Historically, the Pak-Afghan relations have often seen fluctuations, especially in the last three decades. During the Zia era, President Dauod and General Zia ul Haq reached a consensus to 'freeze' all the unresolved issues between the two countries and start working for a prosperous beginning for the both brotherly states. However, unfortunately, their understanding had to be short lived as the communist coup sabotaged it all.
The essentiality of the adjacent boundaries along with large ethnic groups on both sides of the border, and the common religious character requires that the past rancor to be put aside and to surface the way for an association of mutual economic and strategic gains to address the growing challenges. Pakistan can greatly take the advantage if it acts as a major player in the future rehabilitation and reconstruction efforts in Afghanistan. Pakistani machinery, workforce and expertise could play an important part in any rehabilitation and rebuilding efforts, and its ports and transport sector could receive a major boost.
Apart from the so-called concept of the strategic depth, the known Afghanistan’s strategic location and its ability to destabilize the regional security and prosperity, due to its geographic significance of being situated in the south west of Asia, Afghanistan is one of the most important countries in the region. All of its neighbors share a common interest in the emergence of a stable Afghanistan. However, these neighbors have variables, and in some cases quite contradicting interests regarding the nature of the Afghan state. However, the country is landlocked-having no sea and bounded on the north by Turkmenistan, Uzbekistan, and Tajikistan; on the east by China; on the south by Pakistan; and on the west by Iran. But the country whose future is mostly intimately tied to that of Afghanistan is Pakistan.
Afghanistan is very much important for Pakistan in terms of trade and other economic interactions. Pakistan can increasingly facilitate Afghan trade and get the opportunity of being a state that has maritime route towards the rest of the world. Such steps will further boost the economic development of both neighboring countries. Recently, the Afghanistan Foreign Minister also propped the Pakistan’s Ministers for Finance for enhancing the trade activities and a workout for a proper mechanism to enhance bilateral economic cooperation. In Pakistan, in fact, there is still a need of concentration on the internal development of different sectors in the Afghanistan and for the reason somehow; Pakistan has planned many projects to enhance its role in the social and economic development of the Afghanistan.
These projects include a 400-bed Jinnah Hospital in Kabul, a 200-bed hospital in Logar, a Kidney Hospital in Jalalabad Engineering University in Balkh, Rehman Baba School and accommodation for 2000 children and the dual road of 75km to increasing the trade activities from Pakistan’s border directly to the Jalalabad. Recently, Pakistan increased the development fund in the year 2014 to $500 million for Afghanistan as a sign of support for timely completion of these development projects. Pakistan has also proposed including Tajikistan in the transit trade agreement with Afghanistan to convert it into a trilateral accord and extend the trade to the entire region. The transit trade means a trade by a citizen from a non-resident, followed by the sale of the goods to another non-resident without the goods entering the country. Therefore, transit trade is not included in the international trade statistics.
Pakistan and Afghanistan also have a Free Trade Agreement (FTA) with an understanding to follow common tariff policies, to facilitate the transit trade. The Afghanistan-Pakistan Transit Trade Agreement (APTTA) established with a desire of strengthening the economic ties between the two countries on mutually beneficial basis. The Agreement promotes the intermodal freight transport and ensures the effective and efficient administration of the transit transport, avoiding the unnecessary delay in the movement of goods and commercial vehicles.
Pakistan also facilitates Afghan goods transit to India. During the Taliban rule, the trade under transit facilities (ATT) was over Rs.100 billion and comprised of items that were not in demand in Afghanistan and were actually meant for smuggling into Pakistan. The goods that get to Afghanistan are not subject to any tariff; therefore, they are smuggled back into Pakistan to bag the 25 to 35 percent differential on a tariff that Pakistan imposes on its imports. According to an estimate, Pakistan was losing over Rs.30 billion in revenues throughout the ATT. There are no real estimates for the present quantum of smuggling, which could be higher than the official trade figures. However, since September 11, the scope of smuggling had actually reduced due to strict monitoring of the mountainous border terrene.
The smuggling is a curse for both countries that significantly bring losses to the economies of two countries. For the purpose, there is need of employing modern technological means. Moreover, realizing the setback, the Pak-Afghan Joint Chamber of Commerce emphasizes on the need of real time initiatives like providing an online system. The proposed new system of WeBOC (Web Based One Customs)- a system of one window operation for all the Customs needs. This online clearance system is operational for both commercial and non-commercial cargo of transit trade activities. Such steps will really boost the economic growth of the two countries.
The economic growth is benign for the Governments and as well as for the common people. The economic growth means an increase in real GDP and the increase in real GDP will automatically increase in the value of national outputs. The benefits include higher Incomes which will ultimately yield in shape of better services and better living standards. The economic growth will also bring the unemployment at the lowest level because the higher output of firms will tend to employ more workers and create more employment opportunities. The Governments will generate higher tax revenues and there is less need to spend money on benefits such as unemployment benefit. Therefore, there will be an automatic reduction in borrowing. Ultimately, the economic growth will encourage the foreign investors and create a virtuous cycle of actual development.