WikiLeaks Pakistan to allow Delhi exports to Kabul

Pakistani chief transit trade negotiator had, in private, committed to his Afghan counterpart that under a five-year transitional period, Afghanistan will be given unimpeded truck access to the Indian market for full imports but only in exchange for Kabul’s compliance with the re-export study’s recommendations. This has been revealed in the WikiLeaks cache about the secret diplomatic cables sent by the US embassy in Kabul to Washington. The website’s cache of US Embassy Islamabad also contains some titles on the Afghanistan Pakistan Transit Trade Agreement (APTTA) but details remain conspicuously missing.
U.S interest pivotal
The secret cables say Pakistanis feared losing its $1.5 billion annual sales to Afghanistan if they have to face Indian goods coming through Wahga. Pakistan has proposed holding a study to assess the impact of allowing Indian imports to Afghanistan. The study was to be funded and conducted by the USAID. Afghanistan believes that US interest and pressure was essential for progress. However, the cables also point out US worries of Tehran’s interest in Afghanistan’s reconstruction and transit trade. Iranians have been consistent and persistent in offering their ports as a more convenient and reliable location for Afghan traders.
A mail sent by the US Mission in Kabul on October 5, 2009, titled APTTA talks, postponed quotes Afghan Deputy Commerce Minister and Chief Transit Trade Negotiator Adib Farhadi. He told the Embassy on October 4th that Pakistan’s chief negotiator had already privately committed to a five-year transitional period giving Afghanistan unimpeded truck access to the Indian market but only in exchange for Afghanistan’s compliance with the re-export study’s recommendations, something that would be completed after the APTTA is signed.
Re-export study
Pakistan needed the re-export study, he explained, to ensure Indian goods are not re-exported back into Pakistan from Afghanistan. Farhadi opined that Pakistan is not seriously concerned with western goods being re-exported into Pakistan from Afghanistan, but wants safeguards in place to prevent Indian goods from being smuggling into Pakistan and giving the Indians an export advantage without liberalizing overall trade flows.
Under a multi-year plan to open the Wahgah border, in return for Afghanistan’s full compliance with the re-export study’s recommendations, Pakistan would allow Afghan trucks unimpeded access to the Pakistan side of the Wahga border in the first year. In year two, permit Afghan trucks unimpeded access to the Indian side of the Wahga border. In year three, permit Afghan trucks to return from India with certain Indian goods. In year four, permit Afghan trucks to return from India with an expanded number of Indian goods and in year five, grant Afghanistan full access to India in terms of transport and Indian imports.
The flipside
Farhadi rejected the idea of separate side-letters addressing the Wahga re-export issues because such a modality is not legislatively approved but constitutes an executive branch commitment that can be more easily modified. Nonetheless, he said he is open to introducing the notion of “protocols separate from but parallel with the APTTA” as long as they are approved by both parliaments and thus enforceable as international agreements.
Another cable of November 1, 2009 titled paving the way for acceptance of the APTTA says Farhadi believes Japanese-manufactured high-end electronics make up the bulk of the unauthorised trade. He also reiterated that Pakistanis fear that if Afghanistan secures access through Wahga to India, Indian products would be diverted through unauthorised trade back into Pakistan and compete with Pakistan’s domestic products. He predicted a three to five year horizon for implementing the study’s recommendations and placed great importance on the effectiveness and operational ability that line ministries will require to implement the recommendations.
Smuggling, a major concern
A cable titled Af-Pak transit trade talks meeting with Afghan Ministry of Commerce and Industry and Pakistani Ministry of Commerce, of July 9, 2009 says in a June 28 meeting with visiting NSC Senior Director for International Economic Affairs David Lipton, SRAP Senior Economic Advisor Mary Beth Goodman, and Treasury DAS for Asia Robert Dohner, Secretary of Commerce Suleiman Ghani said that the media focus on India notwithstanding, Pakistan’s major concern is smuggling. He said the GOP has concerns with goods moving from India to Afghanistan, but not the other way.
Ghani referred to Pakistan’s need to “rationalise trade with India;” once that happened, it would be more realistic to examine Indian trade transiting Pakistan to Afghanistan. He said that in principle, the GOP has “no problem” with Afghan trucks traveling through Pakistan to the Indian border without having to offload at Torkham. The trucks would, however, still have to switch their loads onto Indian trucks at Wagha. Although Ghani thought that the GOP is “closer than ever” to Afghan trucks transiting Pakistan to both Wagha and the ports, it is not economical for the trucks to return empty. Afghan Commerce Minister Shahrani on July 6, 2009 told Ambassador Wayne that he hoped the Pakistanis would allow Afghan agricultural exports to flow but he believed the Pakistanis feared losing the $1.5 billion annual sales to Afghanistan if they have to face Indian goods coming through Wagha. Shahrani said he believed U.S. interest and pressure has been essential for progress to date and would be also for future progress. Ambassador Wayne said we would definitely continue to engage.
U.S concerns against Iran
The weariness of the Americans against Iran could be gauged from a cable titled, “Afghan reconstruction, trade, hot topics in Tehran”, created on March 30, 2009 says while perpetual dithering takes place between Afghanistan and Pakistan on transit trade and other regional trade issues, the Iranians have been consistent and persistent in offering their ports as a more convenient and reliable location for Afghan traders. If trade and transport become even riskier through Pakistan, we anticipate that this forthcoming Iranian attitude will not only continue but may even become more effusive as discussions on regional trade continue.
At Economic Cooperation Organisation (ECO) summit in March 2009, Iran offered to foot bill on transport feasibility study. ECO participants agreed to provide funding for a feasibility study of the transit route. Head of Foreign Trade Department of Afghan Ministry of Commerce and Industry Azim Wardak, approached the Iranians directly, noting again that “waiting for the money from ECO will take a lot of time,” and asked that they do the feasibility study themselves.
Wardak’s influence
The cable says Wardak, a dual U.S.-Afghan citizen, has been a useful contact for the Mission and in the past has been quite critical of Iranian attempts, some subtle, some not so, to influence Afghan policies. However, in this instance, he said his normal scepticism was outweighed by the potential of the Iranian offer. “We are getting nowhere on transit trade with Pakistan, and Iran is offering major incentives for us, without any of the problems on the Pakistan border.” Note. In June 2008 Afghanistan and Iran signed a transit trade agreement that provided reduced fees for Afghan traders and committed both countries to development of improved trade links.
Wardak visited the ports of Charbahar and Bandar Abbas and said that the Iranians put on a good show, touting their port facilities and security, and offering 25 per cent discounts, visa-free travel, and other incentives. He noted that the Indian wheat donation that has hit roadblock after roadblock quite literally in getting Pakistani permission to cross through Wahga was mentioned specifically by the Iranian side as doable “with no transit difficulties” through either Bandar Abbas which he said can accommodate 80 thousand tons or Charbahar which has a per ship capacity of 40 thousand tons. Other Afghan government officials have confirmed they are considering shipping at least some of the Indian wheat through Iran, even though this would present problems for transporting it from western Afghanistan to population centers in the east.