KABUL: A deal to open new export markets for Afghan products, by creating a tax-free transit corridor to India through Pakistan, is lopsided and may cement Islamabad's resented grip on the Afghan economy, traders and officials say. The US-sponsored transit agreement which comes into effect next year allows Afghan trucks to drive tax free across Pakistan up to the Indian border with products for sale there - but they cannot load up with Indian exports for the return journey. Instead, Afghan traders must buy products made in or shipped into Pakistan, ensuring Pakistani merchants do not lose their foothold in a market worth billions of dollars in annual sales. “We couldn't insist on bringing Indian goods to the country from Pakistan's border... or they would not have been interested in signing it,” said Mozamel Shinware, head of International Trade in the Ministry of Commerce. Afghanistan also agreed to allow Pakistan traders to seek routes to central Asia along Afghan roads, Shinware said. The long-awaited agreement has been in the pipeline for months and was hammered out with help from the United States, which is keen to try and wean Afghanistan off billions of dollars in foreign aid by boosting economic growth. Afghanistan's total worldwide exports were only $400 million last year, and according to Afghanistan's Chamber of Commerce around half of that was sales of fruit and carpets to India. “Pakistan charges a 35 percent tax on Afghanistan exports to Pakistan itself, but transit is now free,” said Chamber of Commerce deputy head Khan Jan Alokozai. However the trucks will have to stock up with Pakistani goods for their return journey. And importing Indian goods via sea is very costly, often more than twice as expensive as overland transport, sources at the commerce ministry say. “Pakistan was very cautious about signing this contract, thinking about its revenues first and foremost,” said Afghan Finance Ministry spokesman Aziz Shams. “We get 10 percent of the benefits from the contract, and Pakistan gets 90 percent of the benefits,” he said. Afghanistan is the largest buyer of Pakistan goods ranging from food items to construction materials, worth $4 billion a year, Shams added.
