ISLAMABAD, Nov 11: Pakistan is considering a proposal to make a formal request to Afghanistan for initiating a dialogue on free trade agreement (FTA) aimed at increasing bilateral cooperation and trade volume.

Informed sources told Dawn on Thursday that in this connection the government would send a high-level official delegation to Afghanistan after Eid for discussing the proposal with the Afghan authorities.

It is expected that under the proposed FTA, Pakistan's exports to Afghanistan will rise to $1.5 billion - that means it would become the second largest country for Pakistani exports after the United States.

The sources said the delegation would discuss with the Afghan authorities issues and items to be considered under the proposed FTA. The commerce ministry is already working on the items to be considered for duty reduction under the proposed FTA.

The statistics showed that Pakistan's exports of five major products to Afghanistan declined by 44 per cent during the year 2003-04 over the previous year. The decline was registered in exports of wheat/flour, rice, grains and pulses, paints and varnishes and sanitary wares.

The export of these commodities might be declined due to availability of these and other primary commodities at cheaper rates in the Afghan market coming from other countries, particularly from India.

The sources observed that since Afghanistan was not a member of WTO, therefore, exporting countries, particularly India were dumping their products in the Afghan market, which created an uneven competition for Pakistani products. "The proposed FTA will provide an option to Afghanistan to import goods from Pakistan at cheaper rates."

According to the statistics, Pakistan's exports to Afghanistan surged by 62 per cent during the year 2003-04 to Rs37.714 billion as against Rs23.200 billion the previous year. Further break-up showed that Pakistan's trade with Afghanistan had turned into a huge surplus of $110.876 million in the year 2000-01; $146.423 million in 2001-02; $280.882 million in 2002-03; and $248.09 million in 2003-04.

Afghanistan's exports to Pakistan stood at Rs2.705 billion during the year under review against Rs2.425 billion the previous year, showing an increase of 11.5 per cent. Afghanistan's major exports to Pakistan include vegetable, fresh fruit, dry fruit, seeds, spices, timber, scrap, etc.