ISLAMABAD-The government on Friday said that Pakistan-Afghanistan transit trade would continue as it has nothing to do with Islamabad’s decision to suspend bilateral trade with New Delhi. The Ministry of Commerce has asked Federal Board of Revenue (FBR) to take necessary steps to prevent mis-declaration and smuggling. According to the Ministry, the suspension of trade with India would not affect trade under the Afghanistan-Pakistan Transit Trade Agreement (APTTA), 2010. The business community has raised concerns over the suspension of bilateral trade with India might result into increase in smuggling of Indian goods, imports of Indian origin goods by mis-declaration through third countries, and smuggling under APTTA.

“Furthermore, it is requested that an effective anti-smuggling campaign may be launched immediately against smuggled Indian goods that may be available in the markets across the country,” said ministry of Commerce in letter written to the Chairman FBR. According to the ministry, the SROS 927(1) 2019 and 928(1) 2019 dated 9th August, 2019 would not affect the shipments in the pipeline for which L/C or B/L have been issued prior to August 09 2019 since in terms of provison to the paragraph 4 of the Import Policy Order 2016, “the amendments brought in this Order [Import Policy Order 2016] from time to time shall not be applicable to such imports where Bill of Lading (B/L) or Letters of Credit (L/C) were issued or established prior to the issuance of amending order”. The SROs do not affect trade under Afghanistan-Pakistan Transit Trade Agreement (APTTA), 2010.

On August 09, 2019, the the Ministry of Commerce on Friday issued a statutory regulatory order (SRO) for suspending trade ties with India including banning all kinds of imports and exports after getting approval from the federal cabinet. Official figures of bilateral trade between Pakistan and India showed that Pakistan’s export to India stood at $263 million in last financial year and imports from India $1.499 billion in 2018-19. In the aftermath of Pulwama incident, exports from March to June 2019 got slowed down as it stood at $14 million in Feb 2019, $7 million in March 2019, $4 million in April 2019, $3 million in May 2019 and $4 million in June 2019. In earlier months of last fiscal year, the monthly exports stood at hovering around $21 million to $44 million on monthly basis. Imports from India remained in the range of around $101 million minimum to $150 million maximum on monthly basis in last fiscal year.

The Indian government had imposed 200 percent duty on the imports from Pakistan after Pulwama attack besides withdrawing Most Favoured Nation (MFN) status. According to the official data, imports from India had declined by over 36 percent in four months (February to June) in wake of Pulwama attack. Imports from India remained $965 million from February June, 2018 whereas this year the figures have declined to $611 million in the corresponding period.

Pakistan had not imposed any duty on Indian products on that time. According to the details presented in National Assembly, the Ministry of Commerce studied all the options available with Pakistan including imposing heavy import duties on all Indian origin products in wake of Pulwama attack. However, on the following grounds, the option was discarded because the decision may politically sound good but not economically viable. More than 50 per cents of imports are either raw materials or intermediate/ semi processed goods i.e. cotton, cotton yarn, P-xylene. The cost of doing would have increase and Pakistan’s export competitiveness might affect if the government had enhanced the import duty on Indian products. However, the National Security Committee (NSC) decided to suspend all bilateral trade after Indian government’s decision to issue a presidential order to repeal the Article 370 of the Indian constitution.