(Reuters) – Afghanistan expects to sign a trade agreement with Pakistan this month in a move which could boost stability, but only if its neighbor drops opposition to forward-traffic with India, business leaders said on Saturday.
A long deadlock over Afghan demands for transit of exports to India via Pakistan through the sensitive Wagah land route was close to ending, clearing the way for Afghanistan-Pakistan Transit Trade Agreement (APTTA) within weeks, Afghanistan Chamber of Commerce director Abdul Qadir Bahman told Reuters.
“It is not yet certain, but we have very strong hopes differences have been overcome,” Bahman said.
Landlocked Afghanistan is dependent upon transit countries for its foreign trade, with Pakistan having the nearest seaport. More exports would help President Hamid Karzai counter a Taliban insurgency by improving economic conditions.
Almost 50 per cent of Afghanistan’s trade is with its five neighbors Pakistan, Iran, Tajikistan, Turkmenistan and Uzbekistan. Trade between Afghanistan and Pakistan is worth more than $1 billion.
But trade is very one-sided, the World Bank says, consisting for the most part by imports from Pakistan, as compared to very little formal Afghan exports.
Bahman said both sides would hold an eighth round of talks before an international conference in Kabul later this month in which donor countries and Karzai’s government will try to chart a path forward for the conflict-torn country.
“The main point is access to the sea for exports to India,” he said, promising a deal would also help combat the current thriving blackmarket trade between the two countries.
“If we sign this agreement, it will decrease that because we will have found a way for everyone to carry out business without any problems,” Bahman said.
Afghanistan, due to its strategic geographic position, hopes to become a regional transit hub for trade with Central Asia as well as South Asia, the Middle East and China, if the security situation in the country can be stabilized.
U.S. and NATO forces are currently preparing a major offensive against the Taliban in its southern strongholds, although the danger of the eastern border was underscored on Saturday when 11 Pakistanis were killed by insurgents as they entered Afghanistan.
Transit to Afghanistan through Pakistan is currently governed by the 1965 Afghan Transit Trade Agreement which specifies ports, routes, transport and customs transit procedures.
Both Afghanistan and Pakistan have agreed on the need for a new agreement to give Afghanistan sea access and provide Pakistan with direct routes to Central Asia.
But Pakistan says Afghanistan is refusing to agree to customs duty on Afghan cargo in Karachi and other measures to combat illegal smuggling such as compulsory licensing, bank credit guarantees and quarantine restrictions.
(Editing by David Fox)