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The US-sponsored transit agreement which comes into effect next year allows Afghan
trucks to drive tax free across Pakistan up to the Indian border with products for sale
there — but they cannot load up with Indian exports for the return journey.
Instead, Afghan traders must buy products made in or shipped into Pakistan; ensuring
Pakistani merchants do not lose their foothold in a market worth billions of dollars in
annual sales.
“We couldn’t insist on bringing Indian goods to the country from Pakistan’s border or
they would not have been interested in signing it,” said Mozamel Shinware, head of
International Trade in the Ministry of Commerce.
Afghanistan also agreed to allow Pakistan traders to seek routes to central Asia along
Afghan roads, Shinware said.
The long-awaited agreement has been in the pipeline for months and was hammered out
with help from the United States, which is keen to try and wean Afghanistan off billions
of dollars in foreign aid by boosting economic growth.
Afghanistan’s total worldwide exports were only $400 million last year, and according to
Afghanistan’s Chamber of Commerce around half of that were sales of fruit and carpets
to India.
“Pakistan charges a 35 percent tax on Afghanistan exports to Pakistan itself, but transit is
now free,” said Chamber of Commerce deputy head Khan Jan Alokozai.
However the trucks will have to stock up with Pakistani goods for their return journey.
And importing Indian goods via sea is very costly, often more than twice as expensive as
overland transport, sources at the commerce ministry say.
“Pakistan was very cautious about signing this contract, thinking about its revenues first
and foremost,” said Afghan finance ministry spokesman Aziz Shams.
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