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Pakistan, Afghanistan agree on PTA

Business Recorder | 11 January 2023

Pakistan, Afghanistan agree on PTA

by Ali Hussain

ISLAMABAD: In a major development which may address many obstacles in bilateral, as well as transit trade, Pakistan and Afghanistan have agreed on Preferential Trade Agreement (PTA), besides clearing the containers stuck at the port and border.

The agreement was reached in a meeting between the relevant authorities of the two countries on Monday (January 9) held in a virtual format in which Pakistan’s side was led by Ahsan Ali Mangi, additional secretary commerce, while Afghan side was led by Dr Farooq Azizi, advisor ministry of industry and trade.

Well-placed sources told Business Recorder that PTA from the Pakistan side focused on 25 items mostly fruits and vegetables while Afghanistan agreed to reduce 60 percent export tax on coal.

Currently, Afghanistan is charging $85 tax per ton on export of coal to energy-starved Pakistan. When this tax is added to the unit price of coal, $35 in royalty, transportation and warehousing costs for Pakistan, it becomes very expensive.

“Taxes have led to increase in cost of production of energy, and increase in the input cost for large-scale manufacturing sectors such as textile, cement, and chemicals that are vital for the economy of Pakistan,” says an official document available with Business Recorder which contains the agenda of discussions.

A heavy duty of $1360 per truck on trucks coming from Central Asia to Pakistan has already been imposed and when this duty is added to the unit price of coal, transportation and warehousing charges, it increases the overall cost of buying and procuring coal from Central Asia, making it an expensive option for Pakistan, according to the document.

Under Transit Trade, trucks coming from Afghanistan carrying Afghan goods for trade are allowed free movement into Pakistan under temporary admission document (TAD) but Pakistani trucks cannot cross Jalalabad.

Official sources said that Pakistani side sought an urgent TAD for free movement of the transit trucks to Central Asia through Afghanistan as it is difficult due to the condition on Pakistani trucks to off-load at Chaman border, hire Afghan trucks and pay them additional fee to transit to Central Asia which has made transit trade cumbersome and expensive for Pakistani traders.

“No progress was made on movement of Pakistani trucks through Afghanistan to Central Asia,” the source said, adding that Pakistani trucks will have to off load goods in Hairatan, in northern Afghanistan bordering Uzbekistan and then Afghan trucks will take the cargo on to Central Asia.

Furthermore, the sources said that Pakistan has also taken up the issue of US$250 per truck as transit fee by Afghanistan on trucks carrying relief goods for flood victims citing two instances when trucks coming from Tajikistan were charged with high duty, royalty and damages.

“This goes against the agreed rules decided in the Transit Trade Agreement and TIR convention – the Convention on International Transport of Goods Under Cover of TIR Carnets. Pakistan is not charging any fee for transit from Afghans,” the source further stated.

The sources also maintained that the two sides also agreed to undertake measures to prevent smuggling of US dollars from Pakistan to Afghanistan, as on average, US$600-700 million per month is smuggled to Afghanistan and then to UAE and Turkey. Besides, the two sides also agreed on taking steps to prevent smuggling of precious commodities from Pakistan such as silk, sugar, tyres, mobile phones, oil and other commodities which is hurting Pakistan economy while these items are then re-exported to Pakistan.

On the containers stuck at Karachi port and the border, the sources said that Afghanistan side will share the list of stuck containers with the Customs holding some containers because they submitted fake invoices.

 source: Business Recorder