HOW PAKISTANI ECONOMY BECOME STABLE THROUGH MARITIME TRADE?

In order to ensure economic and political security and reliability, the world concluded after the WWII that significant realignment of international economic entities was expected. Additionally, a number of nations have begun the journey towards economic and trade connection that will eventually lead to integration and freight efficiency for collective gain.

It would be wise to imitate the European Union’s and, more recently, ASEAN’s pioneering roles. The inclusion of such programs has always included regional integration through transit trade. Because of Pakistan’s geostrategic position as a doorway to Central Asia and even beyond, using transit commerce as a springboard for reciprocal economic and related benefits is a realistic alternative that has, up until recently, received insufficient attention. Thankfully, with the states renewed focus on regional connections, quick efforts are underway in this area.

Together, the Central Asian border region of Uzbekistan, Kirgizstan, Kazakhstan, Tajikistan, the neighboring regions of Russia, and the Xinjiang China region has a population of 120 million people, a GDP of US$ 800 billion, US$ 140 billion in purchases, and US$ 160 billion in sales. The Russian ports of St. Petersburg and Kaliningrad on the Baltic Sea, Vladivostok on the Pacific, and Murmansk on the Barents Sea, Chinese ports on its Eastern coast, and Pakistani seaport of Gwadar, Karachi, and Harbor Qasim provide direct exposure to the waters for this region’s US$300 billion worth of global trade.

Nevertheless, the trip to the sea via Pakistani harbors is quicker, and the total travel time is reduced by between one five days, based on the final location. In emphasizing the potential advantages of an efficient logistics network, the National Freight and Logistics Policy of Pakistan, 2021 noted that for every day less that cargo passes in a distribution chain, the associated trade can grow by 4.5%. Hence, using the terminals of Gwadar, Karachi, and Terminal Qasim and transiting freight through Pakistan to different locations is economically the most feasible method of transportation for the abovementioned region, which has global trade of US$ 300 billion.

Regrettably, mainly Afghanistan has been included in the major transport commerce via Pakistan over the years. This country’s whole international commerce in 2019–20 was US$ 8.5 billion. Out of this, 2.5 million tons of cargo weighing US$ 5.5 billion passed via Pakistan. It is important to note that each 20-foot compartment of goods in transit via Pakistan contributes an estimate of US$ 2000 to the country’s economy in the form of transportation costs, toll roads, health insurer premiums for the security provided against goods in transit, work opportunities, and ancillary advantages.

The 2.5 million tons of Afghan commerce worth US$5.5 billion passing via Pakistan in 2019–20 generated a least profit of US$0.25 billion, indicating that the transit commerce contributes 4.6% of the worth of the transited commodities to the economy of the trading nation. Pakistan can succeed in attracting the extra transit commerce of $300 through establishment of maintain adequate and accommodating regulation, which will yearly pump US$ 14 billion into its market.

The honorable Head Of State ordered that effective action be conducted to expand transit commerce via Pakistan in November 2019 in light of the advantages of doing so that were previously indicated. Under the able guidance of the Chairman Approving Dr. Ashfaq Ahmad Khan, Participant Customs (operations), Tariq Huda, Signatory Customs (Policy), Saeed Jadoon, the defunct Director General Transit Trade, Ahmad Raza, and the current Director General Iftikhar Ahmad, significant headway has been made it toward the goals date by the Prime Minister since before within about a two-year period.

First, three significant adjustments were made to the current Afghan Transit Trade regulation in terms of improving efficiency and decrease waiting times. Individual free automatic evaluation has taken the place of physical cargo evaluation, and once-off submissions are now the only requirements. In accordance with SRO 1013(I)/2021 dated 5.8.2021, rotational insurance guarantees were adopted in place of GD-wise insurance guarantees. In January 2022, the new system for Afghan Transit Trade is anticipated to be implemented. When the road-air corridor was established via CGO 10/2021 dated 22.11.2021, it was yet another historic step towards the extension of Afghan Transport Commerce. It stipulated that Afghan merchandise might arrive at Pakistan’s Islamabad International Airport and then be transported by land to Torkham, the crossings station. There is a strong possibility that this service would also be added to Peshawar and Quetta airports after its effective working at Islamabad airport.

During the Head of State of Pakistan’s trip to Uzbekistan in July 2021, the Ministry of Commerce finalized the Transit Accord with the Central Asian nation, which has a membership of 30 million and an annual foreign commerce of US$38 billion. A few months later, on 11.11.2022, Pakistan Customs released SRO 1466(I)/2021, which was the completed version of the relevant rules. The same facilitating mechanisms that had been put in place for Afghan Transit Trade were described in these regulations. However, provisions for pass ships at Karachi have also been implemented under Uzbekistan Transit Trade Regulations in response to the expansion of the logistics industry in the nation. In March 2022, this new system for transit trade is anticipated to go into effect.

The Transportation Agreements between Pakistan and Uzbekistan was completed during the Head of State of Pakistan’s visit to the Central Asian country in July 2021. Uzbekistan has a population of 30 million people and conducts US$38 billion of overseas trade annually. The finished version of the pertinent rules, SRO 1466(I)/2021, was published by Pakistan Revenue some few months ago on 11.11.2022. These guidelines outlined the same facilitation techniques that had been implemented for Afghan Transit Trade. Nonetheless, in reaction to the country’s growing logistics sector, rules for transit ships at Karachi have also been put into place under Uzbekistan Transit Customs Duties. This new transportation commerce network is expected to be implemented in March 2022.

Together with the two national transport treaties listed above, Pakistan has been a member of the Quadrilateral Transit Trade Agreement (QTTA) since 1995. China, Kazakhstan, and Kirghizstan make up the other three parties to this multinational pact. Nevertheless, because the rules for implementing the QTTA were never created, there hasn’t been any transit commerce through Pakistan as of yet. The Directorate General of Transit Trade also started the QTTA Rules preparatory work out on 10.1.2022.

Last but not least, Pakistan has not yet fully embraced one transit convention, known as Transportation International Routiers (TIR), despite its enormous promise for regional integration. The International Road Transport Union (IRU), which was established in 1948 in Geneva to improve global road travel in Europe, is the origin of this agreement. It created a method in 1949 for moving commodities from nation A to country B without having them inspected in the nations. IRU was given the responsibility of overseeing this system in 1959, ten years after the UN Economic Commission for Europe had transformed it into a Universal Declaration. The idea of receptacles and multimodal transportation was added to the new TIR treaty, which was accepted in 1975. Even though Pakistan signed the TIR treaty in 2015, until 2020 no real progress has been made in utilizing this highly beneficial framework.

The scarcity of the TIR system was also looked at shortly after the Pakistani Head Of state issued directives for the enhancement of transshipment. The established rules’ bottlenecks were eliminated, and on December 30, 2020, a new SRO 1433 (I)/2020 was published; it decreased the number of vehicles required as a least for a transport operator under TIR from 5 to 1, and it substituted a health coverage warranty for the security deposit as a form of security. The protocol for road-sea multimodal TIR operation was devised and sent to the International Transport Union when it was understood that the true potential of TIR could not be achieved only if the route by water is combined with the trip by road (IRU). In September 2021, IRU authorized the aforementioned operation. It is now being implemented in WeBOC.

The CMR Agreement of 1956 defines the contract agreements of the originator, transporter, and recipient with regard to the shipment’s journey by road. In August 2021, Pakistan ratified this pact. In September 2021, draught regulations for CMR assignment notes were produced and delivered to the relevant Ministries for feedback. In December 2021, the 19 immigration stations that had been informed by FBR about TIR movements were made available for import, export, and transit procedures in the Customs Computerized network.

It is important to note that the United Nations Logistic Cell (UNLC) transferred two export shipments under the TIR government from Karachi to Turkey in September 2021. These shipments travelled 4890 kilometers and crossed the land borders of Pakistan, Iran, and Turkey to make their final stop in 11 days. It is important to note that the typical marine voyage from the Red Sea to the Mediterranean Sea takes about 35 days.

Pakistan was one of the first 8 of the seventy-seven member states to choose and be authorized for the e-TIR venture by the United Nations Economic Commission for Europe. The UNECE had envisioned a paper-free TIR government. 30% of the program, the beginning and planning phase, has been finished. Pakistan was one of the first few members to sign the agreement with IRU for the deployment of digital TIR in December 2021, which is an intermediate variant of TIR that is a step approaching e-TIR.

The increase of transit commerce is probably going to aid in bolstering political connections with the respective countries in addition to providing direct financial advantage at 4.6% of the value of products passing via Pakistan. Also, the effort is anticipated to boost travel to and from Pakistan. Also, there is a strong likelihood that Pakistani exporters will be able to increase their part of the US$140 billion regional import market and take advantage of reduced routes.  It is firmly anticipated that by maintaining the current push and momentum for expanding transit commerce, the quantity of global commerce that passes via Pakistan’s territory each year will soon see massive increase, creating Pakistan the world’s greatest transit state.