ISSN 2330-717X

Pakistan-Afghanistan Economic Engagement: A Remedy For Financial Turmoil In Afghanistan – OpEd


Afghanistan a landlocked state has great importance in South Asia due to its geostrategic location. It is connected through a land route with six countries including Uzbekistan, Turkmenistan, and Tajikistan in the North, Pakistan in the South, China in the East, and Iran in the West. Geographically, Afghanistan is taken as an essential state for economic activities at the regional and global level. Afghanistan plays a key role as a bridge between Pakistan and Central Asian Republics for access to natural resources. In the same vein, Pakistan provides a feasible route to Afghanistan for trade with the rest of the world.


Keeping in view the growing importance of economic activities, Pakistan had signed many bilateral and multilateral trade agreements with Afghanistan to facilitate and promote direct trade and transit trade. The first Afghanistan Transit Trade Agreement (ATTA), which was signed in 1965 between the governments of Pakistan and Afghanistan guaranteed the freedom of transit trade to both countries. Traffic in transit trade was also defined under this agreement. The transit routes were identified as Peshawar-Torkham and Chaman-Spin Boldak, with a provision to add future trade corridors. Both countries also agreed upon the development of the Kabul-Torkham-Peshawar trade route with a railway line extension. In addition, Afghanistan and Pakistan established the Pak-Afghan Joint Economic Commission (JEC) to promote trade, deliberate on issues related to bilateral and transit trade, and strengthen their economic relationship in 1992.

Moreover, in 2010 for the enhancement of economic activities Pakistan and Afghanistan signed the Afghanistan Pakistan Transit and Trade Agreement (APTTA), which came into force on 12 June 2011, and replaced the AATA. Under this agreement, Afghan trucks were allowed to transport Afghan products destined for the markets of India and China to the Karachi seaports of Port Qasim and Gwadar. According to APTTA, the sole entry point for Afghan trade cargo into Pakistan was Port Qasim in Karachi. The exit points were Torkham and Chaman.APTTA encourages economic growth for both countries by building stronger commercial relationships between Afghanistan and Pakistan. It also strengthens economic ties and ensures the smooth and efficient movement of goods through both countries and across the region.

In the current scenario, Pakistan has remained at the forefront in helping its brethren to come out of the humanitarian crisis in the post-withdrawal of foreign forces from Afghanistan when the international community is disregarding the well-being of the Afghan masses during the most difficult times on the pretext of certain difference with Taliban Government. Pakistan has also continued its economic engagement with Afghanistan,  Pakistan’s exports to Afghanistan have dropped to around USD 700 million from more than USD 900 million last year, whereas, the imports from Afghanistan have increased to more than USD 700 million from USD 500 million last year. During the current financial turmoil, the Afghan Government is relying more on the country’s natural resources like coal and also agriculture to meet the economic challenges. The change is attributed mainly to increase purchases of Afghan coal by Pakistan in recent months.  Pakistan has also announced trade-related concessions for the landlocked country to help overcome deteriorating humanitarian and economic crises there.

Additionally, Pakistan and Afghanistan are naturally agrarian countries. Dry fruits, fresh fruits, vegetables, and good quality cotton are the most important sectors of Afghan agricultural activity, providing a good source of livelihood for millions of farmers. Pakistan is the top buyer of these items from Afghanistan (about 35 pc) and can enhance the imports to benefit the brothers. Likewise, transit trade needs to handle well between both states as it can bring enormous economic benefits. Therefore, it is a need of hour that various options should be adopted like entry visas and investment visas for businessmen and skilled workers. Enhancement of economic activities and trade relations between both states will bring peace and prosperity not only to Afghanistan but would also help to alleviate poverty in the state.

* The author is an Islamabad-based analyst and holds MPhil in Peace and Conflict Studies and can be reached at [email protected]


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