Transportation of Indian goods to Afghanistan via Wahgah Pakistan says no to proposal

[Lahore_Real_Estate]

ISLAMABAD (July 07 2010): Pakistan has outrightly rejected an Afghan proposal to allow transit facility for transportation of Indian goods to Afghanistan through Wagha border under the proposed Afghanistan Pakistan Transit Trade Agreement (APTTA).

During a special meeting on proposed Afghanistan Pakistan Transit Trade Agreement organised by the Ministry of Finance Tuesday, a senior official of the Ministry of Commerce boldly disclosed before the meeting that Pakistan will lose around $2 billion market by allowing access to Indian goods to Afghanistan.

Official of the Commerce Ministry categorically informed the meeting that Pakistan has nearly $2 billion market in Afghanistan which would be totally lost in case we allow access to Indian goods to Afghanistan under the transit facility. Pakistan is not obligated under any international agreement/convention to allow access to Indian goods through transit trade facility.

Giving access to India through land route to Afghanistan actually means giving complete control of Afghan and Central Asian markets to India. Indian exporters have more products to sell in Afghanistan, which are more competitive as compared to Pakistani goods. "We are not obliged to give market access to India", official informed the meeting. Due to brotherly relations with Afghanistan for promoting their exports, Pakistan has given access to Afghan origin goods to India through land route of Pakistan. The trade between Pakistan and India is a bilateral issue and India is not the party of the agreement, which we are presently being negotiating with Afghanistan, official informed the Afghan delegation.

Sources told Business Recorder here on Tuesday the Afghan side principally agreed to pay bank guarantee on the goods being transported from Karachi Port to Afghanistan through transit facility under the new agreement. They have also agreed to submit guarantees for the trucks, owed by Afghan transport industry, being used for transportation of goods from Pakistan to Afghanistan.

The Afghan side has also shown its willingness to open letter of credit (LCs) for the transit goods and copy of the same would be given to the customs authorities for verification. Similarly, the copy of the Goods Declaration (GD) would also be submitted to the Pakistani customs for reference.

Sources said that a special meeting on the proposed APTTA was organised by the Finance Ministry in an effort to have positive progress on the issue. It is a big achievement for Pakistan to obtain bank guarantees for the transit goods destined for Afghanistan which would not only control smuggling but also check missing of goods during transportation process. The new APTTA would incorporate a new provision in the agreement to seek bank guarantees against the transit goods as security.

Pakistani customs authorities and their Afghan counterpart discussed threadbare the issue of transit facility for Indian goods destined for Afghanistan under the new agreement. The issue of smuggling remained focus of discussion between the two sides. However, Afghan side insisted that the issue of smuggling and APTTA should be separately discussed. No doubt smuggling is a major issue for Pakistan, but the illicit trade and the APTTA should be separately discussed, sources quoted Afghan side as saying during the meeting.

Sources said that it is unlikely that both the countries would be in a position to reach consensus on the proposed provisions of the APTTA, as key issues still remain unresolved. Unless or until Afghan side accepts some of the most important proposals of the Pakistani side, there seems no possibility of a consensus agreement.

It is difficult for Pakistan to accept Afghan demand especially allowing transit facility for Indian goods via land route to Afghanistan through Wagha road link, sources said. A representative of the Afghan Embassy, who was also present in the meeting, was of the view that both the countries are likely to conclude APTTA agreement tomorrow (Wednesday).

During the meeting, Afghan side has also not responded to Pakistan's request for charging customs duty on the import of Afghan cargo at Karachi Port and later transfer of the amount to the relevant bank account of Afghan government to effectively check smuggling of goods under the under transit agreement. However, the Afghan side remained mum on this viable proposal of the Pakistani customs which could play a key role in controlling smuggling.

Pakistan and Afghan sides discussed the issues pending for finalisation of APTTA at a special round of talks held here where Federal Minister for Finance Dr Hafeez Shaikh led Pakistan side and Hazrat Omar Zakhilwal, Minister for Finance Afghanistan and Wahidullah Shahrani, Minister for Mines, Afghanistan led the Afghan side in these crucial talks. Senior officials from several federal ministries as well as high officials from Afghan government also assisted the talks.

Both Pakistan and Afghanistan are making efforts to conclude the APTTA in second week of July 2010 and there are plans to sign this historic agreement during the visit of US Secretary of State Hilary Clinton to Kabul on July 20, official sources informed.

Pakistan and Afghanistan have already completed six rounds of talks for the finalisation of proposed APTTA for promotion of bilateral trade as well as eliminating cross border smuggling. The special round of talks on APTTA which started here on Tuesday is scheduled to complete by today (Wednesday) as the Afghan side would give its final view point on their demands, added the official source.

Sources said that the Afghan side again raised the issue of allowing transit facility for Indian goods via Pakistan land route for Afghanistan and they cited international conventions in this regard under which land locked countries have the right to demand.

However, it was the stated policy of the Pakistan government that allowing transit trade facility to Indian goods via Pakistan land route for Afghanistan was the bilateral issue and its possibility could be discussed with India after resumption of Pak-India Composite Dialogue. This demand should not be made part of the APTTA, as this agreement encompass bilateral trade and transit facilities.

Sources said that Pakistan has proposed measures for having an effective control over cross border smuggling including subjecting existing afghan imports with letter of credit, subjecting afghan imports with bank guarantee, compulsory licensing for afghan imports, placing quantitative restrictions on Afghan imports, maintaining increased sensitive list of items, and equalisation of customs tariff on items and charging of customs duty by Pakistan on transit goods to Afghanistan on behalf of Afghan government.

However, Afghan side informed Pakistan side that they would respond to some of the proposals on the last day of talks on Wednesday (today), sources added. In his opening remarks, Federal Minister for Finance Dr Hafeez Shaikh said that Pakistan and Afghanistan are two brotherly Muslim countries who share a common geography, common history and a rich cultural heritage. The two countries have been parts of ancient civilisations such as the Graeco-Bacectrian, Buddhist and Islamic civilisations. Both have been part of the same vast Iranian, Mongol, Turk and Afghanistan empires. Both countries are located in very strategic region of the world and are at the crossroads of ancient trade routes. The two countries hold the key to trade between Indian sub continent, Central Asia, China, and Russia.

Pakistan is aware of its international commitments under the UN Convention on Transit Trade of Land locked States, freedom of Transit under Article 5 of GATT, Article 2 of the UN Convention of High Seas. It recognises the rights of Afghanistan as a land locked country. Pakistan is committed to facilitate Afghanistan-Pakistan bilateral trade, their involvement in regional trade and international trade.

So for 6 rounds of talks have been held between the Joint Working Group representing the stakeholders of both the countries. Significant progress has been made so for during the 6 rounds. Protocol 5, dealing with Control of Precursors and Chemical Substance used in the illicit Manufacture of Narcotic Drugs or psychotropic Substances. Major text of the Agreement and its protocols has been cleared. The 6th round has been very important in the sense that it helped in bringing out the fundamental issues requiring resolution in order for the talks to move forward.

"We are entering into negotiations with an open mind and positive attitude with the intention to address the outstanding issues and find solutions. He wished good luck and hope that we will be able to come up to the expectations of the people of both the countries," the Finance Minister added.