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Wednesday, July 17, 2024

Pakistan, Uzbekistan do trial runs of trade via war-torn Afghanistan

In an interview, the SAPM on Commerce and Investment Abdul Razak Dawood said that Pakistan expects to sign a multilateral preferential trade agreement (PTA) with both Afghanistan and Uzbekistan. It could mean that free trade would prevail, or low-tariff treatment would be agreed upon between three countries to facilitate trade.

In a first, Pakistan and Uzbekistan have exchanged goods between two nations via the route of war-torn Afghanistan. In a move towards bolstering bilateral and multilateral ties with the Central Asian nations, Pakistan has signed various trade agreements with the countries in the region, and on the top of that list is Uzbekistan.

Keeping this agreement in mind, a Pakistani cargo truck on May 4 transported medicine from Port Qasim in Karachi to the Uzbek capital Tashkent, via Afghanistan. Similarly, an Uzbek truck took a shipment of leather products from the Uzbek capital to Punjab’s industrial hub, Faisalabad on 13th May.

The aforementioned runs between the two countries are going to serve as trial runs between countries to see the feasibility of similar trade in the future, considering war-torn Afghanistan is a part of the route.

Reportedly, this trade route has received various forms of support from USAID. It is a way to boost regional trade integration and connectivity.

Pakistan-Afghanistan-Uzbekistan trade route

Speaking to the RFE/RL’s Radio Mashaal, Pakistani PM Imran Khan’s special adviser on Commerce and Investment Abdul Razak Dawood the pilot project has been “very successful.”

He added, “Our objective is to have greater connectivity with our western and northern neighbors,” saying further, “So, we are very encouraged. We want to do more [trade].”

Read More: Pakistan, Uzbekistan agree to boost trade by diversification, visa facilitation

In the interview, the SAPM said that Pakistan expects to sign a multilateral preferential trade agreement (PTA) with both Afghanistan and Uzbekistan. It could mean that free trade would prevail, or low-tariff treatment would be agreed upon between three countries to facilitate trade.

However, the biggest hurdle for such a trade to successfully occur between these countries is the war in Afghanistan, where following the announcement of withdrawal of US armed forces from the country violence has increased.

The full withdrawal will take effect on 11th September, and according to the recent developments in the region, where the Afghan Taliban are going on an offensive to take control of the country, it is feared that the in-country civil war may be ignited.

According to a statement by a development economist at USIP, William Byrd, “If insecurity worsens and violence further escalates in the wake of the U.S. troop withdrawal, that could become the most severe hurdle both for economic activity in Afghanistan more generally and for regional connectivity.”

According to him, other issues include massive corruption at the borders and the various areas under empowered groups in the regions along the route, which may extort fees from trucks.

Pakistan and Afghanistan have had strenuous trade ties between countries, as Pakistan has banned its western neighbor from using former’s territory for trade with India. As a result, Indo-Afghan trade happens via air cargo transport and via sea through Iran’s Chabahar Port.

Read More: Afghanistan, Uzbekistan, Pakistan make a roadmap for rail link

History of Pak-Uzbek relations

Afghanistan, Uzbekistan, and Pakistan on 2nd February inked a roadmap for a landmark rail link aimed at bolstering trade ties between Central and South Asia.

The signing ceremony for the multi-billion-dollar project took place in Tashkent and attended by senior officials from the three countries.

Speaking on the occasion, Uzbekistan’s deputy prime minister Sardor Umurzakov said peace and stability in Afghanistan will lead to development, economic growth and increased regional cooperation.

The proposed 573 km railway track is set to connect Uzbekistan’s capital Tashkent via Afghan capital Kabul with Pakistan’s northern city of Peshawar. The three countries signed a joint request last month seeking a $4.8 billion loan from international financial institutions for the Trans-Afghan railway project.

Recently on 14th April, Pakistan and Uzbekistan agreed to enhance bilateral trade through diversification of trade, increasing business-to-business contacts, exchange of trade delegations, and extending visa facilitation.

They also noted interest to increase industrial cooperation between companies and entrepreneurs of Uzbekistan and Pakistan, especially the growing inter-provincial cooperation after the visit of the Governor of Punjab to the Namangan region of Uzbekistan.

The two sides agreed to fast-track finalization and signing of the Preferential Trade Agreement to enhance bilateral trade by eliminating trade barriers.

The leaders decided to regularly convene existing political and economic mechanisms between the two countries, including consultations between their respective foreign ministries and to strengthen parliamentary collaboration.

Read More: PM Imran signs letter on railway project with Uzbekistan and Afghanistan

The Uzbek President has also confirmed his invitation to Prime Minister Imran Khan, to attend the high-level International Conference on regional connectivity to be held in July 2021. Prime Minister Imran Khan thanked the President and reiterated his invitation to him to visit Pakistan at a convenient time.