Pakistan-Afghanistan trade hit by border closures

By Aamir Latif

KARACHI, Pakistan

Escalating diplomatic tensions and frequent border closures have had a chilling effect on Pakistan-Afghanistan trade in recent months, according to analysts and business figures.

The volume of trade between landlocked Afghanistan and its southern neighbor have been mostly affected by terrorist attacks in Pakistan that Islamabad blames on Afghanistan-based militants, leading to the closure of border crossings.

According to the Pakistan-Afghanistan Joint Chamber of Commerce, trade between the countries amounted to $2.5 billion in 2010 but has now dropped to $1.8 billion.

Last month, Pakistan closed the border but later reopened the two main crossings -- Torkham in the northwest and southwestern Chaman.

However, the month-long closure led to huge losses for traders, as well as seeing thousands of people -- mostly Afghans -- stranded on the wrong side of the frontier.

The closure “shattered the confidence of businessmen from both sides”, Zubair Motiwala, chairman of the chambers, told Anadolu Agency.

He added: “The trade volume hit a record $2.7 billion in 2015 and it could have touched $5 billion easily if the trade had not been mixed up with politics.

“We can take the trade volume to $5 billion easily if the government gives us an incentive-based trade policy.”

Most agree the blockade has had the greatest impact on Afghans, which is the second largest importer of Pakistani goods after the U.S. -- taking 90 percent of its consumer goods from Pakistan.

Spiralling inflation

The closures have led to spiralling inflation in the shops and markets of Kabul, Jalalabad and Kandahar as goods from Pakistan become increasingly difficult to find.

However, the loss of exports has also had a significant effect on Pakistan’s trade income.

“Pakistan is a slightly bigger loser as the decreasing trade and frequent closure of borders with Afghanistan have not merely hits its exports but it has also lost the markets of Central Asia,” Motiwala said.

Muzamil Aslam, a Karachi-based economist, said the trade slowdown has led Kabul to look elsewhere for imports.

“Afghanistan is looking towards India, China, and Iran to cope with its needs but it will cost it much higher compared to imports from Pakistan,” he said.

“It will certainly increase inflation in Afghanistan but Pakistan will also lose a settled market like Afghanistan, which will not be in our interests.”

Trade between the neighbors is conducted under the Afghanistan-Pakistan Transit Trade Agreement, a bilateral deal signed in 2010.

The current trade volume, according to the chambers of commerce, is hugely weighted towards Pakistan, which is said to have an 80 percent share.