Afghanistan and Pakistan sign preferential trade deal to slash tariffs on key fruits, vegetables

Arab News

5 days ago

ISLAMABAD: Afghanistan and Pakistan have signed a Preferential Trade Agreement (PTA) to reduce tariffs on eight agricultural products, the Afghan embassy in Islamabad announced on Wednesday, in a rare move of economic cooperation between the two neighbors with often-tense ties.
The agreement, signed by senior commerce officials from both countries, will reduce customs duties on four Afghan exports to Pakistan — grapes, pomegranates, apples, and tomatoes — and four Pakistani exports to Afghanistan — mangoes, kinnows, bananas, and potatoes.
Tariff rates on these items, which previously exceeded 60%, will now be capped at 27%.
'This agreement will be effective for a period of one year, commencing on August 1, 2025,' the Afghan embassy said on X.
'It is renewable and also allows for the inclusion of additional items in the future.'
The deal was signed by Mullah Ahmadullah Zahid, Deputy Minister at Afghanistan's Ministry of Industry and Commerce, and Jawad Paul, Pakistan's Deputy Commerce Minister.
The agreement comes at a time of strained political and security relations between Kabul and Islamabad, marked by border closures, mutual accusations over cross-border militant activity, and reduced formal trade volumes since the Taliban returned to power in 2021.
Still, both countries remain heavily reliant on overland trade routes, and fruit exports have long played a vital role in seasonal cross-border commerce.
In the first half of 2025, Pakistan and Afghanistan's bilateral trade reached nearly $1 billion, with Afghan exports to Pakistan totaling $277 million and Pakistan's exports to Afghanistan reaching $712 million. This growth is partly attributed to increased Pakistani exports, including medical supplies, parboiled rice, and sugar. However, trade volume is still below potential, with estimates suggesting it could reach $8 to $10 billion annually if obstacles are overcome.
Obstacles to trade between Pakistan and Afghanistan include border closures, security concerns, and issues with trade facilitation. Specifically, frequent closures of border crossing points like Torkham and Spin Boldak, triggered by political tensions or security incidents, disrupt trade flows and cause financial losses for businesses. Additionally, challenges related to trade facilitation, customs procedures, and transit infrastructure further hinder the smooth movement of goods.