COMMENT: Is a new trade war hitting our region? —Muhammad Aftab

ATTA 1965 had allowed Kabul to use the Pakistani seaport of Karachi and road transportation for custom-free transit and foreign trade through its land route. However, the Afghan businessmen and the smuggling mafia have grossly misused this transit facility for 45 years

Are we witnessing the US-NATO-led war in Afghanistan winding down, but a new war hitting the region? Indications are that we are. And it can be more hurtful and longer lasting.

Pakistan, Afghanistan, India and the US are plunging head on into this war over giving Afghanistan and India transit rights for trade through Pakistan. The entry point for this ‘transit corridor’ will be Landi Kotal in the west, and Wagah-Attari in the east, if new entry-exit points are not added.

The US and India have been pushing Pakistan to ostensibly ‘help’ landlocked Afghanistan open this short and low-freight land route. But every businessman in the region knows that it is a ruse to let India expand its export trade to the entire Central Asia and the Gulf.

Pakistan, for its part, harbours it own dream of transit facilities via the Afghan land route to trade with Central Asian Republics, Iran and the Gulf, through which it hopes to raise its exports to $ 250 billion a year by 2030. But it stays just a dream as the US is not pushing it. The document for Afghanistan-Pakistan Transit Trade Agreement (APTTA) was initialled by Commerce Minister Makhdoom Amin Fahim and his Afghan counterpart Dr Ahady in Islamabad during US Secretary of State Hillary Clinton’s visit.

APTTA 2010 has vastly changed the existing Afghan Transit Trade Agreement (ATTA) signed in Kabul in January 1965. ATTA 1965 had allowed Kabul to use the Pakistani seaport of Karachi and road transportation for custom-free transit and foreign trade through its land route, using only Pakistani and Afghan trucks. However, the Afghan businessmen and the smuggling mafia have grossly misused this transit facility for 45 years. Billions of dollars worth of commodities and equipment, ostensibly imported for use and consumption in Afghanistan, never transited through Pakistan but were retained and openly sold here. These no-tax, customs-free goods competed with legal imports in Pakistan and its domestic products, on which all taxes and customs duties were paid.

Tea worth billions of rupees a year, imported in Kabul’s name, is openly sold in Pakistan. It has hit legal brands like Lipton and Brook Bond of Unilever, and Pakistani brands like Tapal and Ispahani. Some have already gone out of business. Imported industrial inputs by the Afghans, particularly raw material for manufacture of stainless steel, for which Afghanistan has no industry, are retained in Pakistan. Smuggling of goods in transit to Afghanistan (GITA) annually causes Rs 5 billion in customs duty revenue loss to Pakistan, says the Federal Bureau of Revenue (FBR).

The protest against APTTA is led by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). It has asked the government of Pakistan to cancel APTTA. According to them, it is a serious blow to the already crumbling business activities in Pakistan. “APTTA will boost smuggling, and Indian products will swamp the Pakistani markets, which are already flooded with substandard Chinese goods and have forced many Pakistani industries to shut down,” Zakria Usman, FPCCI vice president, laments. The business community objects to the new concession to Afghan trucks alone to carry export goods to Pakistani seaports and to India. It was not allowed by the ATTA 1965. The FPCCI demands a reciprocal facility to Pakistani trucks. It has also called for putting quantitative restrictions on the Afghan imports and business through bank letters of credit. The monopoly of Afghan trucks alone will mean a freight income loss of Rs 3 billion to Pakistan Railways. It will also hit the jobs of nearly 10,000 Pakistan transporters, customs clearing, shipping and border agents.

How to sum up the business mood? Riaz Arshad, president Sarhad Chamber of Commerce and Industry (SCCI) representing Khyber Pakhtunkhwa, says, “The proposed agreement will hurt transport business, boost smuggling and damage industry. If the deal is not cancelled, we will not let the Afghan trucks cross into Peshawar, or let them lift goods from the Karachi port or elsewhere.”

I reported from Kabul when ATTA was signed in January 1965. The misuse of its original provisions has done a massive harm to our own business and industry. APTTA 2010 will be much more hurtful. I strongly feel its new provisions and non-reciprocity will do us more harm than good. The government should scrap it.

The writer is an Islamabad-based journalist and former Director General of APP