One of the thorniest issues complicating Afghanistan’s troubled relationship with its closest neighbor has been the Afghanistan Pakistan Trade and Transit Agreement (APTTA). More than five months after it was signed, in February 2011, there has been no implementation of the treaty, with thousands of Afghan trucks stuck at the border.
Trade was one issue that many had hoped would help smooth the choppy waters in the AfPak world. When the Afghan president traveled to Pakistan in June, one of his major goals was to seek a solution to the problem. He and his Pakistani counterpart agreed on full implementation of the APTTA on June 12.
But continued wrangling over customs duties, cross-border incursions by both sides, mutual acrimony and suspicion have marred what the U.S. Embassy in June hailed as “a concrete demonstration of the common shared vision of development, prosperity and peace that (Presidents Hamid Karzai and Asif Ali Zardari) share.”
The American side had helped to facilitate the agreement, and had hoped that it would “make a significant contribution to regional stability.”
But according to officials from Afghanistan’s Chamber of Commerce and Industry, not a single lorry has yet been allowed to cross the border with Pakistan. In addition, thousands of trucks are waiting to be unloaded at the Karachi port.
“Even though President Karzai has signed a trade and transit agreement with Pakistan, no lorry has yet been unloaded in Karachi, and no new vehicles have been allowed onto Pakistani soil,” said Khan Jan Alokozai, deputy chairman for Afghanistan Chamber of Commerce and Industry, who accompanied President Karzai on his recent trip to Pakistan.
Wahidullah Qazi Khel, spokesperson for Afghanistan’s Ministry of Commerce and Industry, acknowledges the truth of the statement.
“The Afghanistan-Pakistan Trade and Transit Agreement has not yet been implemented,” he said. “The reason for the lack of enforcement is that the Afghan private sector has not yet paid the required 25 percent in bank guarantees and two percent in financial guarantees to the Pakistan government.”
Monetary deposits demanded by Pakistan to guarantee the shipments has been a constant irritant in the negotiations. Given the current economic situation in Afghanistan, economic analysts as well as officials from the Afghanistan Chamber of Commerce and Industry believe that such a huge amount of money is not within the ability of the Afghan government or the private sector to pay.
According to Alokozai, even though Afghanistan is still unable to use Pakistan’s soil for transit, Pakistan derives a benefit of billions of dollars every year from sending its goods through Afghanistan to Central Asia.
“Pakistan is exporting approximately three million tons of cement and 1.5 million tons of fresh fruit and is importing iron, pistachios and raw materials from Central Asian countries through Afghanistan every year,” said Alokozai.
Pakistan is alleging that Afghan exports are being circulated inside Pakistan, but Alokozai rejects the claim. He said that Pakistan is easily able to prevent such a situation and that this is just a “baseless excuse.”
Afghanistan’s import/export ratio is grossly unbalanced, with imports outweighing exports by a wide margin.
He added that Pakistan’s government also has imposed charges on Afghan exports that have been stalled in Karachi. According to Alokozai, Afghanistan has already paid more than 5 million USD in 2011.
“Detention charges can be imposed when goods remain past the due date for transit,” said Ahmad Tawfiq Dawari, policy director at the Chamber of Commerce.
Many are wondering what levers Afghanistan can use to try and break the deadlock.
“Afghanistan can use international pressure on Pakistan to solve the problem,” said Saeed Massoud, a lecturer in the Economic Faculty at Kabul University. “Pakistan has been using this issue as political pressure on Afghanistan for 50 years now and will continue to try and benefit in the future.”
According to Massoud, Pakistan is acting against the International Convention for Transit Trade of Landlocked States, which mandates that those countries without access to the sea should have advantageous conditions for transit trade to the coast.
Pakistan, he said, wants to hinder the TAPI, a gas pipeline that would extend from Turkmenistan through Afghanistan to Pakistan and India.
Alokozai suggested that the Afghan government should take measures to try and force Pakistan to solve this problem. One possible action could involve Afghanistan imposing similar conditions on Pakistani goods transiting its soil.
The first Transit Trade Agreement between Afghanistan and Pakistan was signed in 1965, but Pakistan still bars Afghanistan from access to the Wagah border.
Afghanistan’s import/export ratio is grossly unbalanced, with imports outweighing exports by a wide margin.
According to economic analysts Afghanistan will remain a good market for products from neighboring countries; but its future as an exporter is highly doubtful as long as the transit issue with Pakistan remains unresolved.
