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Business Recorder

Published Date: Jan 9, 2015


Congratulations! Following the failure to successfully implement Afghanistan Pakistan Transit Trade Agreement (APTTA), Pakistan, Afghanistan and Tajikistan are now planning to sign a Trilateral Transit Trade Agreement in March 2015. We do not know how it will be abbreviated – perhaps (PAT-TTA) – but we do know that if lessons are not learnt from the past then we are destined for another non-starter.
According to a news report published in this paper earlier this week, PAT-TTA (if that is what it is going to be called) will replace the existing APTTA. The argument for a successfully implement able transit trade treaty is strong from Pakistans perspective.
Pakistan needs the access to Central Asian markets; the market potential is significant yet hugely untapped. So there is a case for increasing forex earnings via increasing exports to Afghanistan and Central Asia. Then, of course, is the overall market diversification argument, which pundits have long been making. New markets should also result in high industrial production at home and therefore spur economic activity.
However, perhaps the biggest benefit of promoting transit trade business is the socio-economic gains that will accrue to the population living on the West of Indus.
An SDPI survey published in February 2014 found out how transit and bilateral trade businesses led to increased economic activity in Balochistan and Khyber Pakhtunkhwa and increased the number of households dependent on trade, transport, warehousing and communication over the course of 2004 -2011.
Titled, Afghanistan-Pakistan Trade: Welfare impact on Balochistan and Khyber Pakhtunkhwa, the report also showed that as a consequence of increases in Pak-Afghan trade, per capita incomes rose in Balochistan and Khyber Pakhtunkhwa, with households in the lowest income segment benefiting the most.
The expansion of transit trade treaty by bringing more players from the region into the fold should be a win-win for everybody. But as the SDPI study highlights, inclusion of more markets is in Pakistans biggest interest since it can help to develop the under-developed areas and feed into the overall policy solution for Balochistan and Khyber Pakhtunkhwa.
Both Balochistan and Khyber Pakhtunkhwa have their own peculiar set of militancy problems and while both military and political actions are needed to counter those problems, an effective transit trade treaty will go a long way in bridging Pakistans Indus divide. However, in order to make this happen, the centre (read: Punjab) will have to go beyond short-termism.
While bilateral Pak-Afghan trade has increased since the onset of APTTA, Pakistan has been losing the Afghan transit trade business to Iran. At the one end, there are delays in the clearance of consignments which increases transaction costs and reduces competitiveness in international trade.
At the other end, there are law and order issues, failure to sign the TIR system, transporters strikes, inadequate communication between the Pakistan and Afghanistan Customs, terrible road and overall trade infrastructure on Pakistans side and what not.It is as if the centre couldn care less for the Pak-Afghan transit trade. Indeed, changing this mindset will be the key in making the new transit treaty a success. Source :