Across Afghan border, a smugglers'
market By Ashfaq Yusufzai
PESHAWAR, Pakistan - Taking advantage of
the United Nations-facilitated Afghan Transit
Trade Agreement (ATTA), a massive contraband trade
has grown around goods imported into Afghanistan
and smuggled back into the markets of this
frontier town in Pakistan's North-West Frontier
Province (NWFP).
Mohammad Fida, owner of a
huge shopping complex in Peshawar's famous
Kharkhano Market, is candid. "Smuggling is not
considered an unlawful activity here. Thousands of
shops in
Pakistan sells goods brought
clandestinely from Afghanistan," he said.
Officially, Pakistan has a bilateral trade
of US$2 billion with Afghanistan. But the volume
of clandestine business between the two countries
is estimated to be more than $10 billion annually.
The Kharkhano Market established in 1985
has 4,500 shops, owned by both Pakistani and
Afghan traders. Because of the past three decades
of war in Afghanistan, millions of Afghan refugees
have made Peshawar their home.
The shops
do booming business in foreign goods. Everything
from electronic merchandise to air-conditioners,
clothes, cosmetics, automobile parts and tires,
and prescription medicines is available with
prices lower than anywhere else in Pakistan, and
they attract shoppers from all over the country.
Several years ago, the government of
Pakistan decided to impose new tariffs on the
shops, but because of strong protests from the
local traders and the Taliban, the government had
to withdraw its proposal. Also, a large number of
people in Peshawar depend on this form of trade
for their livelihood, and they would most likely
resist any form of curbs. Pakistan's government
provides special transit facilities to goods
shipped to Afghanistan.
The ATTA enables
landlocked Afghanistan - which has no access to
any seaport other than Karachi, Pakistan - to
import goods through ports in Pakistan without
paying customs duty. It was signed in 1965 under a
UN agreement to protect the interests of
landlocked nations. Ever since, smugglers have
prospered in the booming trade of clandestine
goods, transported back into Pakistan via mules
and camels, through hard mountainous
routes.
"Pakistan is losing more than $2
billion in revenue every year due to the
smuggling. Afghanistan has a small market, but the
volume of goods imported far outweighs local
demand there," explained Mohammad Ali Khan, a
business reporter with Pakistan's oldest
newspaper, Dawn.
During the Taliban
regime, Pakistan cracked down on the illegal trade
by issuing a list of 24 items that could not be
imported from Afghanistan under the ATTA. The
items included television sets and cosmetics, both
banned by the Taliban militia.
"Yet
imported items were arriving here in such huge
quantities that Pakistani authorities found it
hard to cope with the situation," said Ibrahim
Shinwari, an official in the traders' association
in Kharkhano Market. Such items as wheat, flour,
ghee, oil, timber and cement were smuggled in from
Afghanistan, he said.
Both Pakistani and
Afghan authorities profited from the huge bribes
paid out to ensure the illegal trade continued
without interruption. The goods flooding Pakistan
are not only imports into Afghanistan under the
ATTA, but smuggled items from China, Iran and the
Central Asian states.
"As there are no
manufacturing units in Afghanistan, it is
dependent on its neighbors," explained Shinwari.
The Ministry of Commerce in Islamabad has
calculated the official volume of trade between
Pakistan and Afghanistan at 71%. Traders here,
including Shinwari, say the claim is highly
inflated.
Shinwari points out that
Pakistan's official trade policy for 2007-08 has
little to offer to help increase exports to
Afghanistan. He predicts that it will be difficult
to achieve the ambitious trade target of $19.2
billion, including $2 billion with Afghanistan.
Pakistan has emerged as a major trading
partner of Afghanistan during the postwar
reconstruction phase because of its geographical,
ethnic and cultural advantages.
Until the
Taliban were ousted from Kabul by US-led troops at
the end of 2001, more than 3.5 million Afghans
lived in rural and urban Pakistan for three
decades, making them familiar with Pakistani
consumer goods.
The bilateral trade
climbed up from $492 million in 2003-04 to $1.63
billion in the previous financial year, mainly due
to exports.
But because of many problems,
exports have witnessed a decline of almost $400
million in 2006-07 from the previous year.
Pakistani manufacturers have been losing out to
mainly Iranian and Indian competitors.
Liaqat Ahmad Khan, president of the Sarhad
Chamber of Commerce and Industry in Peshawar, says
that though the government claims Pakistan's
proximity to Central Asia gives it an advantage to
these emerging markets, it has not found a way to
reap the benefits.
The Federal Board of
Revenue on December 30, 2004, approved the opening
of customs stations at nine different routes to
help facilitate trade. But they have not been
fully opened because of lack of facilities, poor
road infrastructure, and security concerns in the
tribal belt. However, the smuggling trade
continues unabated.
Numan Wazir, president
of the Industrialists Association Peshawar, says
trade and industry in NWFP is mostly focused on
the consumer markets in Afghanistan, but the
Pakistani government's inability to give
incentives to promote legitimate trade is cramping
business.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
