Afghan transit trade leaving a dent on Pakistan’s economy

ISLAMABAD: Pakistan’s economy is facing adverse effects from Afghan transit trade and imports, which have become significant components of the country’s black economy.

Afghan authorities have been accused of misrepresenting the prices of items involved in Afghan transit trade with Pakistan Customs. This misrepresentation has led to inefficiencies in Pakistan’s goods declaration, duty assessment, and anti-smuggling systems.

Consequently, these items find their way into Pakistan illegally and are sold at premium prices in Bara markets.

In the current fiscal year of 2022-23, Afghan imports have surged by 67 percent reaching a value of US$6.71 billion, in stark contrast to the previous year’s imports of $4 billion due to the transit trade

The Afghan imports encompass a wide range of goods, including synthetic fibers, electrical equipment, electronics, tire tubes, and tea, among others. Notably, these imports have seen significant increases of 35 percent, 72 percent, 80 percent, and 59 percent respectively.

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As a result of this influx of Afghan imports, Pakistan has witnessed a sharp decrease in its own imports of similar items: a 48 percent decline in textile products made from synthetic filament, a 62 percent drop in electronic equipment, a 42 percent decrease in tires and rubber, a 51 percent reduction in tea, and a 34 percent decline in machinery. Vegetable and fruit imports have also plummeted by 46 percent.

The impact of Afghan transit trade on Pakistan’s small and medium-scale industries has been overwhelmingly negative, further exacerbating the economic challenges faced by the country.

The Afghan transit trade is subject to international laws aimed at bolstering Pakistan’s economic recovery.

According to a report, merely halting the circulation of smuggled items in the market will not yield significant results. Instead, it is imperative to implement stringent measures along the border, particularly the zero line bordering Iran and Afghanistan, in collaboration with customs, Rangers, coastal guards, and the armed forces of Pakistan to effectively combat smuggling.