Pakistan, Afghanistan to resume high-level trade talks next month

ISLAMABAD: In a major development, Pakistan and Afghanistan have decided to resume talks at a high level by convening a meeting of the Pak-Afghan Joint Economic Commission (JEC) next month in Kabul after a delay of more than 22 months.

It will be the first high-level talks between the two neighbouring countries since November 2015 after Afghan President Ashraf Ghani’s condition to continue talks with Pakistan on all issues, including trade, subject to involvement of India. Moreover, the deteriorating security situation has triggered an intermittent war of words between the two countries with Afghan officials holding Pakistan responsible for each such incident.

The proposal for resuming talks on economic issues in September was made by Afghan Ambassador to Pakistan Hazrat Omar Zakhilwal during a meeting with Finance Minister Ishaq Dar on Wednesday.

“It will be a great opportunity for Islamabad and Kabul to repair their diplomatic and business relations which have discontinued since November 2015,” a source privy to the development told Dawn.

Deadlock caused by Kabul’s insistence on involving India in dialogue

An official statement issued after the meeting said Ambassador Zakhilwal stated that the next session of the Pak-Afghan JEC was due and proposed that it might be held in Kabul in September.

The finance minister welcomed the proposal and said mutually convenient dates be decided to hold the session next month. Mr Dar was of the opinion that the JEC meeting would provide an opportunity to discuss measures for furthering the cause of economic cooperation between the two countries.

The Afghan envoy was informed that Pakistan’s economic affairs division would liaise with the Afghan embassy to work out details in this regard. The main focus of the JEC will be enhancement of bilateral trade and economic cooperation.

The two sides also discussed various issues of mutual interest, including the current state of bilateral relations, especially in the context of economic cooperation.

Finance Minister Dar said the increased economic cooperation would not only benefit the two countries, but also boost regional cooperation and trade. He said Pakistan wanted to see peace and economic progress in Afghanistan which would open many other avenues of mutual cooperation.

The 10th Pak-Afghan JEC session was held on Nov 23, 2015, in Islamabad. The JEC is a highly important forum that takes into consideration important issues, including trade facilitation, enhancement of bilateral and transit trade, highway and railway projects, scholarship scheme for Afghan students, as well as potential joint ventures in various other sectors.

One of the fallout of the suspension of talks was a decline in bilateral trade. Pakistan’s exports to Afghanistan dropped by a significant 27 per cent over the past one year, owing to several factors.

Pakistan’s exports to Afghanistan had reached an all-time high of $2.4bn in 2010-11. It remained over $2bn in the subsequent two years — 2011-12 and 2012-13. Since then, exports started to dwindle and hit $1.43bn in 2015-16.

In the first quarter of the current financial year, exports were recorded at $362.5 million. It clearly reflects that the annual exports to Afghanistan will now be around $1bn when the figure for 2016-17 is finalised.

Talks on several issues have been on the back burner for a couple of years because of Kabul’s loss of interest in concluding a trade liberalisation regime with Pakistan. In 2014, both sides agreed to initiate negotiations on a bilateral preferential trade agreement (PTA), with Pakistan sharing a draft text of the agreement with Afghanistan.

In 2015, Afghanistan conveyed to Pakistan that it would formally respond to the draft PTA by January 2016. This issue will be raised at the upcoming JEC meeting.

Moreover, to encourage business-to-business interaction between the two countries, a joint business council (JBC) comprising leading businessmen from both sides was established. The first meeting of the JBC was scheduled for August 2015. When Kabul failed to send its response, a new date for the JBC meeting was scheduled for Feb 17 last year in Islamabad. However, no meeting of the JBC has been held so far.

Pakistan recently reminded the Afghan side to convene the 7th meeting of the Afghanistan-Pakistan Transit Trade Coordination Authority in Kabul as had been agreed at the last meeting held in 2016. It will be one of the important issues to be raised at the JEC meeting.

The draft text on avoidance of double taxation was also shared, but no follow-up meeting has been held so far.

The deadlock between Afghanistan and Pakistan was due to Kabul’s insistence that India should be included in bilateral and trilateral agreements. Kabul wanted to include India in the Trilateral Transit Trade Agreement — Pakistan, Afghanistan and Tajikistan. Afghanistan, according to officials, also wants access to markets of India and Saarc countries through Wagah border.

Published in Dawn, August 10th, 2017

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