Impact of Afghanistan-Pakistan Transit Trade Agreement on Afghanistan Trade: An Empirical Exploration

Afghanistan is a landlocked county, needing transit agreements with neighboring countries such as Pakistan and Iran. Afghanistan is primarily relying on Pakistan and secondly relying on Iran for its international trade. The aim of this investigation was to understand the effect of Afghanistan Pakistan Transit Trade Agreement on Afghanistan Trade. The investigation would collect secondary data from Afghanistan National Statistics and Information Authority, Federal Board of Revenue, Government of Pakistan, reports of World Bank and World Trade Organization. Where quantitative data would be analyzed through percentage, average value, pivot table and pivot charts. The result show that there is a slight change in the export figure to Pakistan from the year 2015 to till 2018 while a drastically decrease in 2019, which is the political tension among the countries and not implementing the APPTA agreement. While there is a significant increase in export to India from the year 2015 to 2019. The finding indicates that APPTA agreement had significant effect on Afghanistan trade as a result the import from Pakistan had drastically increase from the year 2009 to 2015 while the import reduces from 2016 to 2019. This indicates that politically tension and border close out for number of months in 2016 and 2017 between Afghanistan and Pakistan significantly reduced the import from Pakistan to Afghanistan. Where Afghanistan managed to use Iran and China as an alternative way for fulfilling their import needs over the years. The finding indicates that the import share of Pakistan was 9.22% in 2009, reached to its pick in 2016 18.34%. Due to conflict in the implementation of APTTA agreement and political tension among countries and border closer. The Pakistan import share in Afghanistan total import reduced to 12.7% in 2019. Which indicates that effect of APPTA agreement over Afghanistan trade reduces of the last few years. Pakistan and Afghanistan should learn from regional and international transit agreement in to make the APTTA effective and efficient they may also look at transit agreement among Nepal and India. India and Nepal have tariff parity as importers in Nepal pay the same import duty on goods as paid by Indian importers. If Afghanistan and Pakistan introduce tariff parity between under APTTA, it can address plenty of issues raised in the agreement.