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Trade agreements

Pakistan and Afghanistan Sign Preferential Trade Agreement, Despite Persistent Challenges

Strategic Insights

— 1 min read

The Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) has welcomed the signing of a preferential trade agreement (PTA) between the two countries, which reduces tariffs on key agricultural commodities. Despite this progress, the chamber remains concerned about persistent challenges hindering bilateral and transit trade, including payment disputes, banking inefficiencies, and delays in visa issuance for Afghan businessmen.

Key Takeaways:

  • The preferential trade agreement (PTA) reduces tariffs on key agricultural commodities from over 60% to 27%, with a special 22% rate for tomatoes and potatoes.
  • The Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) has welcomed the agreement, which they claim is a significant step towards enhancing trade.
  • Despite this progress, PAJCCI President Junaid Makda remains concerned about persistent challenges hindering bilateral and transit trade, which declined from $2.5 billion at its peak to $1.2 billion in 2024.
  • The chamber has urged the Ministry of Commerce and the State Bank of Pakistan to establish a consistent, long-term trade policy to boost investor confidence.
  • Payment disputes, driven by banking inefficiencies, have led to undue pressure from the Federal Investigation Agency (FIA) on legitimate businesses.
  • Temporary Electronic Import Form waivers, without a permanent system, complicate trade planning, while delays in visa issuance for Afghan businessmen are discouraging economic collaboration.
  • The Khyber-Pakhtunkhwa government's infrastructure development cess continues to burden transit trade, despite being reduced to 1%.

Statistics:

  • Bilateral trade declined from $2.5 billion at its peak to $1.2 billion in 2024.
  • The preferential trade agreement (PTA) reduces tariffs on key agricultural commodities from over 60% to 27%.
  • The IMF has been advocating for preferential trade agreements to help Pakistan overcome its external challenges.
  • The Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) represents over 500 businesses from both Pakistan and Afghanistan.

Sources:

  • The Express Tribune: "Pakistan-Afghanistan trade agreement signed as part of economic revival"
  • The Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) press release
  • The Nation: "Pakistan, Afghanistan sign preferential trade agreement, a major breakthrough in economic ties"
  • Pakistan Today: "Pakistan-Afghanistan trade agreement: A step forward, but many challenges remain"

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