The visit of trade delegation from Pakistan to Kabul
and visit to Pakistan by two high ranking Afghan Ministers, during the
last week was a reassuring sign that the relations between the two
neighbouring countries were improving.
During the talks Pakistan offered Afghanistan Free
Trade Agreement (FTA) with an understanding to follow common tariff
policies, to facilitate the transit trade.
Afghan team led by Foreign Minister Abdullah Abdullah
held detailed talks with Ministers for Finance and Commerce to work out
proper mechanism to enhance bilateral economic cooperation.
Trade between the two sides during last fiscal year
was just Rs.14.8 billion, with Pakistani exports of Rs.11.6 billion, and
imports of Rs.3.2 billion. In addition to this, the goods in transit to
Afghanistan amounted to Rs.10.7 billion. Pakistan also facilitated
Afghan goods transit to India. During Taliban rule the trade under
transit facilities (ATT) was over Rs.100 billion and comprised of items
which were not in demand in Afghanistan and were actually meant for
smuggling into Pakistan. Why, for instance, should there be so many
air-conditioners imported into Afghanistan. Trucks carrying transit
items to Afghanistan get stopped on the deserted roads of Balochistan to
disgorge stuff that was never meant for Afghanistan. The goods that get
to Afghanistan are not subject to any tariff; therefore they get
smuggled back into Pakistan to bag the 25 to 35 per cent differential on
tariff that Pakistan imposes on its imports. According to an estimate
Pakistan was loosing over Rs.30 billion in revenues throughout, ATT.
There are no real estimates for the present quantum
of smuggling, which could be higher than the official trade figures.
However since September 11, the scope of smuggling had actually reduced
due to strict monitoring of the mountainous border terrene.
A senior official of the Ministry of Finance said
that the most fundamental issue was uniformity in the tariff structure
Afghan side had shown understanding with Pakistani proposal to have 5-25
per cent tariff slabs that now exist in Pakistan. This would facilitate
the two sides to have joint appraisal of transit goods at Karachi before
their transportation to Afghanistan, eliminating scope for intending
smugglers to push such goods back into Pakistani market.
Two sides have decided to pursue this proposal more
seriously, as it would help alleviate Pakistani concerns about certain
goods that were more smuggling prone due to cushion available on
different tax rates. A high level team, comprising officials from the
Central Board of Revenue (CBR) and Ministry of Commerce would soon visit
Kabul to work out details. There was consensus that the Afghan Transit
Trade Agreement (ATTA), a 1965 treaty between the two countries, was
largely misused in the past due to higher incidence of smuggling in the
garb of ATTA. The government wants to avoid similar happenings again
that ruined Pakistani industry in the recent past.
The two sides also discussed possibilities of
escorting convoys from Karachi to Peshawar, and Chaman, to discourage
pilferage of smuggling-prone items imported by Kabul through ATTA to
make sure that transit trade does not subvert financial interests of
Pakistan and Afghanistan also discussed in detail the
feasibility of Turkmenistan Afghanistan Pakistan gas pipeline project.
The Asian Development Bank (ADB) is due to hold a steering committee
meeting on the subject some time next month.
In the context of enhancing trade through land route,
the two sides also discussed construction of Torkham-Jalalabad-Kabul
road. Pakistan had decided to send a technical team of NESPAK and NHA
officials to conduct the pre-feasibility study. Pakistan had shown
interest to construct this highway project in cooperation with the
European consortiums to facilitate the Afghan transit trade.
It is a matter of satisfaction to hear Foreign
Minister Abdullah Abdullah saying that relation between Afghanistan and
Pakistan are gaining strength, especially as he, being a key figure in
the Northern Alliance, had not been kindly disposed towards us during
the Taliban era, not had he reportedly markedly softened his stance. The
imperative of contiguous land, large ethnic groups straddling the
border, and the two peoples' religious identity demand they put past
rancour to rest to pave the way for a relationship of common economic as
well as strategic advantage to meet new challenges. Pakistan could
benefit greatly if it plays a major role in any future reconstruction
and rehabilitation efforts in that country.
Pakistani machinery, manpower and expertise could
play an important part in any future rebuilding effort, and its ports
and transport sector could receive a major boost. Islamabad also has an
interest in seeing the current government in Kabul headed by Hamid
Karzai extend its writ over larger parts of the country. If Karzai can
tame the warlords who wield vast power in the Northern parts of the
country, Pakistan would benefit greatly because it would then open up
the land route to oil and gas rich Central Asia.