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Joining WTO to help resolve Afghan transit trade problems

Joining WTO to help resolve Afghan transit trade problems

Dec 20, 2015 - 20:02

KABULinfo-icon (Pajhwok): The Presidential Palace on Sunday termed Afghanistaninfo-icon’s accession to the Worldinfo-icon Trade Organization (WTO) “a great opportunity to improve trade relations with the international community.”

An analytical report published on the Office of Administrative Affairs’ website said the WTO membership would help resolve issues concerning Afghanistan’s transit trade and would have a positive impact on production at home and attracting foreign direct investment.

The announcement of Afghanistan becoming member of the WTO was made at the body's 10th Ministerial Conference (MC10) in the Kenyan capital of Nairobi.

Economy ministers from over 160 states attended the four-day MC10, aimed at defining the course of multilateral trade relations for the coming years.

The Afghan delegation, which attended the ceremony, was headed by first deputy chief executive officer (CEO) Eng. Mohammad Khan.

Afghanistan had the status of observer at the WTO for some 11 years, with the Afghan government struggling for a full membership status since then.

At the ceremony in Nairobi, Mohammad Khan termed the accession of Afghanistan to WTO “a positive development for the country.”

He said WTO membership would help improve the international community’s confidence on Afghanistan and encourage foreign investment for economic development of the war-torn country.

He said the development would help resolve issues relating to Afghan transit trade in the region, especially with Pakistaninfo-icon.

According to Khan, the WTO membership is vital for Afghanistan because most of world’s trade takes place under terms and conditions of this organization.

Earlier, Afghan Deputy Minister for Commerce and Industries Mozammil Shinwari had told a foreign news agency that the country's WTO membership will give it "an upper hand" when seeking preferential trade terms with its neighboring states.

A statement from the United States Agency for International Development (USAIDinfo-icon) confirmed that WTO had formally adopted Afghanistan’s terms of accession at its 10th Ministerial Conference in Nairobi on Thursday. 

Afghanistan will have until June 2016 to ratify the deal and formally become WTO’s 164th member, joining a global trading organization that accounts for about 95 percent of the world’s commerce, the statement said.

In preparation, Afghanistan engaged in ambitious legal and administrative reforms in areas such as trade policy, customs, food safety, animal and plant healthinfo-icon, intellectual property, and standardization. 

As many as 97 percent trade of the world takes place among WTO members and Afghanistan as members of the organization would be able to improve its trade ties with other countries and protect its legal rights for trade in the region and the world.

Afghanistan’s neighbors such as Pakistan, India, Tajikistan, Kirgizstan, Kazakhstan, Turkey and China are full members of WTO, while Iran, Uzbekistan and Turkmenistan are yet to get the membership.

The Office of Administrative Affairs on its website said Afghanistan’s WTO membership would help improve domestic production.

Legal transit trade rights

Afghanistan is a land-lock country and becoming WTO member would help it use its legal rights in area of transit trade with its neighbor and in this regard WTO’s cooperation will be helpful.

Neighboring countries with WTO membership are bound to accept Afghanistan’s legal rights to transit and facilitate Afghanistan’s transit goods and services.

In case of denial of the legal transit rights, Afghanistan could complain to the world body’s complaints commission and its judgment could punish and panelize the accused country.

Afghan traders always complain against Pakistan for denial of Afghanistan transit rights that cause delay and losses of goods.

The WTO membership enables Afghanistan to officially complain to the trade body against Pakistan about violations of its transit rights.

Iran is another important neighbour for transit of Afghan goods. Fortunately Afghanistan got the WTO membership earlier than Iran which is in the process of getting the membership so it would make Iran not to create hurdles for Afghan transit trade and instead fulfill Afghanistan’s requirements in this regard.

Special privileges for improvement of domestic production

The main concern of economic analysts is that WTO membership would imbalance Afghan trade in the face of excessive imports when Afghan domestic products would be unable to compete with foreign goods.

But the package the WTO offers to Afghanistan has some special privileges for reaching self-sufficiency and the agreed taxes on imports are higher than the current taxes imposed by the Afghan government.

For instance, Afghanistan can levy up to 36 percent tax on import of agricultural goods under WTO membership, which would enable domestic agricultural products to compete with foreign ones.

For industrial goods, the government could bring up to a 63 percent increase in duties on imports and it is also a chance for Afghanistan to support domestic products.

Attracting foreign investment

The WTO membership means giving boost to Afghanistan’s open market and meeting all standards of dealing with international market.

All WTO member countries will help Afghanistan reform its institutions, ensure good governance and fight corruption to enable the government to adopt international trade standards. The reforms will encourage domestic and foreign investors to show their interest in making investments in Afghanistan.

The vast untapped natural resources and workforce in Afghanistan would encourage international companies to open their branches in Afghanistan, something that would alleviate poverty and generate job opportunities for people and would help improve the country’s economic situation.



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