ISLAMABAD, March 1: The failure in effectively managing and monitoring cross-border trade is "spurring extensive smuggling and other unauthorized flow of goods" in the region.

An Asian Development Bank study showed that smuggling was distorting trade and tariff regimes affecting Pakistan, Afghanistan and the Central Asian countries.

Stressing the need for improving border facilities, the ADB report said cross-border procedures and operations were generally bureaucratic and slow, causing extensive delays in movement of goods, and passengers.

Pakistan's trade within the Economic Cooperation Organisation accounted for only three per cent of its total trade and Afghanistan is Pakistan's third largest trading partner within the ECO after Iran and Turkey.

Recent data on trade showed that nearly 90 per cent of Afghanistan's $1.2 billion exports and about 46 per cent of its import were through Pakistan. A significant portion of Afghanistan's exports was re-exports of imports from Pakistan. Thus, Afghanistan's trade with Pakistan was dominated by official exports and re-exports amounting to $941 million, followed by import through transit trade ($221 million and import trade $61 million). With further progress on securing peace and positive developments in Afghanistan, trade between Pakistan and Afghanistan and transit traffic through Pakistan could substantially increase.

The study stated that the onset of peace in Afghanistan, introduction of market-oriented reforms in Pakistan and developments in Central Asia, have opened up opportunities for closer cooperation among these countries.

Pakistan generally and especially Balochistan are geographically well-placed with a potential to play an increasing role in regional cooperation, linking landlocked Afghanistan, and Central and South Asia more closely.

Pakistan provides the shortest route (about 300-500 Km shorter than the second best alternative) to ports for landlocked Afghanistan and most Central Asian states that remain dependent on road transport and transit arrangements with neighbouring countries in this regard.

The transit trade between Pakistan and Afghanistan, the ADB study said, is governed by the Afghan Transit Trade Agreement signed in 1965. ATTA covers two main routes passing via Chamman and Torkham.

Transportation of Afghan cargo is allowed through railway service only. Road transport across Pakistan for certain humanitarian aid shipments bound for Afghanistan is also allowed as an exception by the National Logistic Cell.

To protect domestic industry and to discourage smuggling, 24 items not allowed under ATTA have been put on the negative list. Recently, however, eight items on that list were deleted and Pakistan has also allowed Port Qasim as an alternative port of entry for transit.

The ADB study expressed the hope that additional measures may include improving the application of current procedures and working arrangements at the main cross-border points, allowing private operators to carry containers by road, introducing the use of transit-under bond system, adopting measures to discourage illegal trade and smuggling and improving trade facilitation by revising ATTA with a view to improve the competitiveness of the transit routes through Pakistan.