Pakistan’s special envoy to Afghanistan, Mohammad Sadiq Khan, has announced a significant policy change to facilitate Afghan trade. The government has decided to replace bank guarantees with insurance for Afghan goods transiting through the Gwadar Port. Sadiq Khan has hailed this measure as a step toward easing trade, and it is expected to benefit Afghan traders and consumers.
In a statement posted on X (formerly Twitter) on January 18, Khan elaborated that the decision will primarily apply to importing bulk goods such as Di-Ammonium Phosphate (DAP) fertilizer, wheat, sugar, and other essential commodities.
“Pakistan has decided to replace the requirement of bank guarantees with insurance guarantees for bulk cargo of Afghan transit trade through Gwadar Port. This measure will help the Afghan business community and consumers and is a step towards ease of business through Pakistan,” Khan wrote.
Challenges Highlighted by Afghan Traders
Despite this initiative’s optimism, Afghan trade officials remain cautious about its impact. Khanjan Alokozay, the deputy head of Afghanistan’s Chamber of Commerce and Investment and chairman of the Afghanistan-Pakistan Joint Chamber of Commerce, pointed out that Afghan traders rarely use Gwadar Port.
“Previously, Afghan traders were required to provide both insurance and bank guarantees at Karachi Port, which caused significant difficulties and reduced Afghanistan’s transit trade by more than 60%. While the change is welcome, it’s only applicable to Gwadar Port, which Afghan traders do not frequently utilize,” Alokozay stated.
He added that implementing this policy at Karachi and Port Qasim would have a broader and more meaningful impact. According to Alokozay, such a move could increase the volume of goods transported through Pakistan and lower tariffs in Afghan markets.
Declining Trade Volumes
Trade between Afghanistan and Pakistan has reached its lowest level in decades. According to the Afghanistan Chamber of Commerce and Investment, bilateral trade exceeded $2 billion in 2023 but plummeted by 50% in 2024.
In a 2023 report, the World Bank attributed Afghanistan’s export difficulties to Pakistan’s shifting trade policies and increased tariffs. Afghan trade experts warn that without mutual efforts to improve trade relations, the downward trend is likely to continue into 2025.
Regional Context and Alternatives
The announcement comes as regional powers compete to influence Afghanistan’s trade routes. India’s Foreign Secretary, Vikram Misri, recently met with Amir Khan Muttaqi, the acting Foreign Minister of the Taliban, to discuss trade opportunities. Both sides agreed to use Iran’s Chabahar Port to facilitate humanitarian aid and bilateral trade activities.
This development underscores Afghanistan’s reliance on diverse trade routes to navigate geopolitical and logistical challenges. Gwadar Port’s policy change could serve as a starting point, but its limited scope raises questions about its overall effectiveness in addressing Afghanistan’s broader trade needs.
While Pakistan’s new policy appears to be a positive gesture to facilitate Afghan trade, its limited scope restricted to Gwadar Port raises questions about its broader intentions and potential effectiveness. Afghan traders and experts have expressed concerns over whether this policy is genuinely designed to ease trade or if it serves a strategic agenda tied to Pakistan’s geopolitical and economic interests.
Expanding this initiative to include Karachi and Port Qasim could significantly enhance Afghan trade opportunities, reduce tariffs, and foster economic stability. However, skepticism about the policy’s intent and effectiveness will likely persist without transparent implementation and collaborative efforts from Afghan and Pakistani authorities. The current trade slump, if unaddressed, risks deepening economic instability for both nations.
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