Afghanistan and Pakistan signed the Afghanistan-Pakistan Transit Trade Agreement (APTTA) on July 18 with U.S. encouragement, spearheaded by Secretary of State Hillary Clinton, who recently visited the region. Pakistan estimates that the agreement could increase trade between the two countries to $5 billion from the current $1 billion. U.S. officials say that the agreement will reduce transit costs between the two countries by half, lower import costs and make exports more competitive, improving employment opportunities for both countries. The document still requires ratification by the Afghan parliament and Pakistani cabinet.
Background
In 1965, Afghanistan and Pakistan signed the Afghan Transit Trade Agreement, which currently governs transit between the countries. The APTTA builds on the old agreement and has been the focus of failed negotiations for years. Afghan President Hamid Karzai and Pakistani President Asif Ali Zardari previously promised President Obama that the treaty would be completed by the end of 2009.
Significant components of the agreement include:
- Pakistan agreed for the first time to permit Afghan trucks to transport goods through Pakistan to India, using the sensitive Wagah land route.
- Afghan trucks will be permitted to carry their goods into Pakistan rather than offload their goods onto new trucks at the Pakistani border. However, once goods reach the Indian border, they must be moved onto new trucks to cross the border. Debate about this issue delayed the signing of the agreement.
- The two countries will open 18 additional crossings along their shared border. There are currently two primary road crossings and two primary rail crossings.
- The parties agreed to make customs and transit permit costs uniform. This will improve Afghan access to the Pakistani seaports of Karachi, Qasim and Gwadar. It also will facilitate Pakistani access to Central Asia and improve its access to raw materials necessary for industrial production.
- Afghan and Pakistani officials agreed to place electronic tracking devices on transport units, in order to monitor trade movement more closely.
- When shipping imports from one country to the other, shipping agents will be responsible for a financial guarantee equivalent to the cost of the customs fee until imports exit the transit country.
- Each country will provide the other with cross-border transit “customs-to-customs” information after cargo has reached its final destination.
- The agreement sets up a joint chamber of commerce between the private sectors of the countries.
- The agreement creates the “Afghanistan Pakistan Transit Coordination Authority” to oversee the implementation of the agreement and to mediate disputes resulting from it.
Information for this Background Basics comes from news agencies and government sources.
