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ISLAMABAD: Pakistani authorities have detained hundreds of Afghanistan-bound containers in transit at Karachi port to curb smuggling and ensure proper taxation, causing millions of dollars in losses to Afghan traders, local businessmen said on Saturday.
The development comes days after the country imposed a 10 percent processing fee on several items under the Afghan transit trade deal in a move that was seen as an attempt to stop the illegal entry of goods into the country from the neighboring state.
The Commerce Ministry in Islamabad subsequently banned the export of 212 items to Afghanistan under the transit trade agreement, which included sweets, chocolates, footwear, machinery, blankets, tyres, home textiles and clothing.
“Hundreds of containers bound for Afghanistan are stuck at Karachi port after authorities refused to clear items banned by the Ministry of Commerce,” Qazi Zahid Hussain, former chairman of the Joint Chamber of Commerce, told Arab News. and Pakistan-Afghanistan Industry.
“It is obvious that Afghan traders will have to bear losses running into millions of dollars due to the change in Pakistan’s policy,” he continued, although he praised the move and said it would curb smuggling that was taking place under the transit trade agreement.
“The authorities will now allow Afghan traders to re-export their goods from Pakistani ports instead of shipping them to Afghanistan,” he added.
The Afghanistan-Pakistan Transit Trade Agreement aims to facilitate the transit of goods exported and imported to Afghanistan using the Pakistani ports of Karachi and Gwadar. The pact also provides for the use of Afghan territory for trade between Pakistan and Central Asian countries.
Hussain said the volume of Afghan transit trade had risen to around $8 billion from $4.5 billion in recent months, adding that this alerted authorities that many of the items destined for Afghanistan were secretly flowing into the Pakistani market.
“This means that the volume of smuggling has increased significantly, putting pressure on our currency, closing down local industry, losing jobs and weakening the economy,” he explained, adding that recent government measures against smuggling to through Afghan transit trade had led to an appreciation of the rupee against the US dollar and stabilization of the economy.
Hussain, however, said Pakistan, as a signatory to the World Trade Organization (WTO), was obliged to allow transit trade through its sea and land routes to landlocked Afghanistan.
“Pakistan cannot unilaterally close Afghan transit trade, but it can regulate it to some extent to stop smuggling and increase its tax revenue,” he continued.
Afghan officials have objected to these developments, saying they are putting undue pressure on trade activities between the two countries.
“In addition to imposing a 10 percent processing fee on some goods in transit, the Pakistani government has asked Afghan traders for a 100 percent bank guarantee on cargo in transit, which is beyond the capacity of traders,” the Afghan embassy in Islamabad said this week.
The embassy added that its officials had attempted to resolve trade-related issues by raising them with Pakistani authorities, but they had only exacerbated them.
He urged the Islamabad government to “remove these obstacles in the Afghan transit sector, so as not to have a negative impact on the trade and bilateral relations of the two countries.”
Jawaid Bilwani, member of the Pakistan-Afghanistan Joint Chamber of Commerce and Industry, said Pakistan should revive the railway route to Afghanistan to boost its exports to Central Asian states under the agreement.
“Our total exports to Central Asian countries at the moment are only $1 million a year, which can increase significantly through Afghanistan, which is the shortest route to these nations,” he told Arab News.
“Pakistani authorities should come up with viable plans to use the transit trade agreement to our advantage,” he said, adding that Pakistan was earning millions of US dollars in taxes and fees from using its ports for transit trade.