Sig­nif­i­cance of Transit Trade for Pak­istan

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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

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