Shrinking trade with Afghanistan

Afghanistan has been a booming market for exports from Pakistan, consisting of both value added items and food commodities. The balance of trade always remained surplus. Pakistan’s exports included cement, steel, plastic goods, textiles, pharmaceuticals, surgical goods, wheat flour, rice, sugar, meat, poultry, fruits and vegetables. Exports to Afghanistan are at halt from the past two months as borders have been sealed as inevitable measure of containing coronavirus pandemic. However, goods trucks of Afghan Transit Trade are allowed to move into and move out through trade points on the Pak-Afghan Border. It implies that federal government has instructed the concerned authorities to allow those goods trucks, which carry cargo under Afghan Transit Trade Agreement between Pakistan and Afghanistan. It is a bitter reality that bulk of goods from Afghan transit trade eventually reaches markets in Pakistan, working as double edge sword by causing damage to local industry and revenue loss of custom duty. Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Anjum Nisar has demanded lifting of ban on shipment of exports from Pakistan to Afghanistan through the three trade routes of Torkham and Kharlachi in Khyber Pukhtunkhwa and Chaman in Baluchistan. The exporters have paid advance income tax and export development fund charges. Exports to Afghanistan had witnessed boom during 2002-07 because federal government was keen to use bilateral trade as an effective tool of economic diplomacy, making it a cardinal principle of Afghan Policy. Although the succeeding government invited Afghan President Hamid Karazai to the oath-taking ceremony of President Asif Zardari, but economic diplomacy went to the backburner. Bilateral trade started declining, hitting exports from Pakistan. During the PML-N government 2013-18 serious efforts were not made to expand trade relations with Afghanistan as their main focus was to play a second fiddle role in the domain of foreign policy vis-à-vis India, opening market to Indian goods resulting in massive trade deficit. Afghanistan had remained the fourth largest destination of exports from Pakistan during 2002-07 with exports valuing $2.3 billion. Pakistan’s exports of wheat, rice, sugar and cement catered to 90 percent of market in Afghanistan. In addition, surgical instruments, soap, dry skimmed milk and footwear were also in great demand. But from 2013 and onwards, exports started plummeting. The quantum of exports fell to $1.4 billion in 2014 and to $1.2 billion in 2017. Businessmen and traders of Khyber Pukhtunkhwa and Baluchistan accrued huge losses due to the myopic vision of the then federal government. The Afghan government’s obduracy to allow it inland conduit of trade with India through Wagha border instead of sea rout through Karachi port also hindered the growth in exports to Afghanistan. It also imposed non-tariff barriers on imports from Pakistan. Finding the vacuum, India, Iran and China flooded the consumers’ market in Afghanistan with value added goods and food commodities, mostly on dumping price to create a permanent future market to sell their products on real prices then.