Transit trade to Afghanistan through Pakistan‘s strategic Gwadar seaport began on Sunday with a consignment of bulk cargo from the United Arab Emirates (UAE).
“The first transit consignment of bulk cargo through Gwadar to Afghanistan started today. Several consignments are lined up for coming days,” said Mohammad Sadiq, Pakistan‘s special envoy for Afghanistan, on Twitter.
Afghan Pakistan transit trade starts through Gwadar
“We have crossed another milestone towards establishing our credentials as a transit city,” he added.
The ship carrying trade goods for Afghanistan anchored at the port, which were transported to the war-stricken country after customs clearance, local broadcaster Geo News reported.
Read more: How NLC has ensured Pak-Afghan trade continues amid Covid-19
With its 600-kilometer coastline, Gwadar is a key deep seaport currently operated by China, which seeks to gain direct access to the Indian Ocean via Gwadar in line with its $64 billion Pakistan-China Economic Corridor (CPEC) mega project.
The economic corridor is hoped to provide China cheaper access to Africa and the Middle East and also earn Pakistan billions of dollars to provide transit facilities to the world’s second-largest economy.
Afghan Pakistan transit trade: recent developments and boosts
On July 13, Islamabad reopened a key border crossing to resume exports from Afghanistan to India under the Pakistan-Afghanistan Transit Trade Agreement (APTTA).
The 2010 bilateral trade agreement provides Afghan traders access to the eastern Wagah border with India, where Afghan goods are offloaded onto Indian trucks.
Read more: Pakistan and Afghanistan trade shows upward trend as border opened
The agreement, however, does not permit Indian goods to be loaded onto trucks for transit back to Afghanistan.
Last month, Pakistan also reopened three key trade routes – the southwestern Chaman, northwestern Torkham, and Ghulam Khan border crossings – for transit trade and exports to Afghanistan.
What is the plight of traders in this new transit trade agreement?
Pakistan is currently facing many conspiracies, mostly internal. One of them by the bureaucracy, led by the Federal Bureau of Revenue (FBR). The objective; to fleece business and corporate sector, hound honest businessmen and scare investors away through an obstructionist policy.
No wonder, shipping carriers are leaving this country one by one. IT companies and foreign investors continue to stay away from Pakistan. No major European company appears inclined to step in with significant investment because of the intimidating extractive bureaucratic rigmarole.
Read more: Afghan transit trade: The plight of traders
The nearly 100,000 containers a year Afghan transit trade is being stifled through extractive and abrupt regulations, exemplified by an April 7th FBR 2020 notification, asking Karachi customs to scan all Afghan transit cargo – unlike the agreed-upon 20 percent random cargo.
This situation warrants a highest-level intervention by Pakistani offices to prevent further attrition of Pakistan’s image at the hands of a few unscrupulous FBR officials, policemen and local tribal mafias. This has also dented Pakistan’s bilateral trade with Afghanistan.
Opportunities and challenges in wake of renewed trade relations
Writing for Global Village Space, Najma Minhas, Managing Editor of Global Village Space has identified opportunities and challenges for Pakistan and Afghanistan in the wake of a restart to transit trade.
“Trade relations between the two countries had reached a low point in 2017 due to unusually strained ties. The Afghan government, on the coattails of New Delhi, had developed an attitude, and later Pakistan closed its Torkham and other border posts in the wake of terrorist attacks in the country originating from Afghanistan,” writes the author.
However, “given renewed US initiatives towards peace in the region, things are also improving between Pakistan and Afghanistan; and we are now seeing an increase in transit trade,” adds the author.
Read more: Pakistan Afghan Transit Trade: New Opportunities and Challenges
She identifies smuggling as a major challenge to this new transit trade agreement, saying, “goods declared, cleared and bound for Afghanistan, either immediately return to Pakistan from Torkham or more often do not even leave Pakistan’s national borders as they are offloaded or ‘lost’ on the route from Karachi to Peshawar and onto Afghanistan.”
“Pakistan, having the larger domestic market, has faced a massive loss of revenue since the inception of the 1965 agreement; from smuggled goods diverted into Pakistani black markets, not paying due duties or taxes,” adds the author.
“What is needed is to assign the responsibility to one responsible entity that will manage the upload of goods from the port terminals ensure that they are electronically tagged and each container is electronically transferred and monitored from inception to its endpoint,” says the author, making a case for lesser bureaucratic tape.
“They have to be effectively sealed that does not allow for pilferages, while the container is on the route within Pakistan and when it crosses the border into Afghanistan, it cannot come back once the seal is broken,” concludes the author.
GVS News Desk with additional input by Anadolu and other sources