13 February 2004	Friday	21 Zilhaj 1424

ISLAMABAD, Feb 12: Pakistan has decided to do away with the negative list to allow Afghanistan to import all items via land route under the transit trade agreement, Dawn has learnt through reliable sources.

A formal decision to this effect would be made by the Economic Coordination Committee (ECC) of the cabinet which meets on February 17. Sources at the ministry of commerce told Dawn that with this decision, there would be no restriction whatsoever on Afghanistan to import any item through Pakistan.

Afghanistan, in return, has agreed to put in place by March 21 a general tariff regime of 2.5 per cent, five per cent, 10 per cent and 16 per cent, and four per cent for capital goods and eight per cent for fuel coupled with a full market exchange rate to check smuggling of items back into Pakistan.

The 27-item negative list has already been reduced gradually by Islamabad to six since the fall of Taliban administration in Afghanistan. Pakistan had reduced the list from 12 items to six during Prime Minister Jamali's visit to Kabul last month but Afghanistan had demanded its complete abolition.

The sources, however, said the decision to abolish the negative list by Pakistan had come following diversion of more than 80 per cent of trade by Kabul to Iran's Chabahar border entry point instead of Pakistan's Torkham Border, causing huge revenue losses to Islamabad.

This is to facilitate trade with simplified document of one page making business very easy and the simple system would be introduced through major overhaul of finance regulations.

To address Pakistan's concern that Afghanistan was being used by smugglers to provide right-hand vehicles in Pakistan although the land-locked country has left-hand traffic, the Afghan government has promised to ban the import of right-hand driven vehicles in Afghanistan.

The decision is seen as a major policy shift with far reaching impact in the geo-political situation, specially in the aftermath of "bilateral trade facilitation measures between Iran and Afghanistan and tri-partite Transit Trade Agreement among India, Iran and Afghanistan".

The Pakistan Railways has already rationalized its freight charges so as to give at least "national treatment" to the transportation of Afghan transit cargo. This way the railway fare for goods destined to Kabul has been brought on a par with local fare.

Road transportation companies of both the countries meeting the criteria set forth by the Central Board of Revenue have been allowed to carry transit cargo from entry point to the destination.

The Afghan Transit Trade is being currently carried out under the Afghan Transit Trade Agreement (ATTA) signed between Pakistan and Afghanistan decades ago. The Karachi Port being the only port at that time where custom facilitation could be provided was specified as entry point.

Two routes i.e Peshawar-Torkham and Chaman-Spin Baldak were specified as exit routes. Transporters of Afghan cargo were allowed through railway service only.

Some goods imported under the ATTA were smuggled back into Pakistan hurting the local industry and national revenues. To protect domestic industry, Pakistan notified a list of 17 items in 1996 excluding them from the ATTA. Another seven items were added to the list in 2001 making a total of 24 items on the negative list which were not allowed under the ATT.

The Afghan government has repeatedly been asking Pakistan to abolish the negative list, to rationalize freight charges by the Pakistan Railways on transit goods which were 22 per cent higher than domestic freight, concession in port handling charges, facility of transportation of transit cargo by road along with railways and additional routes for transit.