Trade with Kabul

The erratic nature of border control between Pakistan and Afghanistan has continued into 2018, with Pakistan imposing new tariffs on trade with its neighbour this week. Hundreds of trucks are reported to be stuck at the Chaman, Torkham and Taftan borders as well as the Karachi port. The underlying issue seems to be less to do with any desire to restrict the already low trade between the two countries and more to do with trying to pressurise Kabul to back off from its insistence of access to India through the Wagah border. Afghanistan has been receiving incentivised treatment from Pakistan since the US occupation of the country; this is mostly designed to facilitate the flow of the infamous Nato container trade. With Nato forces having diverted this trade to other Central Asian countries, this has made the pressure to keep the low tariff agreements in place redundant. Now the negotiations are purely between Pakistan and Afghanistan, with the latter feeling like it has the upper hand. The demand for access to India is a non-starter at a time when Pakistan and India have upped hostilities. Afghanistan had asked for revising the Afghanistan-Pakistan Transit Trade Agreement by asking for India-specific conditions, which is essentially where the current trouble stems from.

However, once again, this is an issue where a more considered approach would have been better advised. Pakistan’s trade with its neighbours remains low, and its exports are falling. The Ministry of Commerce wants talks to take place between the two countries, without other countries being invoked. In truth, Kabul was the one to start the standoff by cancelling a round of talks recently, but this can be resolved easier. The fact is that Pakistan could stand to gain much more by accessing the Central Asian market, which we have been trying to reach out to during the last decade – without much success. The full potential of CPEC also lies in Pakistan becoming a transit hub for the region. This potential is compromised by the bickering with Afghanistan over trade details. The two countries have much more serious issues to resolve; these too continue to be unaddressed, despite our apparent support for each other. While PM Shahid Khaqan Abbasi and the FBR stand against the move to impose new tariffs transit goods, the demand is that Kabul should reciprocate in the same manner. Local importers also want a withdrawal of the duty on imports from Afghanistan. Their goods are stuck at customs docks with no solution in sight. This is a troubling sight for Pakistan if it wants to secure its future as a trade hub for the region. The current situation will only make any unfortunate blockades in the future much worse.