Afghanistan’s Transit Trade Patterns Pre & Post APTTA

Afghanistan and Pakistan signed a new transit trade agreement, Afghanistan Pakistan Transit Trade Agreement (APTTA), in 2010 to cover the movement of Afghanistan’s external trade through Pakistan. It came into effect in 2011. Since the signing of the APTTA, concerns have been expressed that Pakistan is losing its importance as a transit route for Afghanistan’s external trade especially for Afghanistan’s imports due to the highly restrictive clauses of the APTTA. However, this Study shows that the bulk of Afghanistan’s transit imports are still routed through Pakistan. The overall volume of Afghanistan’s imports have progressively decreased in the last few years, Pakistan however continues to be the preferred route for Afghanistan’s importers.

Another interesting finding of this Study is the unaccounted for transit trade which in 2014 alone was US$1.0 billion – this is the discrepancy between the figures reported by Pakistan Customs as having entered Pakistan as transit trade destined for Afghanistan and the figure reported by Afghan Customs as having entered Afghanistan through Pakistan.

A comparison of the declared unit prices of the top Afghan transit trade items (as reported to Pakistan Customs) with the unit prices as reported by Afghanistan’s export partners shows that there is considerable undervaluation in items like fabric, glassware, office furniture, soaps, green tea, tires, generating sets etc.

An interesting observation was that when a comparison was done with the prices at which Pakistan Customs was valuing Pakistan’s imports, significant undervaluation was found for Pakistan’s imports of fabric, tires and soaps.