Pak afghan transit trade allows traders from both countries to import and export goods through the borders. Let’s have an in-depth analysis of the framework.

Introduction To The Legal And Regulatory Framework For Afghan Transit Trade

Afghanistan is one of the ten land-locked countries in Asia. And Pakistan is its sixth neighboring country where a 2430 km Durand Line separates the two of them. As a land-locked country, Afghanistan relied on its neighbors for trade and the main imports of Afghanistan included petroleum, metals, machinery and equipment, and food item. In 2014 the annual import figures of Afghanistan declined following the withdrawal of a large number of international troops. It was a major fall in Afghanistan’s economy. International aid was also declined to the country. These factors resulted in sluggish economic activity in the country.

And the country finds China, Iran, and Pakistan as important trading partners. Pakistan, India, and Iran are leading export destinations for Afghan goods. Afghanistan exports to the counties beyond the region by and large depend on the reliability, efficiency, and cost-effectiveness of the transit facility.

Then Afghanistan made a transit agreement with Pakistan, Iran, and land-locked Tajikistan and Uzbekistan. Mainly the country relies on Pakistan as the main transit country. International trade is done via Pakistan where the import and export item reach the seaports of Pakistan before it connects to road linkage to Afghanistan and vice versa.

The afghan transit trade through Pakistan reached a new level after the reconstruction work started in the country after 9/11.

The Role Of The Afghan Government In Regulating Transit Trade

The relations of Afghanistan with the neighboring country Pakistan always remained tense with the implications of its political economy. In the 1959s, access to the sea was critical for the economic growth of Afghanistan because it was facing a serious transit problem from Pakistan. And this is the reason Afghanistan was at the forefront to raise the problems of land-locked countries at the UN. The alliances of Bolivia, Afghanistan, and Czechoslovakia created an agenda and put intense pressure on the United Nation General Assembly to recommend the Conference of Plenipotentiaries conduct a study on the problems of free access to the sea for the land-locked countries.

For this purpose, the Geneva Conference 1958 established the Fifth Committee with the delegates Jaroslav Zourek from Czechoslovakia, Guevara Arze from Bolivia, and Abdul Hakim Tabibi from Afghanistan were elected as the chairman, vice chairman, and rapporteur respectively. It was the job of the committee to examine the regime of free access to the sea and to draft the convention that could be a part of a general codification of rules that are related to the regime of the sea.

Pakistan remained in opposition to the right of freedom of the land-locked counties to access the sea in the conferences and conventions that help on the subject issue.

These efforts of land-locked countries resulted in the New York Convention of 1965. This was the first time the multilateral agreement dealt exclusively with a single instrument with the problems of transit trade.

The Afghanistan-Pakistan Transit Trade Agreement

A major development was seen after the ATTA treaty in 1965 in the modes of transportation, as heavy-duty trucks equipped with advanced technology came to market and the customs processes were modified many times. The security situation and the political economy of the region also changed significantly after the liberation of Central Asian Republics in 1991 that followed the dissolution of the Union of Soviet Socialist Republics. The newly established CARs surfaced as the market for goods’ export and import of energy resources for the regional players in India and Pakistan.

The new dynamics of the region prompted Pakistan to think about accessing the potential export market of CARs. In 2008, the negotiation between the two countries started and the draft text of the new treaty prepared by the World Bank consultant was based on the World Customs Organization’s Revised Kyoto Convention. It was presented by the afghan delegation to Pakistan. In May 2009, the foreign ministers of Afghanistan and Pakistan signed a memorandum of understanding. They agreed to conclude the new version of the agreement by December 31, 2009. And in October 2010, the agreement of signed by the commerce ministers of both countries.

Regulations For Customs Clearance And Tariffs

• The contracting parties Pakistan and Afghanistan disagree that no customs duties and taxes will be levied on goods in transit regardless of the destination and purpose.
• Also, many other factors can imply the Pak-afghan transit, such as the entry and exit point for Afghanistan and Pakistan from the neighboring countries of Afghanistan are;
• Iran via Islam Qila and Zaranj border, Uzbekistan through Hairatan, Tajikistan via Ali Khanum and Sher Khan Bandar, Turkemisan via Aqina and Torghundi.

A survey was conducted by the APJCCI that reveals that the loading and unloading of the containers and the system of clearance of documentation at the customs at Pakistan ports cause unnecessary delays that cost the implication in the form of demurrage charges for the afghan traders. They imply that the traders from Afghanistan do not have to go through this trouble while they transit through Iran.

There is a period that is 12 days within which the trader has to receive the container from the firm which has sold the goods. And after the mentioned number of days, the company will charge the traders $60 per day. These charges increased to $89 and the fine increases after every twenty days. On the other hand, the Pakistani government charges $20 per day for each container that is 40” after 12 days, which got doubled after every twenty days.

This increased the time and cost and impact the prices of the goods that are imported to Afghanistan.

Pak-Afghan Transit Trade Coordination Authority

The Afghanistan Pakistan transit coordination authority was established to monitor, facilitate, and effective implementation of the agreement, the authority has to be co-chaired by the deputy minister of commerce and industries, the government of Afghanistan, and the secretary of commerce, the government of Pakistan.

The authority has to consist of an equal number of representatives from the stakeholders’ ministries or similar agencies of the contracting parties i.e. Afghanistan and Pakistan. The private sectors include the Joint Chambers of Commerce and Industry, freight forwarders, and road transporters. The authority should frame its own rules on business. And the co-chairs may co-opt any other or can incite anyone as a special invitee as and when required.

The contract was amended with the mutual consent of Afghanistan and Pakistan. Such amendments shall be approved by the parties by the respective legal and constitutional procedures and enter into force on the agreed date.

Conclusion

The Pak-afghan transit trade was made for the mutual benefit of both countries. Afghanistan was facing trouble with trading with the countries because it was a land-locked country but Pakistan allows it to transport the goods and make the export and import easy for the country. None of the provisions stipulated in the agreements will affect the rights and obligations of the contracting party that arise from the existing international treaties and conventions to which it is a contracting party. 

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