Pakistan is Afghanistan's largest trading partner, while Afghanistan is Pakistan's 

second-largest export market.

The government of Pakistan has imposed a processing fee of ten percent on imported goods under the Afghan Transit Trade Agreement. What are the effects of this decision on the Pak-Afghan trade? In a notification of the Customs Department of the Government of Pakistan, this ten percent fee is levied on the actual value of the goods, which has to be paid in advance. Some sections of the business community believe that this will increase tensions between the two countries, which will also harm trade and potentially reduce Pakistan's share of the highly lucrative Afghan market. These trade deals are not only limited to Afghanistan, but Afghanistan is also the gateway to Central Asia, where Pakistan is sending many other commodities besides medicines, which are benefiting the country's economy.

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Afghanistan is an important market for Pakistan

Economic affairs expert Shahid Mehmood says that the Afghan market is very important for Pakistan. "Pakistan currently needs cheap coal to generate energy cheaply, which we are importing from Afghanistan at a very low cost," he told DW. Apart from this, we are also sending a lot of goods to Afghanistan. Shahid Mehmood believes that if the reconstruction work starts in Afghanistan, many investment opportunities can be created for Pakistani entrepreneurs.

What are the reasons for the decline in Pak-Afghan bilateral trade?

Former President of Sarhad Chamber of Commerce Manzoor Elahi says that if we improve our relations with Afghanistan, our mutual trade, which is currently about 1400 million dollars, can reach four to five billion dollars. We send goods worth around three hundred to six million dollars to countries, this volume can also be increased to a great extent. According to God's approval, we can import wheat, fertilizer, gas and many other goods from Central Asian countries through Afghanistan. And months of waiting, while the goods can arrive in four days from Central Asia through Afghanistan and payment methods can be other than dollars.”

Concern over Transit Fees

Manzoor Elahi agrees with Shahid Mahmood that Pakistan is importing cheap coal from Afghanistan, which is essential for power generation. However, in his opinion, due to the imposition of transit fee, Pakistan may suffer, which we are concerned about. If we impose any tax on coal, then we will have to import very expensive coal from Indonesia, which will have a great impact on Pakistan's foreign exchange."

Welcome to the verdict

However, some members of the business community consider the imposition of this transit fee as the right decision. Ahmed Chinoy, director of the Pakistan Stock Exchange and a well-known industrialist, says that this transit fee will benefit Pakistan. He told DW, "If transit worth one hundred thousand dollars goes, then Pakistan will get ten thousand dollars in it." There were reports that goods from other countries were going to Afghanistan in the name of transit and they were then sent to Pakistan, causing loss to Pakistan. However, Manzoor Elahi insists that this is a very inappropriate step and it will harm the business community of Pakistan. which is a total of one and a half lakh rupees while Pakistan is asking about 10 thousand dollars for one hundred thousand dollars, which is about 29 lakh rupees and it will have to be given to the Afghan importer in transit. If Pakistan does not remove this fee, they will import goods from China or India through Iran, which will cause us loss, and about 5,000 of our containers, which go to Central Asia between November and February, will be lost. The volume will also shrink a lot.

Trade Volume

According to the Trading Economics website, Pakistan exported about 833 million dollars to Afghanistan in 2021. Pakistan sends many commodities to Afghanistan including cereals, vegetable fats, oil, cattle, salt, Sulphur, earth stone, plaster, lime, cement, medicine, plastic, wood, electrical appliances, steel, iron, and soap. While Afghanistan exports fruits, dry fruits, vegetables, cotton, carpets, raw hides, animal hair, precious stones, tobacco, and other items to Pakistan.

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