Transit goods movement under Aptta: customs proposes safeguards to curb smuggling

Pakistani Customs department has proposed strict safeguard measures to check movement of transit goods, which are being smuggled back from Afghanistan under the new Afghanistan Pakistan Transit Trade Agreement (Aptta).
Sources told Business Recorder on Monday that the Pakistani customs have proposed imposition of a quantitative restriction on the transit items/class of goods after calculating the consumption in Afghanistan from where the goods flow or smuggle back. Secondly, duties and taxes should be collected in foreign currency on disputed goods where no agreement is being made between Pakistan and Afghanistan.
The representatives of the Federal Board of Revenue (FBR) expressed serious concern over the absence of preventive measures to check smuggling in the draft of the Aptta. They proposed comprehensive amendments in the revised draft of the Aptta, which has been forwarded to the Ministry of Commerce. The draft Aptta would be discussed with the Afghan authorities in the next round of talks on transit issues.
The National Trade and Transport Facilitation Committee (NTTFC) has completed the Article by Article review of Aptta in consultation with the FBR/Commerce Ministry. The review of all protocols has also been carried out, and the agreed amended drafts of Aptta and the Protocols were finalised.
Commenting on the draft of Article 3 (Freedom of Transit) of the Aptta, sources said that strong views were expressed by the representative of FBR/ Pakistan Customs that the proposed draft of Aptta did not have any safeguard against smuggling back and flow back of goods imported against Afghan transit trade, which was greatly hurting the economy, industry and revenue collection of Pakistan.
It was agreed that the Executive Secretary, NTTFC should sit with the representative of FBR/Pakistan Customs and draft suitable wording of the Articles to be inserted in the Agreement and the Protocols.
Following text was agreed and included in the draft of the Article 3 (Freedom of Transit), A0: "Notwithstanding the aforesaid provisions of this article, if any Contracting Party (Pakistan or Afghanistan) is of the opinion that some goods or class of goods being allowed in transit trade are smuggled back or flow back in its country and are hurting the economy, industry or revenue collection efforts of import duties and taxes, it may take effective measures. It can call meeting of the Standing Committee conveying in writing the grievances along with facts and figures and damage caused to concerned country. The committee shall meet within 3 months of the notice and may agree on taking one of the following steps to stop flow back or smuggling of goods: It could impose a quantitative restriction on the goods/ class of goods after calculating the consumption in the country from where the goods flow or smuggle back. It could also levy import duties at uniform rate, whichever is higher in any of the Contracting Partys import tariff, by Pakistan or Afghanistan, whatever is the case.
In case no agreement is reached within six months of the notice, the aggrieved Country may collect duties and taxes at the rate prevailing in its territory in foreign exchange (US$ or equivalent currency of the other Contracting Party) and shall remit the amount so collected to other Contracting Party (Pakistan or Afghanistan) on quarterly basis, till the matter is finally resolved.
According to sources, presently there is no organisation in Afghanistan for issuing "TI Carnet" and providing a counter guarantee for the "TI Camel" issued in Pakistan, Pakistan Customs had substituted it by a system of bank guarantees during the previous meetings of the Aptta. However, the representatives of transporters pointed out that it would not be feasible for Pakistani transporters to provide the proposed bank guarantees. It was, therefore, decided to revert to "TI Carnet" system and let the Government of Afghanistan work out the system for implementation of TI Carnet in Afghanistan for implementation of the Agreement.
Sources said that the amendments have also been proposed in the draft of the Aptta keeping in view concerns of the Pakistani transportation industry. The representatives of transporters expressed that the cost of transporting good in containers owned by the shipping lines was extremely high as they had to make a security deposit of Rs 400,000 to 500,000 for each container and also pay rental for hire of the container to the shipping line. To avoid this heavy cost they proposed to acquire their own containers and containerised vehicles and transfer the goods in these containers/containerised vehicles in the Customs bonded area for transit transport under Customs seal. However, such containers would not have the "ISO alpha codes" required under definition of the container. They asked for this requirement of ISO alpha code to be deleted from the definition of the container. This proposal was not acceptable to Pakistan Customs as a firm decision had already been taken by FBR that all transit cargo will be transported in containers in which it is imported. The transporters and the representative of Karachi Port Trust (KPT) also pointed out that it was not practicable to transport large consignments of bulk commodities in containers. Pakistan Customs agreed to include bulk in Article 21(b) of Aptta for these to be transported in accordance with the conditions stipulated by the Customs authorities. About the Article 12 (Exchange of Road Traffic Rights) of the draft Aptta, sources argued that Aptta was an agreement relating to transit trade and traffic and did not relate to bilateral traffic. Therefore, under Article 12.2.a, the permit for bilateral, traffic rights should not be issued. It should be replaced by the permit for transit traffic rights. Necessary amendment in the Article has been proposed. Moreover, in Article 2 the definition of bilateral trade was deleted by the committee.
It was emphasised by the representatives of Ministry of Communications and interior that in Article 12.2.b. the permit for transit rights to go through the territory of the other Contracting Party (Pakistan or Afghanistan) should be subject to bilateral agreement with the third country. Necessary amendment was made in the Article 12.2.b accordingly.
Sources said that while Pakistan has 240,000 trucks for transport of goods against 95,000 in Afghanistan, the surplus trucks available in Pakistan for transit traffic were much less as compared to the number of surplus trucks available in Afghanistan because of the large domestic demand of trucks in Pakistan for transport of goods. Moreover the Afghan trucks were modern meeting the international requirements, while only a limited number of Pakistani trucks were modern enough to fulfil the international requirements. It was necessary to protect the employment of Pakistani trucks for transit trade. Therefore, retention of quota system would be beneficial for Pakistan. It was further desired that the quotas should be fixed so that Pakistani transporters may be able to carry major share of transit trade as the transit cargo transported from Pakistan was much larger than the transit cargo transported from Afghanistan. It was therefore decided to retain Article 12.3 and amend the definition of Quota by adding in accordance with the volume in tonnage transited through the territory of the Contracting Party.
About the Article 20 (Multiple Entry and Transit Visa) of draft Aptta, the Ministry of Interior pointed out that in the cases of multiple entry visas each stay will have to be restricted to 15 days. Therefore, each stay not exceeding 15 days was inserted in Article 20 of the draft convention.
It was pointed out that administration of Periodic Permits would create insurmountable administrative and monitoring problems under Protocol/ One Article 25 (Validity of Permit). Therefore, it was agreed that only single journey permits should be issued and the provision for multiple journey permits was deleted.