In trade, three is not a crowd

road to cooperation: “U.S. Ambassador Anne Patterson’s cables indicated that India-Afghanistan trade could only improve when India-Pakistan trade did.” File photo of Pakistani trucks crossing the Attari-Wagah joint check post.  

In July 2010, a few months before he died, Richard Holbrooke, U.S. President Barack Obama’s special envoy, was in India after visits to Afghanistan and Pakistan, and had some advice for South Block. “Whatever India does, don’t give up on the APTTA ( > Afghanistan-Pakistan Transit Trade Agreement),” he said, enunciating every word. “The Afghans fought too damn hard for it.” As President Ashraf Ghani lands in Delhi for talks with Prime Minister Narendra Modi, amidst a new storm in ties with Pakistan, the envoy’s words hold a relevance that must not be ignored by the leaders.

‘Breakthrough on Wagah’

The American envoy was referring to the agreement that had been negotiated through several bitter rounds in 2009. As cables from Anne Patterson, the American Ambassador to Pakistan at the time, released by Wikileaks show, talks between Afghanistan and Pakistan officials often came to a standstill over the issue of trade to India. Eventually on December 28, 2009, Ambassador Patterson wrote that there had been a “breakthrough on Wagah”.

In return for being > allowed to drive Afghan trucks with fruit and dry fruit up to Wagah, Pakistan would be given transit to Central Asian countries bordering Afghanistan, where Pakistani textiles, and agricultural and surgical goods have a good market. However, the APTTA clearly noted that no Indian goods could be imported under the agreement, and that the Afghan trucks would have to drive back empty to the Afghanistan-Pakistan border where they could, if they wished, load up with Pakistani goods instead.

“When [the Afghan official] asserted that this was less than national treatment for Afghan trucks, [the Pakistani official] insisted that Pakistani trucks also had to carry transit goods on prescribed routes, which did not include Wagah,” said the U.S. Ambassador’s cable records, indicating that like everything else, India-Afghanistan trade could only improve when India-Pakistan trade did.

Holbrooke contended that both were a possibility, adding that the “national treatment” clause in the APTTA would give Afghanistan the benefit from any future trade deal negotiated between India and Pakistan, and could well open the door for Afghan prosperity as well as India-Pakistan-Afghanistan peace.

However, Holbrooke’s words went unheeded by history. Since 2010, India-Pakistan relations have shown little improvement, and an India-Pakistan-Afghanistan trilateral seems out of the question. Although most favoured nation (MFN) talks between New Delhi and Islamabad made some headway in 2011 towards the Non-Discriminatory Market Access (NDMA) agreement, Pakistan reneged on its commitments in 2013, and once the Modi government came into power, trade talks have fallen by the wayside like all bilateral dialogue between the two countries.

Far from being a unifier, the APTTA itself has become a point of deep discord. Bitter India-Pakistan relations mean Afghan trucks carrying perishable fruit face long delays on both sides of the border where they must be loaded and unloaded, often more than once. Last week, Mr. Ghani told the visiting U.K. envoy, Owen Jenkins, that Pakistan was deliberately slowing procedures or shutting down trade in fruit harvesting season, thus causing severe losses to Afghan farmers and traders. Mr. Ghani went on to threaten, not for the first time, that if this continued, he would cut off access for Pakistani trucks to Central Asia. Pakistan in turn has rejected any changes to the APTTA that would benefit India.

Meanwhile, India, Pakistan and Afghanistan are moving at a furious pace to > cut one another out of the trade equation. India is working on a corridor via Iran’s Chabahar port, where goods will go up the land route and connect to the Zaranj-Delaram Highway without touching Pakistan. Pakistan will connect directly to China through the small strip through PoK and Gilgit-Baltistan once the China-Pakistan Economic Corridor is ready, avoiding both India and Afghanistan. Afghanistan too is assiduously cultivating its options to the north, and its position in China’s One Belt, One Road plans. Earlier this month, an 84-carriage train carrying millions of dollars of goods from the eastern city of Yiwu reached the Afghan-Uzbek border bound for Mazar-i-Sharif. A single trip of 7,500 km takes 15 days, half the time needed for maritime transportation and a sixth of the time it takes via Pakistan or Iran’s land route. The service will run once a week by the end of this year, and will connect up to the brand new airport built by Germany and the United Arab Emirates in Mazar.

Separate routes

If anything, all three countries have proven that they can live without improving trade with one another. But what they also need to realise is that they will do so at a cost to their people, amongst the world’s poorest. India and Pakistan have played the charade for far too long: while formal trade figures between them are about $2.3 billion, it is estimated that their informal trade via Dubai is an estimated $4.71 billion. Of that, Indian exports make up about 80 per cent, $3.99 billion.

As a result, India’s insistence on “no talks without the end of terror”, with no such outcome in sight, may come at the cost of Indian traders and manufacturers. Similarly, Pakistan avers it is protecting its markets from being flooded with Indian goods, when the greater threat in this regard is from China. Afghanistan too can work around the mountains and across thousands of kilometres without finding an option for goods and markets that is as viable to the ones in the SAARC region. In 2015-16, 61 per cent of Afghan exports and 53 per cent of its imports came from South Asia (India and Pakistan).

As hard as political ties between them are at present, President Ghani may find negotiating the entry of India to the APTTA, as Foreign Minister Sushma Swaraj has proposed, an important idea to pursue. This may become easier if it includes Tajikistan, a country Pakistan is keen to induct in exchange for India’s entry to the Agreement. Regardless of the hoops and the circuitous routes India, Pakistan and Afghanistan employ, the most sensible option remains the simplest one: the shortest distance between any two points, it is proven, is a straight line.

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