Amin Fahim clarifies terms of Afghanistan-Pakistan transit trade agreement

Published in The News
By Makhdoom M Amin Fahim

Afghanistan is a landlocked country and we are obliged to provide it with access to seaports under our international treaty obligations.

Before I start writing on the issue, it would be appropriate to set in proper context the role of Pakistan for Afghan Transit Trade. Afghanistan has similar transit trade agreements with following countries:

1. Iran

2. Tajikistan

3. Uzbekistan

4. Pakistan

Afghan Commerce Minister Dr Anwar-ul-Haq Ahady was recently in Islamabad with the Afghan delegation for the 7th meeting of Pakistan-Afghanistan Joint Working Group to finalise the bilateral transit trade treaty, which both countries are negotiating since 2008 and which is to replace the 1965 Agreement. The outcomes of this meeting were recorded in the minutes signed in the Prime Minister�s Secretariat. Since then, this event, which was witnessed by the prime minister of Pakistan and US secretary of state, has been focus of attention of the media. Apprehensions have been expressed that interests of Pakistan have been compromised at the behest of some external powers. The Ministry of Commerce has been issuing clarifications on various opinions and misgivings about the new transit treaty. In this background, this article is expected to provide a comprehensive clarification to remove confusions from the minds of the people of Pakistan.

The status of agreement

I would like to categorically state that we have not yet signed the new Agreement on Transit Trade with Afghanistan. The ceremony held in the Prime Minister�s Secretariat was in fact the signing of the minutes of the meeting. I would like to add that it is a routine practice that trade negotiation meetings usually end with a signing of the minutes or record note. The minutes or record notes are permanent record and are essential for drafting a consensus document.


Before I move to the provisions to some of the important elements of the new treaty, I would like to provide a brief history on our current negotiations with Afghanistan. In February 2006, the-then prime minister approved the recommendations of the 4th meeting of National Trade Corridor to start the process of renegotiations with Afghanistan for a new transit trade agreement. It was felt that the present Afghan Transit Trade Agreement signed on March 2, 1965 has become outdated and unfavourable for Pakistan for the following reasons:

(i) It did not contain provision of transit trade to the Central Asian Republics through Afghanistan, which is an impediment to Pakistan�s aspirations to become a gateway for transit trade to Central Asian Republics.

(ii) It restricts transport of Afghan cargo through Pakistan to Pakistan Railways only, while much of the cargo is now being transported by road.

(iii) It provides for movement of Afghan cargo through one seaport i.e. Karachi, while Pakistan now has three operational seaports, Karachi, Port Qasim and Gwadar.

(iv) Customs and other procedures stipulated in the 1965 Agreement are outdated. These provide an opportunity for pilferage and smuggling.

(v) In 1965, there was hardly any containerised cargo. There has been tremendous improvements and developments in international logistics, supply chain and information technology. There was therefore a need to update the existing treaty to cater to these developments.

In November 2008, Afghan authorities submitted a draft Transit Agreement for Pakistan�s consideration. The Ministry of Commerce started consultations with the stakeholder ministries to firm up Pakistan�s position on the new proposed agreement. The Ministry of Commerce also obtained mandate from the cabinet in March 2009 to commence negotiations with Afghanistan to finalise the agreement. Consequently, the first meeting of the Afghanistan-Pakistan Joint Working Group on Transit Trade Agreement was held at Islamabad on May 14, 2009.

During the visit of the president to US, an MoU was signed in Washington DC on May 6, 2009 by foreign ministers of Pakistan and Afghanistan on transit trade to conclude the agreement by end 2009.

Indian exports to Afghanistan

Indian goods under the 1965 Agreement are transiting through the territory of Pakistan to Afghanistan imported via seaports. In the new treaty we would continue to provide this facility to Afghanistan. There have been numerous reports in the local media and television channels that we have allowed transit of Indian goods entering Pakistan through Wagah land border routes. I would like to clarify that this is absolutely incorrect. There have been persistent requests from Afghanistan to allow the transit of Indian goods through Wagah land border. We have always maintained that it is a bilateral issue between Pakistan and India and we would address this under composite dialogue with India. Unfortunately, this process stalled after Mumbai incident.

Afghan exports to India

Afghanistan is already exporting to India not only through Karachi port but also through Wagah land route. The land route through Wagah is in use since 1980. In the new treaty, we have continued the policy to allow exports of Afghanistan to India through Wagah land border station. The Afghan consignments are currently entering Pakistan through Chaman and Torkham from where they are shifted to Pakistani trucks and transported to Wagah. In the new treaty, we have allowed Afghan trucks to travel up to Wagah and offload their export consignments destined for India on the Pak side of the border.

Afghan cargo transportation through Afghan trucks

This concession is reciprocal and now Pakistani trucks would carry Pakistan�s export cargo to Central Asian states through Afghanistan. The decision to allow Afghan trucks to export their cargo through Karachi and Wagah will facilitate their exports, as it would reduce the transit time, which is currently required to load and reload cargo. The relevant law-enforcement agencies will ensure that the Afghan trucks travel on the designated routes.

Use of biometric system

We have also developed a mechanism to grant permits and visas for the vehicles and drivers accompanying the vehicles with the use of biometric information system to monitor entry and exit of vehicles and accompanying driver and crew.

Prevention of smuggling

While negotiating the new treaty we were concerned that one of the main issues affecting our economy was the informal trade or smuggling which was hurting not only our local industry but also undermining our revenue collection. From the beginning of the negotiations, we told our Afghan friends that the new treaty would not be acceptable unless we devise affective and sustainable measures to address misuse of transit trade by certain unscrupulous elements. Three of the most important development in our negotiations have been:

(a) A consensus on the requirement of bank guarantee for the transit of Afghan cargo through Pakistan. The bank guarantee would only be released after the satisfaction of Pakistani authorities that goods have reached Afghanistan;

(b) Agreement to install tracking devices on the vehicles transporting transit cargo; and

(c) The use of containerised trucks and seal-able trucks according to international standards.

These measures would ensure that there are noleakages during the transit journey.

Dispute settlement mechanism

We have also agreed on a dispute settlement mechanism through the creation of the Afghanistan-Pakistan Transit Trade Coordination Authority and setting up of an arbitral tribunal to ensure the smooth functioning of the new treaty. It would be our endeavour to resolve disputes through mutual consultations.

Involvement of private sector in negotiation

The representatives from the private sector were also included in our negotiating team in addition to all other stakeholder ministries. We held seven meetings at Islamabad and Kabul alternatively and reached consensus on the new treaty.

I am confident that the new Transit Trade Agreement with Afghanistan is the best outcome that we could achieve through this process. The negotiating team has sufficiently addressed our concerns keeping in view our national interests. Whatever facilities we have provided to Afghanistan will be available to our exporters to Central Asia through Afghanistan. The new treaty would usher in a new era of peace, prosperity and harmony in this region.

The writer is the federal minister for commerce

3 responses to “Amin Fahim clarifies terms of Afghanistan-Pakistan transit trade agreement”

  1. I hope Shahid Masood will read this article. I am happy that there’s someone from the Govt to respond the dramaybazi of Anchorpersons of TV Channels. Good one Amin Fahim Sahib.

  2. bit confused what will federal govt present in LHC PAK-Afghan transit trade agreement on 5th august , if there is no agreement yet ,