Pakistani traders hail PTA with Kabul, flag hurdles in trade

ISLAMABAD: Pakistani and Afghan traders Saturday welcomed signing of the Preferential Trade Agreement (PTA) with Afghanistan but expressed concerns about certain hurdles in bilateral and transit trade.

Under the PTA, signed in Islamabad on July 23, tariffs on four items from Afghanistan to Pakistan: grapes, pomegranates, apples, and tomatoes, and on four items from Pakistan: mangoes, citrus fruits, bananas, and potatoes will be reduced to 27 per cent.

This one-year agreement will be effective from August 1, 2025, and is extendable.

The Chairman Muhammad Zubair Motiwala and President Pakistan Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) Juanid Makda welcomed the PTA and said traders remain concerned about persistent challenges hindering bilateral and transit trade, which has declined from $2.5 billion at its peak to $1.2 billion in 2024.

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“PAJCCI acknowledges this progress, which builds on discussions from the Special Investment Facilitation Council (SIFC) meeting on December 17, 2024. This milestone reflects PAJCCI’s long-standing demands, pursued through persistent efforts and reinforced during the SIFC meeting, marking a significant step toward enhanced bilateral trade,” Makda said in a statement.

Meanwhile, Co-Chairman of the PAJCCI Khan Jan Alokozai also hailed PTA and said this a positive step to give a boost to trade relations between the two countries.

“We hope more such steps would be taken in the future,” Alokozai, an Afghan businessman, told Hum News English from Kabul.

Formalized by Pakistan’s Commerce Secretary Jawad Paul and Afghanistan’s Deputy Minister of Industry and Commerce Mullah Ahmadullah Zahid, this agreement reduces tariffs on key agricultural goods such as Afghan grapes, pomegranates, apples, and tomatoes, and Pakistani mangoes, oranges, bananas, and potatoes from over 60% to 27%, with a special 22% rate for tomatoes and potatoes.

“As outlined in our recent letter to the Minister of Interior, Mr. Mohsin Naqvi, these issues include the lack of a consistent, long-term trade policy from the Ministry of Commerce (MoC) and State Bank of Pakistan (SBP), creating uncertainty for traders and discouraging investment,” Makda said.

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He added that payment disputes, driven by banking inefficiencies, have led to undue pressure from the Federal Investigation Agency (FIA) on legitimate businesses, affecting trader confidence.

Temporary Electronic Import Form (EIF) waivers, without a permanent system, complicate trade planning, while delays in visa issuance for Afghan businessmen are highly discouraging, streamlining the process could foster greater economic collaboration.

The Khyber Pakhtunkhwa government’s Infrastructure Development Cess (IDC), though reduced to 1%, continues to burden transit trade, contrary to international commitments, diverting some trade to routes like Chabahar, Iran.

Statutory Regulatory Orders (SROs) from October 2023, including a 10% processing fee on Afghan goods, have significantly reduced trade volumes, despite recent relaxations. Frequent Torkham border closures due to security and administrative issues further challenge cross-border commerce.

Makda emphasized the need for private-sector representation from both chapters (Pakistan & Afghanistan) in the newly formed PTA Implementation Committee, led by MoIC (Afghanistan) and MoC (Pakistan).

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This committee, with representatives from Customs and Agriculture Ministers meeting monthly, would benefit greatly from PAJCCI’s insights as a voice for businesses facing these challenges, ensuring practical and effective solutions.

To unlock the $7 billion trade potential, PAJCCI encourages collaborative efforts to develop a long-term trade policy with MoC and SBP, streamline payment processes to resolve FIA concerns, establish a permanent EIF waiver system, simplify visa processes for Afghan Businessman, exempt transit trade from IDC, digitize trade processes through SBP and Pakistan Single Window (PSW), and review restrictive SROs.