Goods’ transit allowed through Sust border

ISLAMABAD (July 20 2010): The government of Pakistan has allowed transit of goods to Afghanistan through Sust border under the new Afghanistan-Pakistan Transit Trade Agreement (APTTA) which may require extra precautionary measures to avert smuggling during transportation of goods through Pak-China border.

Sources told Business Recorder here on Monday that the Customs Protocol-I of the new agreement has permitted transit of goods coming through Sust customs station which is an unusual development under the new agreement. The transit of Afghan goods through Pak-China border has never been allowed in the past on the assumption of illicit trade through Sust border.

The officials of Commerce Ministry and the Federal Board of Revenue (FBR) strongly contested the provision to allow transit of Afghan goods through Sust border due to the higher possibility of smuggling of goods. The government must take necessary precautionary measures to avoid incidence of missing containers or offloading of goods during transportation process. The smuggling of Chinese goods through Sust border is already a major issue for the Pakistani authorities, whereas provision of Afghan transit goods through Sust customs station may increase smuggling manifold. Despite serious reservations of the Pakistani authorities on the issue, now the Afghan transit trade can take place through Pak-China border.

Another strong apprehension is whether the APTTA goods coming from Pak-China border would reach their destination in Afghanistan or Chinese goods under the garb of APTTA would disappear during the transportation process. In 1965, when the Afghan Transit Trade Agreement was signed, there was no Sust customs check post. However, later this provision was never incorporated in the ATTA in view of possible misuse of the facility at Pak-China border.

Informed sources revealed to this correspondent that the distance between Karachi – where Afghan goods are offloaded – and Afghanistan is 900 km while the distance from Karachi to Sust border to Afghanistan is 1,200 km. Hence, using Sust would not be economically viable for the Afghans.

Sources further said that the Afghan government has not accepted restrictions on transit of goods at check posts to contain cross border smuggling. Pakistani authorities strongly pursued their case to allow transportation of goods under containerised cargo as it would not only check offloading of goods during transit process, but also ensure that seals could not be broken. Secondly, containerised cargo is not in loose form eliminating apprehensions of smuggling or offloading of goods during transportation process. The containerised cargo directly coming from the shipping lines is the safest way to control disappearing of goods during transhipment process.

At the same time, the new agreement has also permitted transit of cargo to Afghanistan in sealable trucks. As compared to containerised cargo, there is a greater possibility of opening of sealed trucks. This would also increase chances of offloading of goods during transportation of goods in loose cargo.

Sources said that the record note signed between the Commerce Ministers of the two countries has amended the existing APTTA by extending the period of transport from one year to three years.

Under the new agreement, oversized and bulk cargo (not imported in containers like ship load), shall be transported in open trucks or other transport units and exports of perishable goods in transit (like fruit and vegetable etc) shall be in open trucks or other transport units. The facility of export of perishable goods in transit was already allowed under the previous agreement. Therefore, it would not have any negative impact on Pakistani trade.

Sources said that presently most of the consignments destined for Afghanistan are in containers. Under the new arrangement, a major proposal of the Afghan side, to allow transportation of the transit goods using sealed trucks has been accepted. From henceforth transit goods would be allowed to transfer from the containerised cargo to ‘closed trucks’ covered with some kind of seal.

However, specifications of such seals have yet to be worked out by the both sides. The government of Pakistan has to initially allow hard top closed trucks. The specifications of trucks are needed which are internationally acceptable for transportation of transit goods.

However, such ‘closed trucks’ can not be sealed like containerised cargo. This may increase the chances of disappearing of goods during their transportation to Afghanistan. Sources said that it is yet not clear what kind of internationally acceptable seals would be used for the trucks. The concerned authorities have to carry out studies to identify the exact quality of trucks permissible under the transit system.

Sources said that Afghanistan has not accepted many proposals that were designed to check unauthorised flow-back of goods to Pakistan. On the other hand, some proposals of the customs department have been accepted in the Customs Protocol of the new agreement. It has been agreed that the Afghan transporters would provide bank guarantees for transit goods as well as financial securities for Afghan vehicles. The bank guarantee would equal the value of transit goods.

If Pakistan does not receive cross border certificates, as per timeframe to be agreed, the bank guarantees would be encashed. The Afghan side also agreed subjecting Afghan imports to opening of letter of credits (LCs) at Kabul and not in Pakistan. The Afghan side has to submit the copy of the goods declaration (GDs) of the transit goods for cross border certification that the goods have actually crossed the border and reached Afghanistan.

It has been agreed to check the issue of unauthorised trade by installing tracking devices on the transport units. The mechanism to install tracking device is yet to be devised by the Pakistani side as a foolproof system is needed to be monitored by the customs department of both the sides on 24-hour basis. The major issue in installation of the tracking devices is that such devices must be installed on vehicles in use by both the countries. The Afghan vehicles coming to Pakistan should be required to install tracking devices on their vehicles.

Sources stated that one provision to check smuggling has been included in the agreement which is to provide encashable financial guarantees through authorised brokers on Afghan transit goods for an amount equivalent to the import levies of Pakistan which shall be released after the goods cross the border. However, most of the proposals of the Pakistani side to check smuggling have not been incorporated in the new agreement. For example, Pakistan had proposed drafting of a ‘sensitive list’ of items to check smuggling of those goods which are not being consumed in Afghanistan. Secondly, Pakistan had also proposed to draft a negative list of major smuggling-prone items. Both these proposals have not been accepted by the Afghan side.

Another important proposal was to bring customs tariff of Afghanistan at par with the Pakistan Customs Tariff (PCT) to increase duty on items imported by Afghanistan. As an alternate proposal, rationalisation of tariff was also proposed, but was rejected by Afghanistan.

Afghan side has also rejected a proposal of the Pakistani side to collect customs duty on the import of Afghan cargo at Karachi Port and later transfer the collected amount into the relevant bank account of Afghan government. Secondly, Afghan government has also not accepted a proposal of the Pakistani customs department to chalk out a list of major smuggling prone items to check smuggling under the transit trade facility. Thirdly, the Afghan side is also not ready to expand the existing ‘negative list’ with the argument that such ‘negative list’ has no relevance in checking smuggling. Fourthly, Afghan authorities have also rejected the condition to allow transit of goods based on quota restriction. Fifthly, Pakistan’s proposal that the transit of goods should be allowed taking into account the actual consumption of the goods in Afghanistan has also not been accepted by the Afghan side.

Sources said that the new agreement has allowed Afghan drivers to enter Pakistan without visa. This was strongly objected by the Pakistani authorities, but to no avail. Under the new agreement, both countries have decided that the drivers and cleaners shall be allowed to cross border on permits, identified by the biometric device installed at the entry points that will be established by the two countries. In case of failure to agree on a common name of third arbitrator, two names of non-nationals and non-residents shall be proposed by each side. The third arbitrator shall be selected by drawing lots from the four proposed names.

Under the new agreement, both the sides have agreed that Pakistan will facilitate Afghan exports to India through Wahgah. Afghan trucks will be allowed access on designated routes up to Wahgah. Afghan cargo will be off-loaded on the Indian trucks back to back at Wahgah. No Indian exports to Afghanistan will be allowed through Wahgah at this stage.

Copyright Business Recorder, 2010

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