Prime Minister Nawaz Sharif is expected to discuss Trilateral Transit Trade Agreement (TTTA) between Pakistan, Afghanistan and Tajikistan which has been stalled due to Afghanistan's insistence to include India making it a quadrilateral agreement, well informed sources told Business Recorder
Prime Minister is visiting Tajikistan from 5-6 July, 2017. Tajikistan is also hosting a Quadrilateral Summit of CASA-1000 member states, namely Afghanistan, Kyrgyzstan, Pakistan and Tajikistan. This project aims at developing an energy corridor, as well as land connectivity between Tajikistan, Afghanistan and Pakistan. It will also provide electricity produced in Tajikistan and Kyrgyztan to Afghanistan and Pakistan.
A Joint Declaration entitled "Road towards strategic partnership for regional solidarity" will be signed during the visit. A meeting of Joint Business Council (JBC) will coincide with the visit of the Prime Minister. The JBC will consider steps to enhance bilateral trade and commercial ties.
Besides others, Minister for Commerce Engineer Khurram Dastgir Khan, Minister for Water and Power Khawaja Asif and Chairman Board of Investment (BoI) will accompany the PM. According to official sources, Commerce Minister has been briefed about trade issues with Central Asia especially bottlenecks created by Afghanistan due to insistence on including India in quadrilateral agreement.
Commerce Minister was informed that in 2012, Pakistan proposed to sign a Trilateral Transit Trade Agreement with Afghanistan and Tajikistan on the pattern of an already signed Pak-Afghan Transit Trade Agreement 2010. The draft was prepared by the Ministry of Commerce in consultation with all stakeholders.
In this regard, first expert level group meeting of the trilateral transit trade was held on 3rd January 2015 in Islamabad and the draft was shared with Afghanistan and Tajikistan for their views and comments. Second meeting of the Expert Level Group was held on 9-10 April, 2015 in Dushanbe, Tajikistan. It was agreed that during the third meeting of the Experts Level Group to be held in Kabul, Afghanistan, text of the draft would be finalized and would be presented for signatures.
The third meeting could not be convened as per schedule because Afghanistan proposed major amendments in the draft. Afghanistan officially conveyed its recommendation to include India in the agreement making it a Quadrilateral one. Afghanistan further wanted market access to India and SAARC countries through Wahga border and to open Wahga border for Indian goods to reach Afghanistan.
According to sources, Cabinet had accorded approval for a Trilateral Agreement between Pakistan, Afghanistan and Tajikistan and not a quadrilateral agreement that included India. "Inclusion of India in this agreement will altogether change its contours and scope by providing direct land link to India with Afghanistan and to rest of Central Asia and even beyond thereby eroding Pakistan's commercial and strategic competitiveness in the region," the sources continued.
Commerce Minister was informed that in third session of Pak-Tajikistan JEC both sides agreed to explore the possibility of negotiating PTA between Pakistan and Tajikistan. A summary was sent to Cabinet for negotiations on Pak-Tajikistan PTA. The Cabinet granted approval for negotiations on 15 October 2004. The draft PTA was sent to the respective embassies of Pakistan and Tajikistan.
During the fourth Session of Pakistan-Tajikistan held on 09-12 February, 2011 in Dushanbe, Tajikistan, it was decided to hold discussions on the draft Preferential Trade Agreement after the accession of the Republic of Tajikistan to the World Trade Organization (WTO).
Tajikistan became member of WTO in 2013. Pakistan's Mission in Dushanbe approached the authorities concerned regarding initiation of PTA negotiations, however, it was intimated that due to their commitments with other trading blocks, they deem individual PTA with Pakistan as premature.
Apart from trilateral Transit Agreement, the other option was to access Central Asia including Tajikistan through Wakhan border. A road link can be established from Chitral (Pakistan) to Ishkashim (Tajikistan) through Wakhan border. If this link is established, Pakistan's dependency on Afghanistan can become redundant.
The sources said, another option is to reach Central Asia through China and then to Kyrgyzstan and other CAR republics through Karakorum Highway. In this regard, Pakistan can take advantage of the already signed Quadrilateral Agreement between Pakistan, China, Kyrgyzstan and Kazakhstan, particularly taking into account the eventual construction of Pak-China Economic Corridor in the near future.
After lifting of the international sanctions on Iran, Pakistan can circumvent Afghanistan and approach Central Asia using Iranian rail and road network to reach Turkmenistan and other CAR states. Trade between Pakistan and Tajikistan has increased from $7.5 million in 2014-15 to $15.7 million in 2015-16.
Pakistan's exports have come down from $7.43 million to $4.5 million while imports from Tajikistan have increased from $0.068 million to $11.16 million during the same period. Imports from Tajikistan have significantly increased due to import of raw cotton from Tajikistan.
Major items of export include raw sugar, dairy products, medical and pharmaceutical products, construction materials incl. cement, and cutlery. Major items of import from Tajikistan include raw cotton, chemical materials and products and glass and glassware etc.
The biggest bottleneck at present is the non-availability of cost effective transportation system for Pakistani companies to send their cargo to Tajikistan. Non-availability of direct air links between Pakistan and Tajikistan is another obstacle restricting business to business contacts. Tajikistan's Somon Air started its operations on Lahore-Dushanbe sector in 2016 however, due to non-viability from commercial point of view, the flight operations were suspended.
Tajikistan is a party to TIR Convention. Pakistan's accession to the TIR Convention is an important step for trade facilitation with Central Asian States including Tajikistan. Pakistan-Tajikistan Joint Working Group on Trade, Investment and Communication has been established. This Ministry has proposed the dates of 17-18 July, 2017 for the first meeting of JWG at Dushanbe.
Pakistan-Tajikistan Joint Business Council has been established and its first meeting was held in Islamabad on 12th November, 2015 during Tajik President's visit to Pakistan on 12-13 November, 2015 while the second meeting of JBC was held on May, 11, 2016 at Dushanbe. FPCCI has conveyed readiness to hold the third meeting of JBC on the sidelines of the PM's visit to Dushanbe in first week of July 2017. The Foreign Office may ascertain the willingness of the Tajik side to hold the third JBC in Dushanbe. Pakistan's major items of import from Tajikistan are cotton. Pakistan also has a well-developed and integrated textile sector. Joint Venture in textile and clothing may be explored.
There is potential of export oriented sectors of Pakistan such as pharmaceuticals, leather, textiles, marble and construction materials, however, high import duties including 18% VAT and other taxes are important discouraging factors. Furthermore, registration of pharmaceutical products is also a cumbersome procedure and takes around 3-6 months with the registration fees ranging from $ 2500-3000/per medicine. Some of the Pakistani pharmaceutical companies including Herbion have established a foothold in Tajikistan.