Seizing the CARs markets
After the disintegration of the Soviet Union, the Central Asian Republics have gone through a transition. From centrallycontrolled setups they have transformed into market-based economies. Recent exchange of visits at the top level have led to significant agreements for promotion of trade and investment between Pakistan and the republics of Tajikistan, Kyrgyzstan and Uzbekistan.
Amid the efforts for improving land and air communications with China and signing of the Afghan Transit Trade Agreement, Pakistani goods, services and investment see a sizeable market in the five Central Asian Republics. The prospects look encouraging in the following context:
In the background of Pak-China developments, the air cargo service linking Islamabad with Kashgar in China is important in terms of Kashgar’s strategic location close to the borders of Pakistan, Uzbekistan, Kyrgyzstan, Afghanistan and India. Therefore, the treatment of Kashgar as special economic zone and an important air logistics base has high benefits for Pakistan’s access to the Central Asian market.
The airport also has considerable potential to serve as a transit point on the Silk route, connecting China, Middle East, Central Asia and Europe. Moreover, strategic talks between China and Pakistan over building rail links between the two countries reveal that Torkhum in Pakistan would also be linked with Jalalabad in Afghanistan.
China’s contacts with Kazakhstan, Tajikistan and Uzbekistan are leading the country to play a crucial role for Pakistan in the region. The geographical proximity of Central Asian Republics to China has accelerated intra-region trade. This is an opportune time for Pakistan to seize the Central Asian market by playing a pro-active role in regional forums like the Shanghai Cooperation Organisation and the Central Asia Regional Economic Cooperation.
The second context is enabled by the new Afghan Transit Trade Agreement between Pakistan and Afghanistan, which is being viewed as vital for promoting bilateral trade between the two countries and also for the transportation of Pakistani exports to the CAR region through Afghanistan.
Due to security concerns, trade through Afghanistan is viewed skeptically and there are suggestions for the preferred route through China. However, the agreement with Afghanistan provides a safe passage for Central Asia by addressing the issue of illegal tax collection by the parochial warlords in Afghanistan and the issue of smuggling of trade products back into Pakistan.
The route through Iran to Central Asian Republics provides the third alternative. In this context, the Iranian free trade zone of Chabahar can play an important role, along with the mutual benefit of utilizing the Gwadar port.
Economic experts in Pakistan suggest that the three discussed options must be utilized simultaneously through the platform of the Economic Cooperation Organization (ECO), which can benefit Pakistan with a freight train (Islamabad-Tehran-Istanbul), allowing deeper penetration into Central Asia using both Iran and Turkey.
Potential exports to Central Asian markets would include cement, engineering goods, jewellery, stationary, food items, cosmetics and handicrafts. Pakistan already exports various products to the region, such as cereals, frozen fish, fruits and vegetables, medicines, medical/dental/surgical instruments, leather and leather products, carpets, textile fabrics, knitted garments, ceramics/kitchen wear and bathroom fittings, furniture and confectionary.
The performance of the Trade Development Authority of Pakistan is pertinent in this respect. With 2001-10 already finishing as a record year for Pakistani exports, these are expected to cross $22 billion in 2010-2011 as more than 15 new export projects are being launched by TDAP