Afghan-Pak Transit Trade

[gubbi]

Afghanistan resumes exports with India after 30 years

Afghanistan resumes exports with India after 30 years
Updated at: 1315 PST, Friday, November 13, 2009

KABUL: Afghanistan exported 12 tonnes of apples to India, officials said, touting the shipment as a key step in exploring much-needed international markets for its agricultural products.

The apples were sent to New Delhi via air and road, as part of efforts to encourage farmers to grow crops other than opium.

"Today makes history," Agriculture Minister Mohammad Asif Rahimi told a press conference at Kabul airport before an Air India plane carrying three tonnes (3.3 tons) of Afghan apples took off for New Delhi.

Nine tonnes were sent by road through neighbouring Pakistan, the minister said.

"This is the first time that we export apples to India. This is a very major step in enhancing our farmers' economy," he added.

Rahimi said about 400 tonnes of apples will be shipped to India this season.

Afghanistan's agriculture sector has suffered badly during 30 years of war, driving many farmers to grow opium, a lucrative crop with which other products have not been able to compete.

Now isn't that nice?

 

[DemonHunter]

Wondering how come our western neighbour was so generous to allow the export coming to India by road passing through their country? anyways good news

 

[eastwatch]

Afghanistan resumes exports with India after 30 years

Now isn't that nice?

It is good to see the resumption of Afghan export to India. Pakistan has also accomodated by giving Afghanistan a transit through its territory. However, Pakistan may not do so when Indian goods are to enter Afghanistan, unless Pakistan-India bilateral relationship is improved substantially.

 

[EjazR]

Its the first time that apples were exported, otherwise Afghanistan has been exporting for a couple of years now.

Export partners India 20.5%, Pakistan 18.5%, US 17.2%, Tajikistan 13.3%, Netherlands 7.2% (2008 estimate)

Source

 

[AgNoStiC MuSliM]

It is good to see the resumption of Afghan export to India. Pakistan has also accomodated by giving Afghanistan a transit through its territory. However, Pakistan may not do so when Indian goods are to enter Afghanistan, unless Pakistan-India bilateral relationship is improved substantially.

Agreed - Afghanistan should be allowed transit through Pakistan for exports to India, to take advantage of the Indian market and boost the Afghan economy and remove dependence upon drugs and crime.

However, at this stage Pakistan should not allow imports from India for a variety of reasons:

Afghan Imports - partners:

Pakistan 36.9%, US 9.5%, Germany 7.7%, India 5.2% (2008)
https://www.cia.gov/library/publications/the-world-factbook/geos/af.html

We are by far the largest exporter to Afghanistan - why should we undercut ourselves for the sake of a hostile neighbor? India can, and has, utilize the Iranian route.

In addition, Pakistan is likely the largest destination for exports from Afghanistan when you take into account the illegal re-exports from Afghanistan to Pakistan, by some estimates over a billion dollars. These re-exports are in fact taxed by the Afghan government since they are imported into Afghanistan legally, and then smuggled into Pakistan, so we are in essence subsidizing Afghanistan by that amount.

Some estimates suggest the Afghan government possibly collects $800 million from these illegal re-exports.

This illegal 're-export' trade would skyrocket were India allowed to export to Afghanistan unfettered, and it would bypass the negotiated and steady Indo-Pak trade dialog, undercutting Pakistani businesses.

 

[KillBill]

Afghanistan resumes exports with India after 30 years


Now isn't that nice?

Excellent News, May the good old days of Afghanistan be back soon, amen.

About the trade routes, Please correct me, Isnt a sea route a cheaper means to trasport? If thats the case, why we need to depend on Pakistan to provide us a trade route to Afghanistan?

 

[Imran Khan]

Excellent News, May the good old days of Afghanistan be back soon, amen.

About the trade routes, Please correct me, Isnt a sea route a cheaper means to trasport? If thats the case, why we need to depend on Pakistan to provide us a trade route to Afghanistan?

sea ????????????? i am so sorry you don't even see afghan map until now?you can go afghanistan only via pakistan or air.

 

[deckingraj]

Agreed - Afghanistan should be allowed transit through Pakistan for exports to India, to take advantage of the Indian market and boost the Afghan economy and remove dependence upon drugs and crime.

Great thought...

However, at this stage Pakistan should not allow imports from India for a variety of reasons:

Now here i am a bit confused...Imports are also going to help Afghan Economy...The same logic that you applied for Exports should also be applied to Imports...Here are my thoughts

We are by far the largest exporter to Afghanistan - why should we undercut ourselves for the sake of a hostile neighbor? India can, and has, utilize the Iranian route

.

This can only happen if Indian goods are more competative and cheaper than pakistani goods.. Or Afghans have bias towards indian goods and are forced to rely on pakistani goods because nothing else is available to them...

Anyways my knowledge says there is plenty of room for Pakistani as well as India goods in Afghan Market...

In addition, Pakistan is likely the largest destination for exports from Afghanistan when you take into account the illegal re-exports from Afghanistan to Pakistan, by some estimates over a billion dollars. These re-exports are in fact taxed by the Afghan government since they are imported into Afghanistan legally, and then smuggled into Pakistan, so we are in essence subsidizing Afghanistan by that amount.


Some estimates suggest the Afghan government possibly collects $800 million from these illegal re-exports.

This illegal 're-export' trade would skyrocket were India allowed to export to Afghanistan unfettered, and it would bypass the negotiated and steady Indo-Pak trade dialog, undercutting Pakistani businesses.

Not sure if i understood your point clearly...but don't you think the right way of dealing with that problem is to cut this illegal re-export market??? It seems like you are suggesting to keep india at bay so that the losses which are in billions should not increase...Also what you have to say about the import of indian goods from Iran route?? Last time i heard there was a road being built to have connectivity from Iran to Kabul..I guess the project is called Chahbahar-Milak-Zaranj road...Now we can argue about time frame involved between direct road link vs exporting from sea to iran and then via road to afghanistan yet your problem is not going to change...

As per my knowledge pakistan will benefit from the trade duties if trade export between India and Afghanistan flourish(which anyways would) via Pakistan complemented by her own exports in Afghanistan...


@ With no intention of flaming..

Also don't you think that trade is one way of keeping the hostalities away?? To me india has done her part by giving Pakistan the MPN(most preferred Nation)...may be time to reciprocate..

 

[deckingraj]

sea ????????????? i am so sorry you don't even see afghan map until now?you can go afghanistan only via pakistan or air.

There is connectivity from Iran to Afghan and there are various projects of shortening the route... Having said it i strongly believe that Pakistan should allow indian goods to be exported to Afghanistan..it is good for all three countries....See above posts for reasons...With no intention of breaking your bubble here is the link

http://acorn.nationalinterest.in/2008/07/16/the-road-that-india-built/

After all India is there for some purpose

 

[Imran Khan]

3 times high cost then pakistan transit if you send vie sea iran then afghan .my bubble is stil here.

 

[deckingraj]

3 times high cost then pakistan transit if you send vie sea iran then afghan .my bubble is stil here.

As said i had no such intentions either...Though please care to explain how it is 3 times?? Do you know the stats or just guessing??? Let me say why i am asking before you think the other way...I am under the impression that sea transport is always cheaper than Land Transport...


I am not contesting that it is going to be costly but was wondering what are the actual figures...Having said it my message was to make you aware that alternate routes are available...So if you by any means under the impression that India cannot export her goods without pakistan intent then it is flawed...

Let me repeat i am of the opinion that Indian trade via pakistan to Afghanistan is going to help all the three countries...but in case PAK dont allow her land to be used we have created alternate options...

 

[AgNoStiC MuSliM]

Now here i am a bit confused...Imports are also going to help Afghan Economy...The same logic that you applied for Exports should also be applied to Imports...Here are my thoughts

Not necessarily - exports create a demand for Afghan products and therefore create jobs. Imports will not necessarily have the same impact, especially since we are talking about restricting imports from one nation primarily, which can be replaced by others.

This can only happen if Indian goods are more competative and cheaper than pakistani goods.. Or Afghans have bias towards indian goods and are forced to rely on pakistani goods because nothing else is available to them...

Anyways my knowledge says there is plenty of room for Pakistani as well as India goods in Afghan Market...

Perhaps - but because the Indian market is much larger, domestic Indian companies have an advantage from economies of scale that Pakistani companies do not.

In addition, vast direct and indirect subsidies from the Indian government skew the pricing as well.

Not sure if i understood your point clearly...but don't you think the right way of dealing with that problem is to cut this illegal re-export market??? It seems like you are suggesting to keep india at bay so that the losses which are in billions should not increase...Also what you have to say about the import of indian goods from Iran route?? Last time i heard there was a road being built to have connectivity from Iran to Kabul..I guess the project is called Chahbahar-Milak-Zaranj road...Now we can argue about time frame involved between direct road link vs exporting from sea to iran and then via road to afghanistan yet your problem is not going to change...

The re-export market should be cut, but in terms of policing the border the issue is not so easliy resolved given the terrain and the traditionally low wages of customs and border officials in South Asia that make it easy for smugglers to get their shipments across.

There are some other proposals out there on how to prevent this from happening, but we shall have to wait and see how much makes it into the ATT.

As per my knowledge pakistan will benefit from the trade duties if trade export between India and Afghanistan flourish(which anyways would) via Pakistan complemented by her own exports in Afghanistan...

Trade duties on transit trade, to reduce the cost difference between goods smuggled into Pakistan from Afghanistan and goods taxed properly in Pakistan, is one of the proposals on the cards. But that obviously makes the goods more expensive on the Afghan side, and I am not sure whether the GoA has accepted that proposal or not.

But yes, if trade duties can be imposed to equal the taxes on legally imported goods into Pakistan, then I do not have as many objections to allowing Indian trade.

@ With no intention of flaming..

Also don't you think that trade is one way of keeping the hostalities away?? To me india has done her part by giving Pakistan the MPN(most preferred Nation)...may be time to reciprocate..

India's offering of MPN status does not offer a fair and level playing field - Pakistan's position has been that India has a lot of non-tarrif barriers on imports from Pakistan. I have already mentioned the huge direct and indirect subsidies that India maintains.

In the absence of such subsidies in Pakistan, and given similar labor costs, Pakistani businesses are rendered uncompetitive.

 

[AgNoStiC MuSliM]

I am not certain about the '3 times cost', but it will be mroe expensive to transport through Iran/Chabahar given that a connecting road from Afghanistan has to go around Pakistan to get there, increasing the distance.

See Map:

 

[deckingraj]

Not necessarily - exports create a demand for Afghan products and therefore create jobs. Imports will not necessarily have the same impact,

As far as import is concerned i disagree - i believe it is very important for any economy to have a trade balance...Exports will bring in essential $$$ where as imports will bring in useful goods which eventually will benefit afghanistan and its people....Though its just a blog but an interesting one..

Do imports create jobs?
Imports create jobs, boost local economy say CSULB researchers | Everything Long Beach

especially since we are talking about restricting imports from one nation primarily, which can be replaced by others.

Hmmm...In the present scenario what other countries do you see that Afghanistan can be benefitted from if not India,Pakistan and to come extent Iran?? Who others you think are keen to invest in Afghanistan??? between any other country will be an addition not a filler for India...

P.S : I am arguing becuase you said that Indian imports will hamper pakistani prospects...If your sole purpose of restricting India is because we are adversary's then i rest my case...

Perhaps - but because the Indian market is much larger, domestic Indian companies have an advantage from economies of scale that Pakistani companies do not.

Yes thats true...but just by not allowing India to use Pakistan route you cannot solve this issue...Protectionism is not going to work...Instead the best way of dealing with it would be Pakistani companies partenering with Indian companies...This will be a true win-win situation...

In addition, vast direct and indirect subsidies from the Indian government skew the pricing as well.

Please care to explain what subsidies you are referring to?

The re-export market should be cut, but in terms of policing the border the issue is not so easliy resolved given the terrain and the traditionally low wages of customs and border officials in South Asia that make it easy for smugglers to get their shipments across.

There are some other proposals out there on how to prevent this from happening, but we shall have to wait and see how much makes it into the ATT.

Well good luck with that..

Trade duties on transit trade, to reduce the cost difference between goods smuggled into Pakistan from Afghanistan and goods taxed properly in Pakistan, is one of the proposals on the cards. But that obviously makes the goods more expensive on the Afghan side, and I am not sure whether the GoA has accepted that proposal or not.
But yes, if trade duties can be imposed to equal the taxes on legally imported goods into Pakistan, then I do not have as many objections to allowing Indian trade.

Great...then we are in agreement here..and yes why should there be any revenue loss to pakistan for the sake of any country...

India's offering of MPN status does not offer and fair and level playing field - Pakistan's position has been that India has a lot of non-tarrif barriers on imports from Pakistan. I have already mentioned the huge direct and indirect subsidies that India maintains.

In the absence of such subsidies in Pakistan, and given similar labor costs, Pakistani businesses are rendered uncompetitive.

but then what is the solution??...as per my understanding economy and living standards improve by competition...Indian domestic market can proove a boon to Pakistan economy which under present circumstances is under lot of pressure and it will give pakistani counterparts door to one of the worlds most lucrative market...

Now how to make Pakistani business more competive in lieu of subsidies given by India can be discussed...Though i hope Pakistan view point is not that eradicate these subsidies and then we can talk...

Food for thought : There are many other countries with whom we have trade relations and same is true for Pakistan...if we don't have problems in trading with others then why among us???

 

[deckingraj]

I am not certain about the '3 times cost', but it will be mroe expensive to transport through Iran/Chabahar given that a connecting road from Afghanistan has to go around Pakistan to get there, increasing the distance.

No doubt about it that it is going to be costly..Thats why i guess now its time for Pak to rethink about allowing her land route to India...Negotiate your concerns and india should address them...It is important in today's world for both countries because...

Pakistani Perspective

An alternate route is available and thus Pakistan cannot use her geographical advantage to stop indian goods reaching afghanistan

India Perspective

Using alternate route is costly option than land route via Pakistan


but then

We are busy planning to nuke each other *** that all these economic/trade relations sounds too boring