Muhammad Asad Tahir Bhawana

Pakistan has a great opportunity to export its textile, leather, and agricultural products to central Asian countries. However, it faces a competition from China and Iran, both of which have strong industrial capacities, reports WealthPK quoting a report by the Islamabad Policy Research Institute (IPRI). Relying on the Iranian or Chinese transit routes may lead to unintended sharing of trade intelligence and loss of market share in the long run. However, Afghanistan, despite its lack of industrial capacity, can serve as a viable transit country for Pakistan, but its political instability poses challenges. To address these concerns, the newly-negotiated Afghanistan-Pakistan Transit Trade Agreement (APTTA) deal should include safeguards to deter Afghanistan from obstructing the Pakistani trade.

Presently, negotiations for renewing the APTTA are stalled due to Afghanistan's demands for import access from India and reduction in customs delays and charges. The report says Pakistan should protect its trading interests and can consider offering terms similar to the Chabahar agreement signed between Afghanistan, India, and Iran. While Pakistan can rent out port and rail infrastructure to central Asian countries, tangible economic benefits can only be achieved by establishing Pakistani trading companies in those countries for selling and importing Pakistani-origin products. By encouraging such establishments and signing transit trade and preferential trade agreements, Pakistan can enhance connectivity with central Asian countries and reap real economic benefits. “Moreover, Pakistan's access to those countries through Afghanistan, Iran, and China is influenced not only by hard connectivity challenges but also by soft infrastructure issues.

International instruments like Central Asia Regional Economic Cooperation (CAREC) and Transports Internationaux Routiers (TIR) can address some of these concerns,” says the report. Iran has been proactive in leveraging these tools along with its regional partnership programs to strengthen its connectivity and become a preferred warm water port for central Asian countries. In contrast, Pakistan has not fully utilized and enforced cooperation programs like QTTA, APTTA, CAREC, and CPEC to its advantage, facing bureaucratic and regulatory bottlenecks in transit trade through Afghanistan and China. To tap into CARs' economic potential, Pakistan must employ skilful diplomacy to renegotiate and enforce transit agreements, rejecting the idea of relying on Iran for connectivity to avoid being bypassed and diminishing its strategic location's value.

Credit: INP-WealthPk