation's only port-city.
The strong concerns of the manufacturing sector and
the importers worst hit by the nefarious trade under the umbrella of
agreement and their growing vocal discord made the government put 17
items on the negative list of the ATT six years ago. The present
government added another 7 items in the prohibitive list in 2000-01.
Thus, presently, 24 items make the prohibitive list of the ATT. The list
includes such high smuggling prone items as black tea, tyre, television
set, refrigerator, air conditioner, VCR/VCP, etc.
These high smuggling prone items intended for
consumption in Afghanistan was really meant for the Pakistani market as
the Afghan market was obviously was not able to absorb such a massive
quantity. Figures show that prior to the slapping the prohibitive list
in 1996, the value of these 17 items made up 43 per cent of the total
goods imported under the ATT in 1994-95. Similarly, the value of 7
additional items added to the negative list in July 2001 made up 10 per
cent of the total imports under the ATT in 2000-01.
However, despite the ban, the smuggling of the
prohibitive items has continued over the years as the unscrupulous
elements found an alternative route — the port of Bander Abbas in
Iran. Only about 75 per cent of the total demand of 1.2 million bus
& truck tyres in the country is still fed by smuggling while locally
manufactured and imported counterparts meet the remaining 25 per cent of
the demand combined. The local manufacturers are suffering and the
imports are on a decline and the national exchequer is deprived of Rs
1.5 million in revenue.
Now, reports have it that the Government of
Afghanistan has requested Pakistan to remove the 24 items from the
negative list of ATT Agreement. For reasons which are much too apparent
the news has caused a stir within the circles of Pakistani industry and
trade which see ATT as the major cause of smuggling — a phenomenon
which has refused to die down despite the ban imposed on the import of
24 items under the ATT.
This is particularly true of tyre manufacturers and
importers, tea importers and blenders, and the electric and electronics
industry which has able to gain certain grounds after a range of
products were nor more allowed to be imported under the ATT. For
instance, the issuance of the negative list in 1996 did miracles to the
television manufacturing in the country: The production of television
sets quadrupled from 72,000 in 1996-97 to around 288,000 in 1999-2000 to
push the industry's revenue from Rs 290 million to almost Rs 500 million
during the same period. The production increased to 450,000 level during
the last fiscal.
Even the sealing of Pak-Afghan border and the ongoing
operations by the US led forces in the areas has failed to make any
visible dent in the nefarious activity which is still costing a loss of
billions of revenue to the Pakistani government on the one hand and
discouraging the local manufacturing and legal imports on the other. The
request by Afghan government to remove the 24 items from the negative
list of the ATT is, thus, poses serious concerns about the survival of a
number of industries, legal imports as well as serious revenue