Afghanistan: From Landlocked to Grounded – Opinion
Like the world’s 49 landlocked countries (including five partially recognized states), Afghanistan also relies primarily on transit trade through neighboring countries. It mainly trades by land and very little by air.
Afghanistan’s main transit trade route passes through the Pakistani ports of Karachi and Bin Qasim and some through the Iranian port of Chahbahar. Afghanistan’s trade volume with other neighbors is not huge.
Three main types of bilateral trade take place between Pakistan and Afghanistan, namely formal (or official) trade, informal (or unofficial) trade and transit trade.
Formal trade, including local goods produced in Pakistan and Afghanistan, is conducted through legal channels and is generally documented. It contributes to the economies of both countries, but the quantum is very small and accounts for nearly 2% of total bilateral trade.
Informal trade, as the name suggests, is conducted through illegal routes (back and forth i.e. Pakistan to Afghanistan and vice versa), remains undocumented and contributes to the economy of the black market. Rather, it would be more appropriate to speak of smuggling. Its exact value remains undetermined but is estimated at around 15% of total Pakistani-Afghan bilateral trade.
It mainly includes locally produced goods such as wheat, rice, fruits, spices, fertilizers, cement, petroleum products, carpets, precious stones, timber and scrap metal. Few items imported by Afghanistan from Gulf countries (by air), Iran or CAR (mainly electronic devices in small quantities) are also smuggled into Pakistan.
The third form of trade is transit trade, which accounts for nearly 80-83% of bilateral trade. It is registered and driven through official channels using Pakistani ports. Some of these items are supposedly either smuggled back to Pakistan or never cross the border.
However, since the institution of the Afghanistan Pakistan Transit Trade Agreement (APTAA), strict border management, rigorous customs procedures and the introduction of negative lists by Pakistan, this trend has somewhat halted.
Nevertheless, Pakistan still needs to streamline its procedure for documenting transit trade from Pakistani ports to crossing the border with Afghanistan before the territory is ceded to Iran and Afghanistan starts importing. its goods via Chahbahar.
Afghanistan being a landlocked country, it cannot remain isolated in a globalized world. International rules and regulations enable Afghanistan to integrate into the international economic system. Pakistan must help Afghanistan to move from a “landlocked” country to a “land-connected” country and to overcome the constraints imposed by its geography.
By doing so, both countries will benefit, provided the agreements are not misused by smuggling or malfeasance. Communications infrastructure in Pakistan and Afghanistan will improve, employment opportunities will be created, more income will be generated (or saved), and most importantly, interdependence will increase. It will also lead to a significant improvement in bilateral relations.
It must be realized that the privileges of landlocked countries have been recognized by international law for a long time. Landlocked countries around the world began demanding a share of maritime trade as early as 1864, when Switzerland submitted a request to raise its maritime flag. Despite the opposition of a few countries, this right was finally recognized in the peace treaties concluded between various European nations after the First World War.
It was in this context that a declaration was adopted unanimously at the Barcelona Conference in 1921, authorizing seagoing vessels from landlocked countries to fly their flag. The declaration stated that “the Barcelona Conference has, from time immemorial, embodied the right of all landlocked States to fly a flag at sea”.
The agreement reached at the Barcelona Conference was later incorporated into Article V of the General Agreement on Tariffs and Trade (GATT). Subsequently, Article 33 of the Havana Charter of the International Trade Organization expressly refers to freedom of transit for landlocked countries.
UN General Assembly Resolution 1028 (XI) also calls on its members “to fully recognize the transit and trade needs of landlocked member states.”
Transit rights were further substantiated at the Law of the Sea Conference convened in Geneva on 27 April 1958, which led to the adoption of Articles 2, 3 and 4 of the United Nations Convention on the Right of the Sea (UNCLOS) which recognize the right of transit and innocent passage of vessels of any State in the territorial waters of other States.
Finally, the Convention on Transit Trade for Landlocked Countries was concluded under the auspices of the UN, which entered into force in 1965. Since then, landlocked neighbors of countries with a sea coast can benefit from trade facilitations.
In 2003, the United Nations adopted an important declaration in Almaty, Kazakhstan, known as the “Almaty Program of Action”, aimed at connecting landlocked countries to international markets, facilitating trade, transport and transit.
In addition to protecting the rights of landlocked countries, the declaration calls on participating countries to promote interconnectivity and trade facilitation. Pakistan, as a permanent member of the United Nations, is bound by the provisions of the declaration.
Nevertheless, whenever a country wants to put pressure on a landlocked neighbor, it can do so under one pretext or the other. The country can simply close the borders citing the current security situation or any other reason.
It may even impose certain restrictions on the means of transport or the routes to be followed. Delay tactics can also be adopted in other ways. Pakistan had used this option against Afghanistan on several occasions. The Pakistan-Afghan border remained closed for more than seven months after the Salalah incident in November 2011.
Economic cooperation and integration, especially trade expansion measures, can only be pursued effectively if an infrastructure is in place to support the process. Thus, efficient port facilities must be put in place and rail, road and air links improved.
Synergy must be created in the areas of telecommunications, banking, finance and customs services as well. Moreover, radical reforms are needed to modernize the transport sector, especially in the case of Pakistan and Afghanistan where the main mode of freight transport is by road.
By facilitating trade within its own territory, Pakistan’s overall communications infrastructure and services will improve, leading to job creation and poverty reduction.
It will also help attract Foreign Direct Investments (FDI), the banking sector will flourish and, above all, it will lead to a significant improvement in bilateral relations. Unfortunately, the Afghan transit trade through Pakistan has not yielded the desired dividends due to its misuse mainly due to mismanagement and neglect.
In this rapidly changing globalized world, countries are drawing closer to each other through trade. May Pakistan not be isolated and left behind in this race.
(The author is associated with the National Institute of Maritime Affairs. The opinions expressed are his own)
Cdre Bilal Abdul Nasir SI(M) (retired)
Copyright Business Recorder, 2022