The Importance Of Pakistan-Afghanistan Barter Trade

Barter is the oldest form of commerce between the two parties without using money in the transaction. This system has been practiced for centuries and long before money was introduced.

After the fall of Kabul and US withdrawal from Afghanistan, the economic and humanitarian crisis in Afghanistan is worsening. Pakistan in not only providing humanitarian and economic assistance to Afghanistan but has increased its bilateral cooperation with Afghanistan and giving it trade-related concessions, because the war-torn country is facing severe economic crisis.

Afghanistan and Iran are Important trading partners of Pakistan, and to transform excellent diplomatic and trade relations with the two countries government of Pakistan has allowed import and export under barter trade with Iran and Afghanistan. According to ministry of Commerce “Barter trade has tremendous importance to increase regional trade to overcome foreign exchange and other challenges”.

The initiative of Barter trade has taken because of dollars shortages and due to non-existence of a banking system in Afghanistan and freezing of assets belonging to the Afghan and Iran by US. Under barter trade mechanism the essential items would be provided to Afghanistan and Iran in return of their commodities.

Pakistani official, who deals directly with bilateral Afghan matters also said “We have allowed Afghan importers to buy our products in Pakistani currency and have given them the freedom to export any items to Pakistan to facilitate bilateral trade,”. He described that the government of Pakistan has a plan to establish new crossings on the border to further facilitate commercial activities. Pakistani traders are happy with the government announcement that it would open additional border crossings. They said that with this gov’t decision bilateral trade with Afghanistan will increase.

There has been some progress on the proposal of barter trade between Afghanistan and Pakistan as both countries have setup special committees to formulate recommendations. The committee will formulate their recommendations for trade under the barter system and present them to both the governments.

The Vice President of Pak-Afghan Joint Chamber of Commerce Zia-ul-Haq Sarhadi welcomed the decision, saying that it is a positive step forward for the revival and promotion of trade between the two countries.

Since the Taliban takeover in Kabul, Afghan exports to Pakistan especially fruit and vegetable exports have increased and Pakistan’s export to Afghanistan decreased, while sales tax on Afghan fruits is zero. Pakistan wants to enhance trade relations with Afghanistan and has taken important steps to boost bilateral trade. Afghan Foreign Ministry spokesman “Abdul Qahar Balkhi said in a statement that the ministry welcomes the steps taken by Pakistan and called for an increase in trade between the two countries”.

Afghanistan Chamber of Commerce and Investment (ACCI) said that this agreement, will initially involve trade in 20 times and the number of items will increase further. Syed Zaman Hashimi, former head of ACCI had said at a meeting in February 2020: “The government, in coordination with diplomatic channels in both countries, shall work effectively for a mutually beneficial barter trade mechanism. This can be more beneficial for the people of Afghanistan.”

The President of SAARC Chamber of Commerce and Industry Iftikhar Ali Malik has said that Pakistan’s prudent decision of barter trade with Afghanistan and Iran would further strengthen trilateral trade relations and foster existing economic ties among the three neighboring Muslim countries.

The strong relations between the two countries are need of the hour, especially trade and economic relations because trade and economic relations are the main steps towards strengthening, enhancing cooperation and better relations. Pakistan is taking every step to give easy access of its market to Afghan goods.

Now both countries should try to build mutual trust and cooperation in all fields which is in the interest of both countries for achieving economic progress. They have to make business-friendly policies, better trade mechanisms, and effective investment and joint venture policies and should have to remove all hurdles which are in the way of bilateral trade and relations.

According to some businessmen and economists, its time for Pakistan to see Afghanistan from a geo-economic angle instead of only looking at the neighboring country. Dr Abid Qaiyum Suleri the Executive Director of Sustainable Development Policy Institute.said, “if Pakistan resorts to practice barter trade with Afghanistan, it would be a great help to the neighboring country as it will resolve the issue of food supply for the masses”.