Pact aimed at improving transit for Afghan goods to ports and for Pakistani goods to Central Asian markets
Geneva, 4 February 2011 - Afghanistan and Pakistan will begin operations on 14 February of a new agreement intended to ease the flow of trade between and through the two countries. The agreement, signed in October 2010, reflects long-standing UNCTAD recommendations on using trade-facilitation arrangements to spur economic development in these nations.
The Afghanistan-Pakistan Transit Trade Agreement (APTTA) is a successor to the Afghanistan Transit Trade Agreement (ATTA) signed in 1965 between Pakistan and Afghanistan to facilitate the transit of goods exported from and imported to Afghanistan using the Pakistani port of Karachi. The current agreement permits the use of more ports and more carriers - including Afghan trucks - and increases the number of border crossing points. It also provides for Afghan exports to India using the land border between Pakistan and India. The pact also envisages the use of Afghan territory for trade between Pakistan and Central Asian countries.
UNCTAD has long advocated the potential benefits that improved transit arrangements can bring to Afghanistan and Pakistan. For Afghanistan, among the main benefits is improved access to overseas markets through Pakistan´s ports. For Pakistan, it is particularly important to obtain better access to Central Asian markets. In addition, transit trade - goods travelling through both countries to and from other nations - can generate income through the expanded use of transport logistics services in Afghanistan, a landlocked country, and from greater use of ports in Pakistan. Although Afghanistan is a landlocked country, its geographic position gives it a potentially large role as a gateway for trade to the Central Asian interior. In Pakistan, it is above all the terminal in Karachi, as well as Pakistan´s importers and exporters, that can benefit from economies of scale that additional traffic from and towards Afghanistan can generate. In the long term, the economies of scale of higher trade volumes help to reduce transaction costs for all traders. Lower transaction costs then help to further expand international trade - what economists refer to as a "virtuous circle".
In both countries, UNCTAD is currently implementing World Bank-financed trade-facilitation projects, which include measures to increase the efficiency of the bilateral transit regime between Pakistan and Afghanistan. To achieve the objective of bringing Pakistan´s foreign trade into line with international standards, the Government´s Ministry of Commerce, in collaboration with UNCTAD, initiated a National Trade & Transport Facilitation Project in 2001. Among several other achievements, this project successfully contributed to the creation of a National Trade and Transport Facilitation Committee (NTTFC) and to the introduction of a Single Administrative Document for goods entering and/or leaving the country. The Goods Declaration now in use applies the Single Administrative Document to facilitate trade. UNCTAD collaboration with the NTTFC and the Ministry of Commerce is continuing under the Trade and Transport Facilitation Project 2, which began operation in 2010. One of the objectives of the new project is the improvement of international transit, including the implementation of APTTA, and other steps intended to expand Pakistan´s access to Central Asian markets.
In Afghanistan, UNCTAD has been collaborating with the Ministries of Finance and Commerce since 2004. Its Emergency Customs Modernization and Trade Facilitation project includes the implementation of UNCTAD´s Automated SYstem for CUstoms DAta (ASYCUDA), as well as support for Afghanistan´s accession process to the World Trade Organization. It also provided assistance in the preparation for negotiation of the APTTA, and it will provide assistance for APTTA implementation.
This agreement shows that, even in politically difficult times, Afghan and Pakistani policymakers seem to be willing to advance towards regional economic integration and export-led growth. UNCTAD is committed to continuing the organization´s support for Afghan-Pakistani trade collaboration and initiatives.
