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November 30, 2020

Pakistan steps up efforts to regain export share in Afghan market

National

November 30, 2020

ISLAMABAD: Pakistan has geared up its efforts to regain the export share in Afghanistan market that slipped to Iran and India because of previous faulty policies, and positive parleys between Islamabad and Kabul are underway for preferential trade agreement (PTA), and trade under Afghanistan-Pakistan Transit Trade Agreement (APTTA).

“In the wake of incompetence in decision-making, irrational and faulty policies on behalf of Pakistan in the past, Kabul diversified its import regime and abandoned the reliance on imports from Pakistan which is why 50 percent country’s export share glided to Iran and India,” Adviser to Prime Minister on Commerce, Textile and Investment Abdul Razak Dawood stated in an exclusive interview with Afghanistan.

“I am confident to win back the lost share in Afghanistan’s market as for Kabul to import from Pakistan is the most economical,” he said.

According to the trade data available with The News, in 2010-11, the country’s exports stood at $2.6 billion which tumbled to $1.3 billion in 2018.

During the talks, Kabul raised the issue of allowing passage of Indian goods through Wagha border for Afghanistan, but Pakistan made it clear that talks are bilateral not trilateral. And Kabul was also told that the ties of Pakistan with India are at the lowest ebb because of tension which propped up on account of the Kashmir issue. So Pakistan will not open Wagha border for trade of Indian goods to Afghanistan. “Then Kabul side took back its demand and talks went smoothly on PTA and APTTA,” he said.

Once the PTA is inked and made operational, Abdul Razak Dawood said, Pakistan will not only get its lost market share of $2.6 billion in short term but in next five years’ time, exports will go up to $5 billion. The PTA will also help formalise the 70 percent off-the-book trade which is currently prevalent. Only 30 percent trade is formalised for which L/Cs (letters of credit) are opened.

Pakistan and Islamabad held two day talks in Kabul on November 16-18 with focus on finalisation of draft for APTTA, signing of PTA, free movements of trucks of goods in each country, and port, Customs and banking related issues in trade. During the talks, it has been decided that trade between the two countries will not halt even if any bomb explosions coupled with any subversion activities take place in each country because the importers and exporters suffer a lot and their trucks in both sides of borders kept standing for months owing to which trade is massively hurt.

However, the adviser also hastened to pitch his argument saying all about capturing of its lost share in exports and increase in exports up to $5 billion will hinge upon policies that Joe Biden, President-elect of US, will adopt about Afghanistan and the peace there.

He told that Pakistan Armed Forces have so far managed to make 90 percent areas bordering Afghanistan barbed with wires owing to which smuggling of goods from Afghanistan has substantially dropped. However, smuggling of goods that go to Afghanistan under the existing APPTA deal is still continuing into Pakistan’s market inflicting huge loss to local industry. “This issue has been raised with Kabul authorities also,” he said.

Razak Dawood said that in case of smuggling of goods, under the new APTTA, Pakistan will give six months notice to Kabul administration and if no required action is taken up, then Pakistan will have the right to scratch down the agreement. More importantly, Pakistan will also be having the right to place restrictions in trade under the APTTA if smuggling of goods from Afghanistan to Pakistan takes place. Pakistan wants the APTTA should be for three to five years, not for 10 years.

Afghanistan mentioned that whenever Pakistan wants it suspends the transit trade under one or other pretext and the consignments under transit trade are forced to stay in ports resulting in huge demurrages. Pakistan also raised the transit issue in the vicinity of Afghanistan highlighting that when Pakistani trucks carrying goods for Central Asian States are unnecessarily stopped just for nothing, then they have to pay demurrages knowing the fact that Pakistan trucks meant for exports to Central Asian States are to cross the territory of Afghanistan in five days, but trucks movement is made too slow by authorities in Afghanistan.

Coming to the PTA, Abdul Razak Dawood said that Kabul has shared its list of 27 items for tariff concessions mainly belonging to vegetables, fruits and dry fruits, but Pakistan is in stage of finalising its tariff lines which will be hundreds. However, Pakistan is interested to seek tariff concessions on engineering goods, material items hailing from construction and food industry. Pakistan will also seek tariff concession on pharmaceuticals, chemicals and vegetables. He said that PTA and APTTA talks will conclude by the end of January 2021.

To a question, he said that the exports to Afghanistan during July-October in 2020-21 stood at $344 million showing an increase by 15.6 percent if compared with the exports of $287million in the same period of last financial year.