Pakistan, Afghanistan to ink new trade agreements

Daily Times (Pakistan) | 27 December 2008

President’s first official visit: Pakistan, Afghanistan to ink new trade agreements

By Sajid Chaudhry

ISLAMABAD: Pakistan and Afghanistan are expected to enter in to a new trade and economic cooperation mechanism during the President of Pakistan first official visit to Afghanistan on January 7, 2009, official sources told Daily Times on Friday.

Under South Asia Free Trade Area (SAFTA) agreement, Pakistan is set to allow duty concessions on the import of over 1000 items from Afghanistan. Federal Cabinet has already approved this proposal and it is expected that this facility to Afghan exporters would be available to from January 2009. Similarly, Afghan side would also offer duty concessions to Pakistan on certain items, according to the provisions of the SAFTA for promotion of bilateral trade.

A landlocked country, Afghanistan is dependent upon transit countries for its foreign trade. Pakistan represents its main access to a seaport. At the same time, due to its strategic geographic position, Afghanistan has the potential for becoming a land linked country providing Pakistan with direct routes to the Central Asia Region (CAR) as well as being a regional hub for trade and transit between Central and South Asia, the Middle East and China, a role which the country has played historically.

According to the sources, the two countries are yet to finalise co-operation deals for promotion of trade, which has been impeding due to tension between the two countries. Pakistan is interested in getting land route transit facility from Kabul to market its products to Central Asian Republics (CARs), similar to Afghanistan Transit Trade Agreement (ATTA), under which Pakistan is providing tax and duty free transit facility to Afghan cargo transported through Torkham and Chaman to Afghanistan. In this regard, Afghan government is already examining the proposal and is set to ink formally the transit facility at highest level.

The two sides are also in a process of revising and upgrading ATTA to remove the difficulties faced by the Afghan importers but also to increase the volume of transit trade for the benefit of both the countries.

Central Asian States, being active members of Economic Cooperation Organisation (ECO) and signatory to ECO trade agreement (ECOTA) are most potential and important market for Pakistan and possibility of transit facility would make Pakistani exports more competitive.

As per proposed agreement, the ATTA of 1965 is outdated and does not take into account the current economic realities of the two countries and the new international transit requirements. The new convention would help in effective administration of transit transport, avoiding unnecessary delays in the movement of goods and commercial vehicles between Pakistan and Afghanistan.

According to the latest version of the ATTA, renamed Afghanistan Pakistan Transit Agreement (APTA), Pakistan and Afghanistan would not levy customs duty, taxes, dues or charges of any kind whether national, provincial or municipal on goods in transit regardless of their destination.

Extension of railway link between Chaman-Spin Boldak is expected to be deliberated in the visit as this issue was discussed in 2006 for establishing better communication and development of physical infrastructure, which will help in enhancing trade facilities between the two countries.

Pakistan would also offer preferential, low-cost and hassle free access to Afghanistan through Gwadar port.

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source: Daily Times