*How APTTA Has Damaged Pakistan Economy*
By: Muhammad Salman
The Afghan transit trade was initiated in 1995, when Pakistan and Afghanistan signed a transit trade agreement, which gave Afghanistan duty-free access to Pakistan’s seaports and waived customs duties on Afghan goods passing through Pakistan.
The agreement was revised in 2010, and again in 2021, to include new provisions and regulations.
However, the Afghan transit trade has been a win-win situation for Afghanistan government, terrorist organisations and it’s drug mafia, smugglers and cartels only. In turn, It has caused huge losses to Pakistan’s economy and security.
According to a report by the Directorate General of Trade under the Federal Board of Revenue (FBR), the APTT is causing a substantial loss of billions of dollars to Pakistan’s revenue by distributing smuggled goods within the country without paying customs duties and taxes, among other obligations.
The value of imports under the Afghan transit trade is several times higher than the figures reported.
Pakistan, with a population of 250 million, had considerably lower imports as compared to Afghanistan, which had a population of only 40.1 million.
This trade imbalance is evident in various sectors. For example , in the fiscal year 2022-23, Pakistan imported tires worth $12 million, and fabric worth $83 million, whereas Afghanistan imported tires worth a staggering $92 million and fabric worth a substantial $440 million through Pakistan’s routes. Similarly, Afghanistan, although not a big consumer of black tea, imported tea worth $89 million in the last fiscal year.
The influx of smuggled goods flooding the markets, facilitated through APTT and sold at lower prices, detrimentally impacts Small and Medium-sized industries in Pakistan. This unfair competition puts the local businesses at a disadvantage, as they struggle to compete with the artificially low prices of smuggled items. This, in turn, leads to a reduction in their production capacity and a decline in employment opportunities.
Afghan smugglers convert earned PKR into USD and illicitly transport these funds to Afghanistan. This illicit activity contributes to a shortage of USD in Pakistan, resulting in an increase in the USD exchange rate, depreciation of PKR, and consequently, a surge in inflation, putting pressure on foreign reserves. which further compounds the economic challenges.
Smugglers, mafias, and cartels have become more formidable than those engaged in legal business, creating a negative impact on the business environment in Pakistan. This shift poses challenges and adversely affects the overall economic landscape of the country besides casting a negative effect on morale of law abiding businessmen.
The issue of Afghan transit trade has long been a point of contention between Pakistan and Afghanistan, leading to mistrust and resentment.
The recent report released by the FBR sheds light on the alarming scale and consequences of this problem, emphasizing the need for immediate and effective measures. It is imperative for Pakistan and Afghanistan to collaborate and find a solution that benefits both countries, ensuring that the transit trade operates in the best interests of their respective economies rather than serving the terrorists, smugglers and black market mafias.
About Author Salman is a PhD scholar in
Islamia university bahawalpur