By: AISRS Editorial Team
The Afghanistan-Pakistan Transit Trade Agreement (APTTA), signed in 2010, represents a pivotal yet strained trade accord between the two neighboring countries. Originally designed to facilitate regional connectivity and boost economic cooperation, the agreement has often been more of a source of contention than a mechanism for progress. For years, Pakistan has imposed numerous obstacles that have hindered the agreement's potential, negatively impacting bilateral trade with Afghanistan. These impediments, combined with broader geopolitical challenges, have led Afghanistan to seek alternatives. To revitalize the bilateral trade relationship and restore mutual benefits, Pakistan must reconsider its current stance, relax the stringent conditions of APTTA, and allow for greater economic engagement, especially in the context of Afghan-Indian trade relations.
The Historical Context of APTTA and its Predecessor
The roots of the Afghanistan-Pakistan trade agreement date back to 1965, when the Afghanistan Transit Trade Agreement (ATTA) was first signed. This agreement allowed Afghanistan to import duty-free goods through Pakistani seaports, giving the landlocked nation access to international trade routes. However, the agreement was not reciprocal. While Afghanistan could move goods through Pakistan, Pakistan was not afforded the same privilege to use Afghan territory to reach the Soviet Union or, later, the Central Asian Republics (CARs) after the dissolution of the USSR.
This lack of reciprocity was a long-standing point of contention for Pakistan. In 2010, APTTA replaced the earlier agreement to promote a more balanced framework of trade. It was believed that APTTA would not only stimulate Afghanistan's economy but also improve regional trade connectivity. However, this promise remains largely unfulfilled due to the persistent obstacles created by Pakistan.
Pakistan's Barriers to APTTA
Despite APTTA's potential, Pakistan has, over the years, introduced a series of measures that have significantly restricted Afghanistan’s ability to maximize the benefits of the agreement. One of the primary grievances of the Afghan government revolves around the restrictions on bilateral trade with India. While Afghan goods can be transported to Indian destinations via Pakistan and unloaded at the Wagah border, Afghan trucks are not allowed to carry Indian goods back through Pakistan. This one-sided limitation stifles Afghan-Indian trade relations and highlights a broader issue in the way Pakistan manages its transit policies.
Pakistan justifies this restriction by claiming that allowing Afghan trucks to carry Indian goods back through its territory could lead to a surge in black-market trade of Indian products in Pakistan. However, from Afghanistan's perspective, this limitation is a serious economic disadvantage. With India being one of Afghanistan's key trade partners, especially in sectors such as textiles, dried fruits, and medical supplies, restricting the trade route through Pakistan hampers Afghanistan’s ability to diversify its markets.
Further complicating matters is Pakistan's use of border blockades as a political tool. Over the years, Pakistan has closed its borders with Afghanistan multiple times, often in response to political or security disagreements. These blockades have a devastating impact on the Afghan economy, causing prices to rise in Afghan markets as more expensive or smuggled imports are used to meet consumer demand. This volatility has made it difficult for Afghanistan to rely on Pakistan as a stable trade partner, leading the country to explore alternative routes and partnerships.
The Consequences for Pakistan
Pakistan's obstructions to APTTA have not gone without consequence. Over the past decade, Afghanistan has diversified its trade partnerships, reducing its reliance on Pakistan. Notably, Afghanistan has signed new transit agreements with Tajikistan, Uzbekistan, and Turkmenistan, further integrating itself into Central Asian trade routes. In addition, Afghanistan's trade with Iran has grown by 25%, while Pakistan’s exports to Afghanistan have declined sharply—from $3 billion in 2011 to around $1 billion by 2017. This shift is a clear signal that Afghanistan is not willing to be held hostage by restrictive trade policies and is instead pursuing a more independent economic future.
In a bold move in 2017, Afghan President Ashraf Ghani banned Pakistani trucks from entering Afghanistan. This decision, which came in response to Pakistan's continued refusal to allow Afghan-Indian trade, forced Pakistani goods to be offloaded at the Afghan-Pakistan border and carried further into Afghanistan by Afghan trucks. This was a strong message to Pakistan that Afghanistan would no longer tolerate one-sided transit policies.
Furthermore, Afghanistan’s recent accession to the World Trade Organization (WTO) has strengthened its commitment to integrating into the global economy under a "non-discriminatory" and "rules-based" framework. This move underscores Afghanistan’s vision of moving away from dependency on Pakistan and creating more balanced and fair trade partnerships globally.
The Way Forward: Easing Restrictions and Enhancing Trade
To improve bilateral trade and relations, Pakistan must ease the conditions it has imposed on APTTA. A more flexible and accommodating approach to Afghan-Indian trade would not only help mend relations with Afghanistan but also enhance Pakistan's own economic prospects. Afghanistan sits at the crossroads of South Asia, Central Asia, and the Middle East, and its cooperation is essential for Pakistan to access the natural resources and trade routes of the Central Asian Republics.
Pakistan's restrictive stance is increasingly at odds with its own strategic interests. With Afghanistan gaining greater leverage through its partnerships with India, Iran, and Central Asia, Pakistan risks losing its primacy as Afghanistan's chief trade partner. Moreover, Pakistan’s long-term need for regional connectivity, particularly in terms of accessing Central Asia’s energy resources, can only be realized through cooperation with Afghanistan.
Therefore, it is in Pakistan’s best interest to revisit the terms of APTTA and work toward a more mutually beneficial arrangement. By allowing Afghan trucks to carry Indian goods and removing unnecessary border restrictions, Pakistan can foster greater economic cooperation and political goodwill with Afghanistan. This, in turn, would promote regional stability and prosperity, strengthening Pakistan's role as a central hub for trade in South and Central Asia.
In conclusion, easing the restrictions on APTTA would not only benefit Afghanistan but also open new economic opportunities for Pakistan. A cooperative, rather than confrontational, approach to trade is essential for building stronger bilateral relations and enhancing regional connectivity.