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Trade through land routes

August 24, 2015

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THE convention on the International Transport of Goods signed up by Pakistan will open the way for traffic-in-transit of goods across borders with countries in the region, entailing no payment of customs duties and taxes. It will become effective from January 21, 2016.

The United Nations has accepted Pakistan’s instrument of accession to the Customs Convention on the International Transport of Goods (TIR). As many as 68 countries have acceded to the TIR convention so far.

Commerce Minister Khurram Dastgir Khan said the matter had been held up for long owing to some reservations from a few stakeholders, but the government finally approved the TIR.

“This is a great step for facilitating trade with neighbouring countries on our western borders and beyond, and the trucks carrying goods to the neighbouring countries would not pass through the checking process,” the minister said, adding that this would also ensure uninterrupted flows of trucks.


Besides the implementation of trade agreements, infrastructure development is also a prerequisite for enhancing regional connectivity via land


As per the agreement, Pakistani goods will now be able to travel in customs-secure vehicles or containers. And throughout the journey, duties and taxes at risk would be covered by an internationally valid guarantee.

The goods will be accompanied by an internationally accepted customs document (TIR Carnet) that would be opened in the country of departure and serve as a customs control document in the countries of departure, transit and destination.

For example, Afghanistan was charging 110pc guarantee taxes on the transit of goods to Tajikistan, which was returned to Pakistani exporters after the trucks crossed the Afghan border. After signing this convention, the Afghan government cannot impose this tax on Pakistan’s transit goods.

After joining the TIR, Pakistan will have access by land/sea from/to China, Central Asian states and beyond, opening a vertical corridor that would benefit regional and global trade and economies, say trade experts. Transit trade with China through the Kashgar-Gwadar corridor will also be facilitated.

However, there is a need for operationalising transport and transit agreements. Having joined the ECO Transit Transport Framework Agreement (TTFA), Pakistan can now use road transport among ECO countries on the land route, thus reducing the time taken by ships.

However, the revised transit trade agreement signed by Pakistan and Afghanistan (APTTA) needs effective implementation. In July 2012, the two sides had also agreed to extend the APTTA to Tajikistan as well. This will provide a shorter and more economical route for the businessmen in Tajikistan.

Similarly, the Quadrilateral Traffic in Transit Agreement (QTTA) among Pakistan, China, Kyrgyzstan and Kazakhstan, signed in May 2005, remains on paper because of the difficult topography and terrain, delay in the implementation of uniform customs transit procedures and the disruption of Karakoram highway etc.

Pakistan is a member of the Central Asian Regional Economic Cooperation (Carec) — a partnership of 10 countries and six multilateral development partners. Carec also requires accession to the TIR convention for cross border transport of persons, vehicles and goods.

In 2010, the Cross-Border Transport Agreement (CBTA) was signed by Kyrgyzstan, Tajikistan and Afghanistan under the Carec framework. In 2011, Pakistan had joined as an observer in the organisation.

Carec has identified and designated six transport corridors among member countries for effective integration of the region. Of these, corridors five and six pass through Pakistan and connect the Central Asian countries with the Middle East and Europe via the Karachi and Gwadar ports. Pakistan will now have to upgrade its status after acceding to the TIR convention.

Pakistan has also signed agreement on road transport with Uzbekistan and Kyrgyzstan. After the implementation of the APTTA, the transit access through Afghanistan has become available. The agreement can therefore be operationalised now, as the instruments of ratification have already been exchanged.

Similarly, the agreement with Kyrgyzstan is only on paper because of a lack of direct linkage, as the intervening states are Afghanistan and Tajikistan. But now, after the implementation of the APTTA, Tajikistan’s concurrence is required to operationalise this agreement.

Besides the implementation of these agreements, infrastructure development is also a prerequisite for enhancing regional connectivity via land. The upgradation of the Indus Highway (N-55) from two to four lanes (North-South Corridor) is required to cope up with the increased volume of transit traffic under the Carec programme.

Both Pakistan and Afghanistan have agreed to extend the existing railway line from Chaman to Kandahar and from Torkham to Jalalabad. But the feasibility of these projects has been delayed and has been pending for many years.

The Peshawar-Landikotal-Torkham railway line needs to be rehabilitated, while the Quetta-Taftan rail link may be also be improved for high-speed goods trains. And the Gwadar-Khuzdar-Rathodero rail link may be constructed under the China-Pakistan Economic Corridor.

The upgradation or modernisation of border customs stations is required to increase regional trade and connectivity. The government has established a land port authority to oversee all these developments, but work on this crucial project is moving at a snail’s pace.

Published in Dawn, Economic & Business, August 24th, 2015

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