Trade Wars

A tightrope of caution and hope – Journal

Pakistan hopes to capitalize on the fall of the hostile regime led by Ashraf Ghani by increasing the breadth and depth of economic engagement with Afghanistan at a time when the economy is in desperate need of a boost for growth .

As Taliban leaders fight for legitimacy following the bloodless takeover on August 15, Pakistani businesses want lasting peace in the neighboring country. The community expects to be part of the reconstruction process in a war-torn country, realizes the trade ambitions of the landlocked Central Asian Republics (CAR) using the Afghan corridor and reaping dividends as Kabul unleashes its mineral wealth probably with Chinese help.

Traders, truckers and freight forwarders as well as some politicians seem to be so optimistic that they are delusional. Big business houses, however, fear the resurgence of religious activism in Pakistan inspired by recent events.

“How could we ignore this risk? The memory of the massacre of the army public school and the numerous terrorist attacks has not faded. The projected trade gains would be pale in comparison to the high cost one faces in supporting the militant obscurantist elements in Pakistan. If the perception of security worsens, people with assets, with options will end and go. The already low investment rate will drop further in such a case, ”said one CEO who was too scared to speak.

“The situation is always volatile. It is too early to project the future, but Pakistan has the most to gain from the peace and lose the most if the Taliban fail to quickly reach an agreement for an inclusive waiver acceptable to the world, ”said one. retired army officer with a keen eye. on Afghan affairs, and is currently associated with a Sino-Pakistani economic corridor project.

Traders, truckers and freight forwarders and some politicians appear to be deliriously optimistic as big business dreads the resurgence of religious activism

“If chaos in Afghanistan persists, the danger of civil war is great. The overflow would destabilize Pakistan, which is still recovering from the fallout from previous wars there. ”

He was not convinced that the Taliban had transformed, abandoned their decadent mindset, and were ready to take an accommodating position in nation-building. “It’s great that the Taliban have shamed the West’s powerful military alliance, but establishing a stable government is a different ball game. Maintaining victory in a divided society dependent on aid is a huge challenge. Over the next few weeks the situation will be clearer in Afghanistan, but we must continue to remember that it can change one way or the other.

Razzak Dawood, the Prime Minister’s special assistant for trade, was a little worried about the new challenges of economic diplomacy. The exit of the United States and the victory of the Taliban in Afghanistan have upset the balance of power in the region. “We negotiated long and hard for a favorable Afghan transit trade agreement (ATTA). The two sides hammered home the differences and hoped to conclude the new deal before December 2021 (the month in which ATTA expires). Now we’ll have to start all over when the dust settles on it.

“I am optimistic that I will strengthen economic ties with Afghanistan in the coming period. After two days of disruption, cross-border business operations resumed. I am told that the circulation is in fact faster than before, ”he concluded, repeating the party line.

Speaking of the key points he intends to discuss with his Afghan counterpart if and when they meet, he touched on trucking policy, ATTA and the Preferential Trade Agreement (PTA).

Some Peshawar and Quetta-based business leaders, better aware of the complexity of the Afghan situation, have advised caution while confirming that reports on border trade are encouraging.

“Under Ashraf Ghani’s regime, the duties were harder for Pakistan. We had to pay 15 percent of the value of the container while the tariffs for all other countries hovered around 8pc. We had to pay an additional 5 to 10 pc at the checkpoints manned by the Taliban. High tariffs made the export of several Pakistani items unsustainable. The Taliban reduced Pakistan’s mehsole (homework) rate as soon as they took power. They set a universal rate of 7pc, ”Adnan Jalil told Dawn over the phone from Peshawar.

Majyd Aziz, an entrepreneur from Karachi, dismissed doubts about Afghanistan. He advised government and businesses to prepare for the good times ahead, ignoring baseless propaganda against developments alongside. He viewed the official bilateral trade figures with Afghanistan as misleading.

“The boom in informal trade with Kabul more than offsets the decline in formal trade. Pakistan has a natural advantage in Afghanistan, but it must remove the temptation to go it alone and direct its efforts to partnering with others in the region for optimal results.

Daru Khan and Ghazanfar Bilour, former presidents of the Pakistan Chamber of Commerce and Industry Federation (FPCCI), believed Pakistan-Afghanistan trade could increase if irritants were removed and traders made easier. “Logistics facilities, including sufficient weighbridges and fast customs clearance, can shorten journey time, reduce waste and increase global trade for the benefit of countries and their peoples,” said Daru Khan.

Leaders of the Joint Pakistan-Afghanistan Chamber of Commerce and Industry (PAJCCI), which has 326 members, could not be reached for their views on the matter. The chamber has 183 Afghan and 123 Pakistani business entities.

One analyst was worried because he saw no point in getting too excited when the biggest regional powers are involved. “Pakistan is not holding the cards. Sharing the language and the culture is good, but neither do we have the resources (financial and technical) nor the diplomatic skills or the credibility to help Afghanistan much at this stage.

“As for Afghanistan, its economy shrank by 1.9% in 2020. The country has the second lowest per capita income in the region. Things are changing and there is every chance that the situation will deteriorate further as the flow of aid could be disrupted. After all, 80% of the Afghan budget is funded by aid. It would serve us better if we kept a low profile and did our homework to deal with all possible scenarios in Afghanistan. ”

Posted in Dawn, The Business and Finance Weekly, August 23, 2021