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February 4, 2019

Pak captive market of Afghanistan glides to Iran, India

Top Story

February 4, 2019

ISLAMABAD: Pakistan has virtually sustained mammoth blow in exports to Afghanistan by 41.57 percent, unfolds the latest data available to The News.

The exports to Afghanistan has drastically tumbled to just $1.4 billion in 2018-19 from $2.6 billion in 2010-11 showing how fast Pakistan is losing its one and only captive market from its influence.

Pakistan’s this captive market has massively slipped to Iran and India mainly on account of the frequent closures of trade borders between Pakistan and Afghanistan and escalating diplomatic tensions.

However, year on year basis, according to the latest trade data of Islamic Republic of Iran Customs Administration, Iran’s exports to Afghanistan have increased to $2.8 billion and out of which in first ten months financial year of Iran the exports to Afghanistan have climbed to $2 billion as of June 20, 2019. However, Iranian exports to Afghanistan in 2011 stood at $1.88 billion which now has risen to whooping $2.88 billion with surge of $1 billion in exports, says UN COMTRADE database on international trade.

And currently Iran holds 22 percent share ($2.5 billion) of Afghanistan’s $11.5 billion consumer market. Pakistan’s export which once in 2010-11 stood at $2.6 billion has alarmingly decreased to $1.4 billion showing the bitter fact that Iran has snatched the Pakistan captive market to a large extent. The official said that closure of trade borders between Pakistan and Afghanistan in the wake of terror activities in Pakistan has provided the opportunity to Iran to make inroads in Afghanistan market. “The diplomatic tensions between the two countries have also forced landlocked country to diversify its import regime.”

“If we look at Indo-Afghanistan trade,” the official said, “In 2010, the exports from India to Afghanistan stood at just $115.6 million and the trade between the two states is also growing up which currently stands at $1 billion out of which India’s exports to Afghanistan stand at $873 million showing that the export from India has increased by 655 percent. However, both the countries have shown the commitment to grow the trade between them up to $2 billion by 2020. Currently India is trading with Afghanistan through Chabahar port in Iran and two air cargo routes linking New Delhi and Mambai to Kabul.

The senior official at commerce ministry said that Pakistan’s exports to Afghanistan witnessed a mammoth decline due to the decrease in aggregate demand as a result of withdrawal of Nato forces from Afghanistan, increasing trust deficit, worsening law and order situation, frequent closures of the Pak-Afghan border and diversion of Afghan trade to Iran. More importantly Afghanistan which is a landlocked country has diversified its import regime and started importing items from other neighbouring countries reducing the import reliance on Pakistan because of the rise in trust deficit.

Prime Minister Imran Khan has recently directed the relevant authorities to make necessary arrangements for keeping the Torkham border crossing between Pakistan and Afghanistan operational round the clock within next 6 months to boost bilateral trade ties between the two countries.

According to the details, Pakistan exported the items valuing $1.271 billion to Afghanistan in 2016-17 as compared to exports of worth $2.6 billion in 2011-12. However, the bilateral trade was in 2011-12 at $2.6 billion which has now squeezed to just $1.4 billion.

Interestingly, the imports from Afghanistan have grown up to $414 million which stood at $199 million in 2011-12 whereas Pakistan exports have dwindled by 41.57 percent.

Pakistan often exports cereals and cereal preparations (wheat & wheat flour), raw sugar and refine rice, cement, petroleum products such as kerosene type jet fuel other than JP-1 and JP-4, potatoes other than seeds, vegetables and vegetable preparations, medical and pharmaceutical products, edible brassicas other than cauliflowers. Kabul administration is heavily under the influence of India and has started importing items from other countries despite the fact that the cost of importing from Pakistan is much less than that the importing cost from other neighbouring countries, but Afghanistan has done this reducing the reliance on Pakistan.

As far as the document unfolds, the progress on trilateral transit trade among Pakistan, Afghanistan and Tajikistan is concerned, Kabul administration has emerged as stumbling block in the way of the finalisation of the accord. Kabul wants to link it with trade with India through Wagha boarder. Kabul also wants to include in the trilateral transit trade agreement. Pakistan deems the demand of Kabul unjustified as the trilateral transit agreement will become the quadrilateral accord.

Afghanistan further, the document divulges, wanted the market access to India and Saarc countries through Wagha border and to open Wagha border for Indian goods to reach Afghanistan. Pakistan says that inclusion of India in the proposed agreement will altogether change contours of the agreement and scope by providing direct land link with Afghanistan and to rest of Central Asian States and even beyond eroding Pakistan’s commercial and strategic competitiveness in the region.

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