Effect of Afghanistan-Pakistan Transit Trade Agreement on Afghanistan Merchandise Trade: An Introspection and Literature Review

Afghanistan is a landlocked country, needing transit agreements with neighbouring countries such as Pakistan and Iran. Afghanistan is primarily relying on Pakistan and secondly relying on Iran for its international trade. This investigation aimed to understand the effect of the Afghanistan-Pakistan Transit Trade Agreement on Afghanistan Trade. The investigation would collect secondary data from the Afghanistan National Statistics and Information Authority, the Federal Board of Revenue, the Government of Pakistan, and reports of the World Bank and the World Trade Organization. Where quantitative data would be analyzed through percentages, average values, pivot tables and pivot charts. The results show that there is a slight change in the export figure to Pakistan from the year 2015 to 2018 while a drastic decrease in 2019, which is the political tension among the countries and not implementing the APPTA agreement. There is a significant increase in exports to India from the year 2015 to 2019. The finding indicates that the APPTA agreement had a significant effect on Afghanistan trade as a result the imports from Pakistan drastically increased from the year 2009 to 2015 while the imports reduced from 2016 to 2019. This indicates that political tension and border close out for several months in 2016 and 2017 between Afghanistan and Pakistan significantly reduced the imports 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, reaching its peak in 2016 at 18.34%. Due to conflict in the implementation of the APTTA agreement and political tension among countries and border closer. Pakistan import share in Afghanistan’s total imports reduced to 12.7% in 2019. This indicates that the effect of the APPTA agreement on Afghanistan trade has reduced over the last few years. Pakistan and Afghanistan should learn from regional and international transit agreements to make the APTTA effective and efficient they may also look at transit agreements 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 under APTTA, it can address plenty of issues raised in the agreement.