Pakistan-Afghanistan Trade – OpEd

As per international relations a state can change its friends but cannot change its neighbors owing to geographical compulsions. Neighbors should at least have good relations if not the best and trade relations should not be paused at any cause. Pakistan and Afghanistan are interlinked in similar bond and are connected geographically. There is a need of the hour that they should have good relations. 

The trade relations between Pakistan and Afghanistan have seen ups and downs. These relations are regulated through Afghanistan- Pakistan transit trade agreement (APTTA) of 2010. Before it was regulated through Pakistan- Afghanistan free trade agreement (PAFTA) of 1965. 

Owing to multiple factors bilateral trade between both states has shrunk. A couple of years ago their bilateral trade was 2.5 billion USD which reduced to 1.8 billion USD in 2023. It was 870 million USD in 2020. In addition, from 2010 to 2020 Pakistan exports to Afghanistan declined 200 percent while its imports increased 62 percent only. 

Through (APTTA) Afghanistan was allowed to trade with the other world via Pakistan but Pakistan has been complaining it was misued. It asserts that Afghanistan imported more then it needed hence many items smuggled back to Pakistan because of which Pakistan,s economy suffered. On the flip side,  Afghanistan was complaining that it had not been given due access to India for trade. Therefore, owing to mistrust and worsening relations trade declined mostly during Ashraf Ghani tenure who focused on trade with India through Chabahar which the Taliban 2.0 has continued. 

Afghanistan is located at the crossroads of South and Central Asia. While Pakistan has admirable coastline and seaports.
At the same time, Central Asia could be a good trade matket of Pakistan through Afghanistan. Meanwhile, Pakistan is a window of trade for Afghanistan through Gwader. Hence, the extension of the CPEC to Afghanistan would be a win-win situation for both countries. 

Both countries share 2600 KM border where there are 18 trading points between them. This geographical location of both states could help in increase in bilateral trade provided that both countries focus trade relations from an economic lens not just a security perspective. Trade development authority of Pakistan (TADAP) estimates that Afghanistan is a market of 4 billion USD exports for Pakistan, while as per Dr. Raza Khan an expert of Afghanistan affairs observes that the actual figures are 20 billion USD. 

The clouser of border has been a huge impediment in trade relations between Pakistan and Afghanistan. The Dawn newspaper writes that the loss of Clouser of Torkham border to both states is 1 lac dollar daily. While in Chaman border hundreds of trucks  stranded time and again owing to multiple factors. The government of Pakistan has initiated an admirable step by constructing NLC in Chaman which will undoubtedly help in for integrated transit trade management system (ITTMS) once it is operational. 

Both countries should focus on trade easiness and reduce political tentions. They should work on treade facilitation, should stop smuggling, take steps for easiness of visa system, start trade related documentation, evolution of tax system, trade financing, pause Hawala and Hundi system, and start banking system. Overcoming hese factors would undoubtedly pause mistrust and will ultimately increase trade between both states.