The framework APTTA or Afghanistan and Pakistan transit trade agreement were under surveillance by the authorities. Recent changes have been made with the collaboration of both countries. Let’s have a look at it.
Introduction To Legal Framework For Transit Trade
Pakistan and Afghanistan signed an Afghanistan Transit Trade Agreement in 1965. It was a unilateral agreement, in which it provided the transit facility to Afghanistan via Pakistan but not to Pakistan via Afghanistan to the then Soviet Union. More to this, the way the framework was structured led no room for rampant diversion and evasion.
To rectify these defects and allow Pakistan reciprocal transit right, an MOU was signed in Secretary Hilary Clinton’s presence in 2010. It was allowed by the formal transit agreement. The Afghanistan-Pakistan transit trade agreement in October 2010. This had a very strong impact and backing of the United States.
The 2010 Afghan-Pakistan transit trade agreement allows both countries to use each other’s railways, roads, airports, and ports for the transit trade along with the designated transit corridors. The agreements did not cover the road transport vehicle from any other country for example India or any central Asian country.
Afghan trucks are to enter the borders through the crossing at Torkham, Ghulam Khan, and Chaman to transit the Afghan goods across the territory of Pakistan and to import goods from Pakistani ports in Karachi, port Qasim, and Gwadar. The agreement allow Afghanistan trucks to access to Wagah border with India where the afghan goods will be offloaded into the Indian trucks. It doesn’t permit Indian goods to be loaded into the trucks for transit back to Afghanistan.
The agreement enable Pakistan access to every country that shared a border with Afghanistan, with access to Iran via the Islam Qila and Zaranj border, Uzbekistan through the Hairatan border, Takakistan via Ali Khanum and Sher Khan Bandar crossings, and Turkmenistan through the Aqina and Torghundi border crossing.
Pakistani imports and exports are granted permission to enter Afghanistan via the border crossing at Torkham, Ghulam Khan, and Chain.
The Afghan-Pakistan transit trade calls for multiple measures to counter the smuggling of duty-free goods into both countries by mandating the tracking devices of goods, financial guarantees, and the specially bonded carrier license for transit trucks, container security deposits, and the vehicular tracking system.
The Afghanistan Pakistan transit trade coordination authority was then also created to coordinate the APTTA and meetings are held.
Recent Revisions To Transit Trade Agreements – progress on APPTTA 2010
Implementation of the treaty has been inconsistent with both countries complaining about the continued barriers to trade. Owing to tension between the government of President Hamid Karzai and Pakistan, most of the Afghanistan-Pakistan transit trade agreement provisions remained unexploited after 2010. Pakistan is the largest trading partner of Afghanistan and Afghanistan is the fourth largest export market for Pakistan. While Pakistan is again the fourth largest source of afghan imports. The banking contracts between the two countries remain under development, however, the commerce minister of Pakistan pledged to improve these in 2015.
Afghanistan complained that the anti-smuggling security measures agreed in the agreement between the countries are restrictive and cost-prohibitive and that the banking and insurance guarantee fees are excessively high and consume a lot of time, and range from I00k to 150k per carrier. The banks from both countries also refused to offer these guarantees, which was responsible for further delays in customs clearances.
The truck tracking systems were required and have been implemented in Pakistan, while the afghan side has yet to install this system on their trucks. Afghanistan refuses to grant Pakistan the right to import and export goods from central Asia across the afghan territory. The 2010 APTTA allowed for afghan goods to be exported to India through Pakistan territory but did not allow Indian goods to in turn be exported to Afghanistan via Pakistan territory.
Though the pre-2010 rampant evasion has been arrested and the Pakistan government and industry suffered some diversion of goods ostensibly and implausibly imported for consumption or use in Afghanistan.
Addressing Challenges And Opportunities In The Updated Legal Framework
In any trading, there is always a chance of many opportunities with a lot of challenges.
Opportunities Of Pak-Afghan Transit Trade Agreement
Afghanistan has a landlocked status and which means that the country relies on its neighbors to facilitate the transit of its trade with the border global economy. The two countries that initially signed the Afghanistan-Pak transit trade agreement redesigned it in 2010 to enable the transit of afghan exports through Pakistan to the Wagah border with India and the seaport cities of Karachi and Gwadar. The Pakistan truck in return go the opportunity to move products to all regions of Afghanistan n. the agreement led to the formation of a joint chamber of commerce in July 2012, and both countries agree to text the agreement to Tajikistan. It is the first step in the establishment of the north-south trade corridor. The agreement that was proposed would allow Tajikistan to use the Gwadar and Karachi ports of Pakistan for its imports and exports, on the other hand, Pakistan would have to enjoy trade with Tajikistan under terms that are similar to the transit arrangement with Afghanistan. In 2015, a ministerial delegation from Tajikistan arrived in Pakistan to explore the trade prospects in different sectors.
The newly elected afghan president of that time Ashraf Ghani also visited Pakistan in November 2014 and highlight the potential of Afghanistan to work as a land bridge between Pakistan and central Asia. It sought the same facility from Pakistan for trade with India.
Risks Of Pak-Afghan Transit Trade Agreement
Despite the past agreement the tension continues between the two countries and prevented the full realization of Afghanistan and Pakistan’s bilateral trade potential. The impact of new regulations on transit trade operations was serving. And changes in tariffs and customs procedures were also made to keep the transit trade smooth between both countries. But still, there were some risks to the Afghanistan-Pakistan transit trade agreement.
Afghan proposals to allow the transit of imports from India through Pakistan met with resistance, in part owing to Pakistan’s concern that they may be dumped instead in Pakistan, affecting the local industry. Illicit trade between Afghanistan and Pakistan is a longstanding concern on the Pakistan side. A report by Pakistan Federal Ta Ombudsman noted that there were goods that were being smuggled from Afghanistan to Pakistan. This was the risk of the park-afghan trade.
At the same time, the efforts to control the smuggling and another misuse of the agreement provoked complaints from the traders on both sides of the borders. The requirement for the traders like obtaining the custom clearance documents, restriction on partial shipments of goods that require all trucks of the given shipment to be present before the truck cross into Afghanistan, and the heavy security deposit, shipment tracker installation cost, and insurance added to the cost of the trucker of the operation and strain the limited working capital.
In April 2015 both countries agreed that afghan trucks bound for India would be allowed to reach the Wagah border crossing, and on the way back would be allowed to carry Pakistani exports to Afghanistan, this provision remove the previous restrictions. This was designed to help afghan businessmen significantly reduce the cost of transportation. And similar to this, Pakistan-origin trucks were allowed to transit through Afghanistan without loading. It was expected that the customs revenues for Pakistan will increase as a result of more trade via Wagah. The truck companies in Afghanistan are destined to allow the relief.
Conclusion And Future Outlook For Transit Trade Legality
The peaceful economic cooperation between both countries improved trade and transit facilities helping to build connections between south Asia with central Asia. The exported economic growth was expected to increase domestic employment in both countries and provide foreign exchange to import the commodities manufactured more cheaply somewhere else. Afghan officials see India and Pakistan as the primary market but faced many obstacles in realizing the goal. The official from Afghanistan seeks to position the country as a corridor that links Pakistan and central Asia with gains on their own via the reduced operational barrier to trade and the uninterested trade access to India.
The people-to-people contact is mandatory for sustainable trade relations, therefore business visa policy needs to be relaxed further in the future. There are various options such as visa on arrival, long-term, and multiple entry visas investment friendly visas for skilled workers and businessmen, so they could explore and implement.
A preferential trade agreement between bcountries will give more access to Afghan goods in Pakistan’s market and address the issue of smuggling is the need. The agreement should include a clear roadmap for the regionalization of tariffs in the region and the removal of double taxation to facilitate investment in Afghanistan and Pakistan.
Both sides must commit to the support transit of Pakistani exports through Afghanistan to central Asia and similarly the transit of afghan export via Pakistan to India.