Traders Deem Pakistan's Trade Restrictions On Afghanistan A 'U-Turn' On Transit Trade

Afghan traders warn that this step could result in unintended, negative consequences for trade and ties between the two countries

Traders Deem Pakistan's Trade Restrictions On Afghanistan A 'U-Turn' On Transit Trade

Traders have deemed the new restrictions imposed by Pakistan on trade with its western neighbour Afghanistan, equivalent to reversing the Afghan transit trade process, adding that it would negatively impact the trade and the strained ties between the two countries.

These sentiments were expressed by traders days after Islamabad slapped a 10% processing fee on items imported under the Afghan Transit Trade Agreement (ATTA). The measure was reportedly part of Pakistan's efforts to curb the illegal entry and exit of goods in the country and ensure proper taxation and customs duty on imported and exported goods. 

A statutory regulatory order (SRO1381 of 2023) issued by the Customs Department earlier in the week said that a fee, calculated at 10% ad valorem based on the original value of goods, must be paid in advance during a process to declare the goods part of the Afghan transit commercial goods entering Afghanistan via Pakistan and vice versa.

On exports, the government has introduced a new condition whereby traders must submit bank guarantees equal to duties and taxes to ensure that goods destined for Afghanistan reach their final destination. In this regard, to give effect to the new trade regime for Kabul, the commerce ministry and the Federal Board of Revenue (FBR) issued separate notifications.

Meanwhile, imports of tyres, black tea, nuts and dry fruits, fabrics, cosmetics, vacuum flasks and home appliances through Afghanistan under the ATTA have been banned.

The move, however, comes at a time of heightened tensions between Pakistan and Afghanistan, with the government of the former giving some 1.1 million illegal immigrants, including many Afghan refugees, to leave the country. In the second phase, some 1.73 million Afghan nationals living in Pakistan as legal refugees will be evicted.

Commenting on the imposition of the processing fee, Sarhad Chamber of Commerce and Industry's (SCCI) Shahid Hussain told The Friday Times that the step was tantamount to discouraging traders.

He added that this step can ostensibly be dubbed as a 'U-Turn' on the Afghan transit trade, which will negatively impact regional connectivity.

It is pertinent to mention here that Islamabad hoped this restriction would help curb the practice of smuggling certain goods destined for Afghanistan but end up in Pakistan without paying duties.

Under the bilateral transit trade agreement, Pakistan can impose processing fees on cargo. However, to economically support Afghanistan, this fees was waived. Since the incumbent government in Afghanistan took over Kabul, Islamabad provided tax and duty exemptions on various commodities.

Pak-Afghan Joint Chamber of Commerce (PAJCC) Executive Director Naqeebullah Safi from Afghanistan spoke to The Friday Times via telephone and said that imposing trade restrictions would not create a positive impact.

"We have asked both governments to look into the matter," Safi said, adding that they have written to both governments to resolve this matter amicably.

He said the departments dealing with Afghan transit should have been taken into confidence before announcing the move so that the least impact is made on citizens.

Pakistan Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) Co-chairman Khan Jan Alokozay said Islamabad's latest step may compel Afghan traders to seek out alternate trade routes.