Boosting bilateral trade
Government has decided to keep Torkham Border open round-the-clock six days a week to boost bilateral trade with Afghanistan. All goods bearing trucks shall be allowed to pass subject to observing the standard operating procedures, pertaining to the prevailing novel coronavirus pandemic. Increase in the quantum of bilateral trade through land routes with Afghanistan and other friendly neighbouring countries will help offset to some extent the once again soaring current account deficit, which had showed decline during July-March 2019-20. In the month of March deficit in merchandise trade was $9 million but it rose to $572 billion in April due to suspension of shipments via sea routes, tells SBP report. Textile exports have dropped by 65 percent to $404 million as compared with the shipments worth $1,138 million in the same month last year.
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 in favour of Pakistan. Composition of exports included cement, steel, plastic goods, textiles, pharmaceuticals, surgical goods, wheat flour, rice, sugar, meat, poultry, fruits and vegetables. Exports to Afghanistan were at halt from the past two months as borders have been sealed as an inevitable measure taken for containing coronavirus pandemic. Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Anjum Nisar had 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 had 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. Bilateral trade started declining, hitting exports from Pakistan since 2008.
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 get the transit trade facility 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.
The question is not of reclaiming the Afghan market alone. Afghanistan provides a short inland route for trade with Central Asia. Pakistan’s exports to five central Asian States of can get a big boost when a political settlement of Afghanistan is reached and the country returns to peace and stability. At present Pakistan is planning to do trade with Tajikistan, Uzbekistan, Kirgizstan and Kazakhstan though Xinjiang province of China by Karkoram highway. At present it will be a very long and difficult trade route.
Despite the preferential trade agreement with Iran, volume of bilateral trade is stagnant at $293 million. Pakistan exports goods and cereals worth $32 million to Iran and imports a number of items of $270 million. On the contrary, even in the era of economic sanctions on Iran before its nuclear deal with 5 plus world powers bilateral trade between India and Iran grew to billions of dollars, done in national currencies. Hopefully, a comprehensive policy of facilitating bilateral trade with Afghanistan and Iran shall be implemented on priority basis.