PAJCCI, as a lead chamber on the barter trade committee across the border, has started deliberations focused on developing the practical, sustainable and agile barter trade mechanism with Afghanistan. Afghan side, under the leadership of Khan Jan Alokozai, Co-Chairman PAJCCI, has already conducted the first meeting. In contrast, on the Pakistan side, under Zubair Motiwala, Chairman PAJCCI initiated the first session in Karachi, attended by various relevant trade associations and representatives of different chambers. The Ministry of Commerce nominated PAJCCI to formulate a Pakistan side barter trade committee to deliberate multiple options and methods to develop final recommendations, which both governments will then approve.
The mechanism will be developed under the guidelines provided by the Ministry of Commerce, drawing certain parallels from PAK-IRAN barter trade and PAK-AFG trading dynamics. Barter trade can serve as an alternative to monetary transactions, especially when Afghanistan lacks an operational banking channel and faces international sanctions. In contrast, banks continue refusing to process third-party payments.
The expiry of the E-form and EIF waiver is due on 30th June 2022; hence the formation of the mechanism is a matter of grave urgency; however, it needs more time as an agreement between Pakistan and Iran has a different background, is permanent & Oil-Food based sectoral engagement whereas trading with Afghanistan is based on diversified products and via multiple borders based on local cross border industries. It will also require updating the Pakistan Single Window system with the option of barter trade supporting the easy processing of sales tax refunds and duty drawbacks in case of exports, special modules, and handling by Pakistan Customs. Motiwala stated that the business community is already facing delays and issues in obtaining sales tax refunds and duty drawbacks through land routes; hence careful etiquette needs to be developed to avoid such discrepancies while conducting barter trade.
Barter trade with Afghanistan will only be successful if trade barriers are removed. The workaround is developed beforehand to process goods’ documentation and clearance with the final settlement of payments between traders via an independent and credible entity.
Zubair Motiwala; Chairman of PAJCCI, remarked that the barter mechanism would need time to evolve, and its TORs need to be carefully devised; hence the waiver of EIF and E form must be approved for a further six months, giving ample time for committees across the border to conduct deliberations in this context. He urged the government to immediately support the extended waiver and ensure that the business community’s voice is given weightage in improving the economy, especially the trade with its nearest neighbor, which has vast opportunities at a very low cost.
He said that the barter trade payment settlement would require a very stringent and credible mechanism that all parties and TOR must trust must be developed, which must undertake all prevailing conditions and unique requirements of both sides. The system shall be neutral and transparent while supporting smooth trading activities by PAJCCI and government entities; Customs, FBR, State Bank, and Ministry of Commerce.
PAJCCI will continue further sessions with multiple stakeholders to gather deep insights and draw from business community experience before submission of final recommendations.