Challenges on trade routes between Afghanistan and Pakistan

Rabia Nusrat

1 June 2018

Despite tensions between Afghanistan and Pakistan, the two countries agree that economic cooperation is central to peace and stability in the region. When Afghan President Ashraf Ghani and Pakistan’s former Prime Minister Shahid Khaqan Abbasi met in April 2018, they agreed on key principles to finalise the Afghanistan-Pakistan Action Plan for Peace and Solidarity (APAPPS). A key focus of APAPPS is to reinvigorate economic ties between the two countries.

Despite growing political tensions, Pakistan had remained Afghanistan’s largest trading partner until 2015. However, from 2016 onwards, Iran has taken over as the country’s key trading partner. Understanding, and addressing, challenges to trade between Afghanistan and Pakistan will help both governments to revive economic ties.

International Alert, together with partners Bonn International Centre for Conversion (BICC) and The Liaison Office, have been researching the challenges faced by transport companies based in Pakistan and working on the trade route with Afghanistan. In particular, we have been focusing on the employment practices of these companies. Our research provides interesting insights for APAPPS working groups to facilitate trade between Afghanistan and Pakistan.

Corruption and unpredictable payments demanded by various government officials in the border areas are the biggest concern for transport companies operating on the cross-border routes, such that they rank higher than the threat posed by non-state armed groups. Company owners complain of corrupt traffic police in Pakistan and, after crossing the border, of the multiple bribes that they must pay to the Afghan border police, customs officers, traffic police and city police in order to receive permission to pass. If the payment is not made, the officers demand the vehicle to be unloaded for checking, causing delays, sometimes up to two or three days. Our research reveals that if importers and hauliers have links within the government, they can get away with low customs duties, enabling imported goods (mostly fuel) to be sold at lower prices.

Transporters also frequently complain about the complicated procedures they are subjected to, which impacts the price of the goods that they are carrying and causes delays. Within Afghanistan, transport companies are required to re-load freight from Pakistani trucks onto Afghan trucks. This allows municipalities located near the border, such as Samar Khil which is situated between the Pakistani border and Jalalabad, to demand an extra payment for this trans-shipment to Afghan lorries, amounting to AFN 10,000 (about US $148) per load. Therefore, companies are forced to increase the prices of imported goods to recover the losses incurred during transportation.

In Afghanistan, different customs offices in various locations must be visited for a number of procedures which again cause delays. This is particularly worrisome for transporters who carry perishable items. Although reforms have been introduced over the years to formalise, digitalise and enforce customs rules and regulations according to the law, these reforms are largely perceived as a measure related to the deteriorating diplomatic relationship between Pakistan and Afghanistan, thus a political issue and not necessarily one that benefits the transport companies.

Transport companies that work for certain clients such as NATO face greater risks from the Taliban and other non-state armed groups fighting against Western forces and the government on the Afghan side of the border. Some routes within Afghanistan are more dangerous for people of a certain ethnicity, tribe or religious denomination and thus impact the choice and selection of drivers. One company owner told us that only Afghan drivers are used within Afghanistan, while Pashtun drivers are used as far as Peshawar, and mainly Punjabi drivers are used on routes from Peshawar to elsewhere in Pakistan.

Our research demonstrated that employment strategies in the transport sector vary between large and small or medium-sized companies (SMEs). Both of these groups have in common the need to respond sensitively to changing market conditions and risks. Large companies employ a very limited number of core staff on long-term or permanent contracts and flexibly bring in or drop sub-contractors, such as short-term contracted drivers and other staff.

SMEs or individual truck owners take market opportunities as they come and rely on the cheapest possible employment solutions. In the Peshawar district, our research showed that working conditions within Pakistan’s transport industry fail to meet international labour standards for decent work, with exploitation and human rights violation being the norm. Our assessment suggests that as long as transport companies do not see any clear benefits from adopting formal procedures, the current mixture of formalised and irregular trade is likely to remain in place.

Border areas are sites of complex negotiation between state, non-state and private actors where political tensions, settlements and irregular economies define the norms and rules of engagement. Any attempt to facilitate cross-border trade between Pakistan and Afghanistan must appreciate these challenges and their implications, particularly for employment within the transport sector. Without such an understanding, any reforms are unlikely to be effective and sustainable. Furthermore, it is critical that policymakers understand that companies working in these contexts need additional support as well as flexibility and trust from their respective governments and from the international community so that they can effectively manage the complex political and social dynamics that they operate within.

Image details

Title photo caption: A Trainer Cargo Aircraft from the NATO Airborne Early Warning and Control Force (AWACS) arrived in Islamabad on 20 September 2010 with around 17 tons of relief goods. In addition to water purification systems, including one donated by NATO, the aircraft also carried tents, beds and blankets donated by the German government.

Title photo credit: NATO Photo

About the Author

Rabia Nusrat

Rabia Nusrat is International Alert’s Regional Projects Manager for South Asia, and is currently overseeing and developing Alert’s work in Afghanistan and Pakistan.

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