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Constraints facing Afghanistan’s Transit Trade:

Specific Focus on
Pakistan – Afghanistan Transit Treaty

Trade and Development Board


Commission on Enterprise, Business Facilitation and Development
Expert Meeting on the Design and Implementation of Transit Transport
Arrangements
Geneva, 24 – 26 November 2004

by Amer Z. Durrani (World Bank),


and
Sardar M. Humayun Khan (Consultant)

South Asia Energy and Infrastructure Unit


The World Bank

What is this presentation about?


Æ Bank’s involvement, the study of transit in Afghanistan and
Pakistan and its objectives
Æ Scope and some familiarization with the “landscape”
Æ Transit Agreements and subscription to international
conventions
Æ Common constraints to transit
Æ Afghanistan’s Key Internal and External Transit Issues
Æ Case Study – The state of practice in the largest transit trade
corridor: a look at the state of the Pakistan – Afghanistan
Transit Treaty (PATT)
Æ Given the state of affairs can we not “concession” the design,
implementation, management and operation of the large transit
corridors such as Karachi - Kabul
Status of Transit in Afghanistan and Pakistan
(looking at the “Rim” Countries)
Æ Summarize the current bilateral and multilateral Transit Trade Agreements (if any) that
affect the countries involved – Afghanistan, Iran, Kazakhstan, Pakistan, Tajikistan,
Turkmenistan, Uzbekistan, Kazakhstan and China. India is not included in the current
study, as a separate study on Pak-India Trade issues is underway.
Æ Identify the objectives of these treaties; the conditions and requirements that need to
be fulfilled to make them effective; and the harmonization (legal/administrative,
infrastructure, and means) requirements to make these traffic corridors operational.
Also, identify the key transit routes these treaties aim to operationalize and their key
benefits.
Æ Identify the extent to which these treaties are operational. Based on desk reviews, a
visit to commercial sections of the related country missions in Pakistan and
Afghanistan, assemble a rapid picture of the reasons behind the current level of
operationalization of these treaties.
Æ Provide a set of recommendations on how to make these treaties effective in the future.
Include any additional information that is deemed relevant to the issues mentioned
above e.g., enhance greater cooperation within the public and private sectors of the
countries involved.

Afghanistan and its


extended “Rim”
Countries
Key Trade Infrastructure—Afghanistan, Iran, Pakistan

Uzbekistan
Î Î Kyrgyzstan

Tajikistan
Caspian Turkmenistan
Sea

Afghanistan
Road Classification Length, km
National Primary 3,300
National Secondary 2,700
Total National 6,000
Province Primary Afghanistan 8,900
Province Secondary 6,100
Iran
Iran Total Provincial 15,000
Road Classification Length, km Total 21,000
Paved 49,440 Note: 2,400 km of the national primary roads were originally paved
Unpaved 90,760
Bandar Abbas Pakistan
Total 140,200
26 berths Road Classification Length, km
Note: paved roads including 470 km of expressways
Max draught 12m Pakistan
National Highways and Motorways 8,500
Provincial
Chahbahar 90,000
berths District, and Village Roads Karachi168,500
4Municpal,
Total 11.9m
Max draught 31 berths250,000 India
Î Max draught 11.9m
Note: 150,000 km of the total roads are paved
N

W E

ÎÎ Î Î S

Arabian Sea
Î Major-Roa ds

Qasim
Ro ads
Ra ilway N etwork
Unde r Co nst. Hig hways

UAE 9 berths
Unde r Co nst. Rail

Oman Plan ned Rail Li nk

Max draught 12m Î Ports

Sea

The Border Crossings


#Y Cities-f1.shp
Major-Roads #Y

Fair
Good
Turkmenistan Uzbekistan Tajikistan
Poor
Poor (Track)
Road-Road Road-Road/Rail Road-Ferry-Road
Roads
#Y
#Y

Railway Network
Sea Aqina Hairatan Sher Khan Bandar #Y
#Y

#Y

Shighnan
#Y #Y

Aqina #YMary #Y Hairatan


#Y Shir #YKhan
#Y
#Y

Faizabad
#Y

Road-Road/Rail
#Y #Y
#
Y #Y

Andkhvoi #Y #Y
#Y
#Y #Y

Qonduz #Y
#Y #Y #Y
#Y #Y

Ishkashim
#Y

Sheberghan Taloqan
#Y #Y

Mazar-e-Sharif
#Y

#Y
Torghundi #Y
#Y

#Y #Y
#Y #Y #Y

Road-Road Meymaneh#Y
#Y #Y #Y #Y
#Y

#Y #Y
Doshi #Y
#Y

Islam Qilla
#Y

Toggundi
Salang#Y
#Y #Y
#Y

#Y #Y #Y

Charikar
#Y
#Y #Y
#Y

Islam Qila
#Y
#Y

#Y Bamian
#Y
#Y
#Y

Jalalabad
#Y #Y
#Y #Y #Y #Y

Kabul
#Y #Y #Y #Y #Y #Y

Zar Kharid
#Y

Herat Panjab
#Y #Y
#Y

Chesht-e Sharif
#Y #Y #Y
#Y #Y #Y
##Y
Y #Y

Torkham
#Y #Y #Y
#
Y

Iran
#Y #Y
#Y #Y
#Y #Y

#Y
#Y #Y
#Y

Torkham
#Y #Y #Y #Y #Y

Afghanistan
#Y #Y
#Y #Y
#Y #Y
#Y
#Y #Y #Y #Y

Ghazni
#Y

Road-Road
#Y
#Y
#Y #Y #
Y #Y #Y
#Y #Y
#Y #Y
#Y
#Y #Y
#Y #Y #Y
#Y
#Y #Y
#Y #Y
#Y #Y #Y
#Y #Y #Y
#Y

Delaram
#Y #Y #Y
#Y #Y #Y
#Y #Y #Y
#Y
#Y #Y #Y #Y
#Y #Y
#Y #Y #Y #Y #Y #Y

#Y
Qandahar #Y
#Y #Y #Y
#Y #Y #Y #Y #Y
#Y #Y
#Y #Y #Y
#Y
#Y #Y #Y #Y

Pakistan
#Y #Y #Y
#Y #Y #Y #Y
Zaranj
#Y
#Y #Y

Spin Buldak
#Y #Y
#Y #Y #Y
#Y #Y
#Y
#Y #Y
#Y #Y #Y
#Y #Y

Zaranj
#Y #Y #Y
N
#Y #Y #Y #Y
#Y #Y
#Y #Y
#Y

Road-Road
#Y

Chaman
#Y
#Y #Y #Y
#Y
#Y #Y #Y

#Y #Y
#Y
W E
#Y #Y

Road-Road
#Y
#Y #Y
#Y
#Y
#Y
#Y #Y #Y
S
#Y #Y
#Y
#Y #Y

#Y #Y #Y
Road Freight Transport Vehicles

Pakistan and Afghanistan

Iran

Pakistan
Pakistan and Afghanistan

Uzbek Trucks at Mazaresharif ICD


The “Friendship Bridge”—Hairatan to Hairatom

Iranian Trucks at Islamqilla


Efficient Transshipment at Islamqilla

Transit Agreements in the region

Æ Afghan Transit Trade Agreement (ATTA) represents a unilateral treaty


signed by Afghanistan and Pakistan in 1965
Æ Economic Cooperation Organization (ECO) Transit Trade Agreement
1995 is a multilateral document ratified by 8 of the 10 ECO member
states
Æ Pakistan-China-Kazakhstan-Kyrgyzstan Transit Trade Agreement is a
multilateral treaty between these countries (2003)
Æ Afghanistan-Iran-India Transit Trade Agreement represents a
multilateral understanding between the three countries to be formalized
as a treaty (2003)
Æ Separate Transit Trade Agreements have been concluded between
Afghanistan and its neighbors - Tajikistan and Uzbekistan (2004)
Status of International Conventions in the region…
Countries Party to International Conventions
1 2 3 4 5 6 7
Convention Convention Customs Customs Customs International Convention
on Road on Road Convention Convention Convention Convention on of the
Traffic Signs and on the on the on the Contract for
1968 Signals International Temporary Containers Harmonization the
S.
Country 1968 Transport of Importation of 1972 of Frontier International
No.
Goods Commercial Control of Carriage of
Under Cover Road Goods 1982 Goods by
of TIR Vehicles Road (CMR)
Carnet 1975 1956 1956

Requires
1 Afghanistan Yes
Renewal
2 China Yes
3 Iran Yes Yes Yes Yes
4 Kazakhstan Yes Yes Yes Yes
5 Kyrgyzstan Yes Yes Yes Yes
6 Pakistan * Yes Yes Yes
7 Tajikistan Yes Yes Yes Yes
8 Turkmenistan Yes Yes Yes Yes
9 Uzbekistan Yes Yes Yes Yes

Yes = ratified
* Status up-dated as on 15-11-04 Source: UN ESCAP 1999

Common Constraints to Transit

Æ Lack of Real Political Will


Æ Very little “Nationalization” of international, regional, bilateral
agreements—sovereignty fears deter harmonization
Æ Inappropriate and unrealistic transit agreements—key “small”
details overlooked
Æ Doing it all at once—corridors not “in”
Æ Little capacity to design, implement, and monitor transit
agreements
Æ Lack of familiarity with trading practices and environment
Æ Lack of awareness of benefits to all—quantification not available
Afghanistan’s Key “Internal” Transit Issues

Æ Key roads in bad condition


Æ Security
Æ Narcotics
Æ Weak customs and poor facilities
Æ Provincial governments
Únumerous check posts
Úunofficial taxes and fees collected in Afghanistan
Æ Nascent financial system
Úno real domestic insurance
Únascent banking and no real bonding system
Æ Very old trucking fleet
Úalways overloaded, always competitive

Afghanistan’s Key “External” Transit Issues


Æ Outdated transit treaty with Pakistan
Údirection of traffic to rail (treaty compelling to do so)
Úlimitations on road transit
Únegative list for transit
Æ Cargo transshipment at borders
Úinevitable when rail/road interchange
Úmost road cargo also transshipped
Æ Difficulties of cross- border operations
Úprotection of local trucking through transit permits and visa restrictions
Úunofficial and discriminatory charges
Úduty and document deposits, guarantees and convoys
Æ Restrictions on afghan role in transit
Æ Little direct transit: port to destination
Pakistan Afghanistan Transit Treaty:
What is actually happening?
Æ Lack of confidence in existing overland infrastructure
Æ Unilateral Abrogation via the negative list and Excessive Customs
control
Æ Transit cargo restricted to Pakistan Railways
Æ Heavy Cash Deposits on containers and extra cost of their empty
return
Æ Jeopardizing the integrity of the cargo in containers by breaking the
seal affixed at origin
Æ Slow response to deal with complaints and disputes
Æ Lack of standardization in language, documents and procedures
Æ Out dated legal regime covering rail and road sectors (not supporting
multimodal operation)

The Solution:
Concession the Virtual Transit Corridor
Æ “Concession” the design, implementation, management and operation of the
large transit corridors such as Karachi - Kabul
Æ Public sector provision and O&M not successful
ÚScattered responsibilities in public sector
ÚPoor understanding by public sector of trading conditions and the
environment of transit
ÚPublic sector not quantifying economic and social impact by “transit
losses”—in effect this could make a case for subsidized concessions
Æ More efficient securing of revenues, protection of society, and facilitation
Æ Multi country regulator
Æ Proper design of Terms of Concession
Æ Need to avoid monopoly
Æ Can link up with on-going physical infrastructure concessions
Æ Propose forming a working group on exploring this further
For more details….

Æ This is work in progress.

Æ The study will be finalized by Jan 2005, and will be available.

Æ Can contact adurrani@worldbank.org