Pakistan seems to be taking giant strides for building better economic relations with Afghanistan, a neighbouring country with which we had,one way or the other, special relations in the last about two decades and a half, not that things were different earlier.
They were, however, of a lower denomination; new and huge vistas are currently being opened with expanded trade and enhanced list of items under Afghan Transit Trade (ATT).
While there is no reason to attribute anything other than the most noble motives to the new policies and nothing but an admirable desire to put Pakistan solidly on a more profitable course in inter-country trade, there is apprehension of negative developments too: the repercussions of these efforts could well result in undermining some vital agricultural and industrial products of Pakistan and may even lead to their devaluation to extinction by causing closure of the said industries.
The ATT has been a thorn in the flesh of many indigenous industrial organizations of Pakistan and it appears that the scope of disaster would expand to include more products. The present head of Export Promotion Bureau (EPB) had presided over a multinational firm producing, among other things, shoe polish, about a decade or so back.
I remember coming across documents in which the firm he managed had pleaded with the Central Board of Revenue to remove shoe polish from the ATT list because the arrangements for assisting Afghanistan to counter economic disadvantages from its land-locked state had virtually ruined the shoe polish industry, besides some other local products. The joint request of the two organizations failed to make the authorities review their policy for this item in the ATT in their favour.
Import of shoe polish continued in Afghanistan during periods when a majority of the Afghans were so terribly stricken by poverty that they could not afford a pair of shoes. And if they possessed one, keeping it in the shining state of footwear of, for instance, a soldier or a bureaucrat, was beyond them.
This was just one of the many items imported by Afghanistan during strife torn times of conflict in which the Soviet Russia was challenged by freedom fighters or Jihadis, today's terrorists and later when Taliban, now on the run, ruled the country. The most remarkable thing about this policy has been its continuation under the most difficult periods of Pakistan-Afghanistan relations.
ATT imports had covered, and continue to include, things like cigarettes, television sets, auto parts, tyres and tubes, telephone sets and a number of other items that, one felt, were not among the most dire needs of the country at least at some junctions. A market for many items imported under the ATT was difficult to visualize in Afghanistan; it is difficult to do that even today. Meanwhile more items have been deleted from the negative list for the ATT.
Decisions regarding the ATT are outside the jurisdiction of EPB's present boss and a matter of higher policy that is formulated at the ECC level. One presumes that members of that august body presided over by the all powerful Federal Finance Minister Shaukat Aziz weigh options and possibilities in the scales of information, some of that could well be classified, before formulating a policy and delivering a verdict.
The only apprehension is whether facts and statistics at their disposal also include such ground facts as the bulk of imports under the ATT reaching Pakistan's markets with an edge over local products or official imports as ATT items are not subject to local duties and taxes. That made and still makes for uneven competition.
If the policy could survive negative relations between the two countries, there is every reason for it to further prosper now that the governments of both countries are politically in the same camp, pursuing the same ends and collaborating with each other on sensitive bilateral and international issues.
Pakistan may not have many options vis-a-vis policies considered detrimental to national interest by some quarters; that is, however, a political field and one feels that even the detractors of these policies would just step in to the present government's shoes if they had a chance.
But what could be the compulsion for extending despair to the economic field and agreeing to place such items on the ATT list that are not likely to have any significant demand inside Afghanistan or they would lead to the closure of some industries in Pakistan and further enhance the volume of already considerable smuggling through the country's porous north western borders.
The latest addition to items under the ATT list make reading that is interesting, amusing, and, for concerned industrialists and importers, not exactly pleasant.The ECC, in its absolute wisdom, has deleted from the negative list, items like razors and shaving blades, cigars and cheroots, shampoos, refrigerators, air conditioners, art silk fabrics, dyes and chemicals and yarns, among some other items.
One can understand the increased use of certain luxury items in the present day Afghanistan that is marked by a western swagger in its movements but many of the new items could have been exported by Pakistan and without undermining the vested interest elements that have been integral components of ATT business-provided the requirements are authentic. In case they are not, and that seems to be the position, many items would be re-routed to Pakistan to be sold in the local markets, much to the detriment of concerned industries.
There is additional emphasis on building trade with Afghanistan and official statistics inform that bilateral trade rose to about $ 600 in 2003 and that trends continue to be positive. But the possibility that Pakistan may have to pay heavily for new concessions for the ATT is also quite concrete.
That would play havoc with a number of local industries and business ventures, cause loss to state revenues in terms of unpaid duties and generally make Pakistan an even greater haven for smugglers, a reputation the country already enjoys.
The last few months were a time of wheat and flour shortage. Their smuggling to Afghanistan was one of the factors contributing to the food crisis in Pakistan. From the look of things, it may be sadly predicted that the politics-based initiatives of ECC would provide material for the creation of more economic problems for Pakistan than they would resolve for the holy cows that import under the ATT.
