ISLAMABAD: In a breakthrough in trade relations with Afghanistan, Paki­stan has agreed to a plan to separate cargo movement and passenger crossings at border stations to maintain unfettered bilateral trade and facilitate transit to Central Asian states.

Pakistan has decided to establish a one-document regime (ODR) for all foreign nationals, including Afghans, who travel to Pakistan with a valid visa. The first deadline for implementing ODR was Nov 1, 2023, which was extended to Jan 31 and then March 31.

During the March 24-27 visit, Pakistan’s Commerce Secretary Mohammad Khurrum Agha met with his Afghan counterpart Nooruddin Azizi to discuss bilateral trade and transit. They reached an understanding on various issues.

An official source told Dawn that the secretary of commerce will brief Prime Minister Shehbaz Sharif on the agreed-upon plan with Afghanistan before proceeding with implementation. The source added that the prime minister’s approval will be sought on all these issues.

PM to be briefed on the agreed-upon plan before implementation

Soon after returning from Kabul, the government transferred Secr­etary Commerce Khurrum Agha on Friday, but the Establishment Division has yet to notify his replacement. Before becoming secretary of commerce, Mr Agha worked in the prime minister’s secretariat.

According to the source, the introduction of ODR has significantly imp­a­cted trade relations with Afgha­nistan and transit trade with Central Asian states (CAS) since November 2023. The decision has also significantly impacted truck drivers and supporting staff on both sides of the border.

According to a source, Pakistani and Afghan truck drivers do not possess passports. As a result, cargo transportation has been significantly affected, leading to a slowdown in trade volume.

To address this issue, Pakistan has decided to exempt Afghan truck drivers from visa requirements for a year beginning in May and to allow vehicles to move against temporary admission documents. At the very least, this decision will end the uncertainty in bilateral and transit trade with Afghanistan and CAS.

Many trade experts praised Islam­abad’s initiative to delink trade from politics. Furthermore, the Pakistani business community expressed concern that the new proposed visa system will impede bilateral trade with Kabul and transit trade with the CAS.

At the same time, policymakers were made aware of the negative consequences of Pakistan’s downgraded diplomatic relations with New Delhi and suspension of all bilateral trade in August 2019, when India revoked occupied Kashmir’s special status by repealing Article 370 of its constitution. Pakistan is now considering revising its decision to resume trade relations with India.

Experts believe Pakistan should not make the same option in the case of Afghanistan due to political issues and border tensions.

The annual average cargo movement at Pak-Afghan border stations is between $7 billion and $8bn. The bilateral trade volume amounts to approximately $1.5bn, with the remaining portion attributed to Afghan­istan’s transit trade goods under the transit trade agreement.

At the same time, Pakistan’s trade with CAS is also between $400 and $500m annually via a transit of Afghanistan. Uzbekistan has already implemented its transit trade agreement with Pakistan, under which 1,200 containers were imported only in February.

Tajikistan imported three trucks loaded with potatoes from Pakistan under the transit agreement.

Under the Afghanistan-Pakistan Transit Trade Agreement, Pakistan accepted Afghan proposals to enable cross-stuffing at Karachi ports within six months. It was also decided that the transit trade agreement would be finalised within the following two months.

Both sides agreed that Pakistan will use insurance guarantees rather than bank guarantees for transit trade. Both parties agreed to boost trading through financial systems rather than barter trade. It was also agreed at the meeting that Pakistan would import coal from Afghanistan at international rates.

Published in Dawn, March 30th, 2024