Significance of Transit Trade for Pakistan
Transit trade for any nation is of utmost importance and for a country like Pakistan, which enjoys a unique geographical location, providing links to various landlocked countries, it becomes even more significant.
International law and practice on transit trade is generally based on the following principles: 1. The landlocked countries are entitled as a matter of right, to be granted, unhindered and unencumbered safe passage to international markets by their neighbors (Hosts). The hosts cannot dilute the economic sovereignty of the landlocked states, by imposing their own conditions either physical or financial that may limit the trade choices of a landlocked country. 2. The neighbors (host countries) have complete rights to safeguard their own economic and security interests. Grant of transit facilities to landlocked neighbors cannot be presumed at the legitimate economic and other security expense of the host country. 3. Reciprocity. Transit trade agreements are
predominantly on reciprocal basis.
Afghanistan has been the old transittrading partner of Pakistan. About 34% of Afghanistan’s imported goods are transported through Pakistan. However, now transit trade between the two nations has been hampered by shortage of railway wagons, trucks and the new curbs on cargo delivery. As reported in the media, the non-availability of transport has led to the piling up of over 8,500 containers in Karachi.
Another problem of transit trade is that Pakistan cannot impose import duty on transit goods. A large volume of goods destined for Afghanistan could (and most likely would) get into Pakistan duty free during transit and Chaman in Balochistan and Torkham in KPK.
The trucks going to and from Karachi to Kabul do not pay international toll. On the other hand, numerous highways suffer severe damage from movement of heavy and often overloaded supply trucks, notably the important Indus Highway from Karachi to Peshawar. So Afghan trucks use the road network but do not pay the right toll. This is a dilemma since transit trade which was supposed to benefit Pakistan is proving to be worthless for the country. It is not only Afghanistan that is exploiting the transit trade with Pakistan but India is doing so as well. Statistics show that India exported goods worth Rs15 billion to Pakistan in the last two years while Pakistan’s exports to India have been negligible due to non-tariff barriers.
Transit trade could be used to generate revenue which is very easy and requires low investment. Iran has developed the Chahbahar seaport, which is located on the Makran coast in the SistanBalochistan province in Iran, just a few kilometers from Gwadar across the border. It has been officially designated as a Free Trade and Industrial Zone by the Iranian government. What needs to be done by Pakistan is to safeguard its trade routes to discourage smuggling which eats up the possible revenue that could be generated. Secondly, drafting strict transit trade policies would surely make the trade worthy for through smuggling from Afghanistan. Banned goods in Pakistan also cross the border through this route. More than 200 tankers and trucks leave the southern port city of Karachi daily for Afghanistan through the Pakistani border towns of Pakistan. There is also a dire need to develop better infrastructure to avoid any gaps in the trade and trade routes.
In such a demanding environment, better transit services and more developed infrastructure will give an edge to Pakistan