Tag Archives: trade

The Af-Pak saga continues: Af-Pak Transit Trade Agreement (APTTA)

Published in The Friday Times, 30 July 2010 to sort out what the hullabaloo is about. This is the what the agreement is all about in a nutshell.

The 1965 Transit Trade Agreement between Pakistan and Afghanistan has been revised this year with regards to Afghan goods’ transit to the Arabian Sea, as well as terms for Pakistan to secure routes to the Central Asian republics through Afghanistan. Pakistan is the largest trading partner of Afghanistan and the two countries’ trade has grown from $170 million in 2000-01 to $1.49 billion in 2008-09.

During the meeting between President Hamid Karzai and President Zardari in Washington in May 2009, a memorandum of understanding was signed to begin talks. The draft for an agreement was finalized on 19 July 2010. The decision to discuss APTTA coincided with the visit of Secretary of State Hillary Clinton and has irked many in Pakistan as it reinforces the perception that the government is making the decision under US pressure.

On 22 July, clarifying the ambiguities regarding the trade agreement, the Chairman Federal Board of Revenue (FBR) Sohail Ahmed said the agreement had not been signed yet, only the minutes of the meeting had been endorsed by authorities on either side.

The new agreement will allow Afghan trucks to carry export goods to the Wagah border for delivery to India. In order to check unauthorised trade the cargo will be allowed to be transported in accordance with internationally acceptable and verifiable standards of sealable trucks for a period of three years. Pakistan will be allowed to use Afghan territory for its exports to Central Asia.

India, which has transit trade agreements with Iran, Uzbekistan and Turkmenistan, seeks the shorter Wagah-Khyber transit route to Afghanistan for access to Central Asian markets. This access has been denied by Pakistan but India will be able to carry its goods to Afghanistan using Pakistan’s airspace despite the fact that India has not extended Pakistan transit rights to landlocked Nepal.

The drivers and cleaners will be allowed to enter and exit the two countries on short-term work permits readable by biometric devices installed at entry points. If goods do not exit the country within the specified time, the guarantees will be encashed by customs authorities.

An Arbitration Tribunal will also be set up bilaterally in case of a dispute. Failure to agree on a common name of a third arbitrator, two names of non-nationals and non-residents will be proposed by each side and the third arbitrator will be selected by drawing lots from the four proposed names.

To tackle the issue of smuggling, the two sides agreed to install tracking devices on transport units and a mechanism for customs to customs information sharing (IT data and others) will be established. Financial guarantees, equal to the amount of import levies of Pakistan, have to be deposited by authorised brokers or customs clearing agents to check the unauthorised trade and these deposits will be released after the goods exit the country.

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