Delays at Torkham Border Crossing

Background

Pakistan is the largest export destination for Afghan goods. The proximity of the two countries with one another, their longstanding trade history, and direct access to markets make Pakistan an attractive export destination, especially fresh fruits and vegetables; notably grapes, pomegranates, cucumbers, tomatoes, apples and apricots. Afghanistan exports of fresh fruits and vegetables to Pakistan are reported $153 million in 2018 and more than $225 million in 2019, with grapes accounting for more than 191 million USD. Grapes which are the country’s most valuable exported product accounted for 20.1% of the country’s total trade.[1]

Fresh fruits and vegetables are exported to Pakistani markets mainly through the Torkham dry port. The seasonal nature of fresh fruits and vegetables means that exports to Pakistani markets reach their annual height during summer and autumn.

 

In recent years, infrastructure and operational capacity issues, and at times, political decisions have created challenges for Afghan traders of perishable goods during peak season. Media reports about Afghan fruits and vegetable perishing at the border are abound.[2] Against this backdrop, in November 2020, PriSEC received reports that 400 trucks carrying fresh fruits and vegetables were held up at the Torkham port.

 

Issue

In a consultation meeting in Afghanistan Chambers Federation (ACF) in October 2020 , the traders of Fresh Fruit and Vegetables Exporters Union raised customs clearance delays for trucks carrying perishable goods as an urgent concern. They said that an estimated 350-400 trucks carrying Fresh fruits and vegetables were held up at the Torkham border awaiting clearance. This delay was causing significant damage as these consignments of perishable goods had an estimated value of 10 million USD.

 

Traders also reported that it was possible to hasten the clearance process by paying a bribe. However, PriSEC was unable to verify these reports as traders were reluctant to make an official complaint.

 

The OFVP asked PriSEC to take the lead in coordinating efforts to support the private sector in resolving this issue as a top priority.

 

Efforts towards Resolution of the Issue

PriSEC provided expertise and technical solutions and recommended immediate actions to help resolve this issue, including direct engagement with relevant officials. PriSEC highlighted the lack of a dedicated lane for the clearance of perishable goods as a contributing factor in its briefing note. The current system at Torkham means that all trucks, including empty ones, queue in the same lane. PriSEC also identified a need for a coordination mechanism between transport companies and customs officials to facilitate the quick processing of trucks carrying perishable goods.

 

PriSEC met with H.E Minister of Industry and Commerce (MOIC), Nisar Ahmad Ghoryani, the Governor of Nangrahar, Ziaulhaq Amarkhil, and senior officials at the Ministry of Finance (MoF) to discuss this issue. The senior officials agreed to increase the number of trucks cleared at Torkham port from 400 to 700 per day. As per the FVP’s instruction, PriSEC will support developing a permanent mechanism for handling perishable goods at the Torkham port.

 

Following the decision on increasing the maximum number of trucks that are cleared at the port each day, a delegation composed of representatives of relevant state institutions, including the Ministry of Interior and the Chairperson of the Fresh Fruits and Vegetables Union, visited Torkham port the following day to facilitate the implantation of the decisions and observe the situation on the ground.

 

Current Status

PriSEC supported efforts to resolve issues related to the 350-400 trucks delayed at the border until a workable solution was found. Additional measures were put in place to avoid similar delays for the remainder of the 2021 peak season, specifically a rotation system to clear 1 truck carrying perishable goods for every 2 carrying non-perishable goods or empty containers. The Fresh Fruits and Vegetables Union reported, during this period, around 300-500 trucks cleared customs each day. This number includes trucks transporting perishable and non-perishable goods as well as empty containers. However, PriSEC has received reports that strongmen, including armed actors, continue to delay perishable goods in favor of their own consignments; and the Union has reported armed mafia in Nangarhar province who receive money from the empty trucks and release them and they stop the loaded consignments of the perishable goods.

 

Assessment/Analysis

In general, infrastructure and operational capacity issues are ubiquitous in Torkham and negatively impact trade relations well documented, and issues related to timing and capacity have been raised regularly. However, barriers to Afghan fruits and vegetables’ transportation create unique challenges due to their perishable nature. Since 2016, tighter border controls implemented by the government of Pakistan, together with delays in customs clearance procedures in Afghanistan, have contributed to a reduced volume of trade between the two countries. A 2017 article by the Pakistan daily Express Tribune quoted the Afghan Trade Commissioner in Peshawar Mirwais Yousufzai: “Trade between the two countries has scaled down from $2.5 billion per annum to $1.3 billion per annum in the past two years.”[3]

 

According to the Afghanistan Chambers Federation’s Executive Board, the current operational capacity for clearance of export cargo on the Torkham route is less than 400 truck per day. However, during peak season, an estimated 300 trucks reach Torkham, carrying perishable goods. This is one of the main contributors to frequent delays in Torkham, especially for shipments of fresh fruits and vegetables, which are prone to perish.

 

While the issue was resolved,  it was only resolved for this year and only after delays at the border had reached their tipping point leading to reports of an impending crisis with goods in danger of perishing at the border. Steps should be taken by way of proactive engagement to plan for, and facilitate, increased traffic at Torkham during high season and before they reach a crisis point. This would require high-level coordination in Kabul and Islamabad and on the ground in Torkham, which would pave the way for a permanent solution to this issue.

 

There are agreements between the two neighbors to facilitate trade, including the Afghanistan-Pakistan Transit Trade Agreement (APTTA), which was due to expire on 11 February 2021 but was extended pending final accord on a new agreement. Also, newly penned accords, including the Preferential Trade Agreement, were agreed to during the visit of Pakistan’s Prime Minister, Imran Khan, earlier this year. One important provision is the 2020 agreement for customs checkpoints to operate 24/7 on both sides of the border. However, traders report that, for the most part, customs staff leave their posts by 16:00. This indicates a disconnect between policy and action. In other words, the agreements are in place, but implementation is lagging. This contradicts the letter and the spirit of the countries’ World Trade Organization (WTO) and the South Asian Free Trade Area (SAFTA) commitments. This dynamic has also contributed to the shrinking share of Afghan fruit and vegetables in Pakistan markets as vendors unable to recoup the year-on-year losses associated with frequent border delays, and periodic closures are sourcing products from other countries. While these products are not as desirable to the Pakistani consumers, who prefer produce from Afghanistan, they offer more reliable supply chains to traders.

 

Recommendations

To address this issue, PriSEC proposes the following recommendations:

 

Prepare early and engage proactively – Due to its seasonal and recurring nature, it is possible to begin preparations in advance of peak season and taking proactive coordination measures. To this end, PriSEC’s Working Group 4 should establish a subcommittee to work with relevant state and private sector actors to ensure standards are in place well in advance of peak export season for fruits and vegetables.

 

Step up coordination on both sides of the border – The Office of the First Vice President and PriSEC should take the lead in ensuring coordination between relevant line ministries, including finance, transport, and commerce, to devise durable mechanisms to address this issue. These national coordination efforts should include the Nangarhar Provincial Governor, other relevant provincial authorities, and transportation agents (Kamesari). Furthermore, coordination efforts should also include engagement with the government of Pakistan to ensure that policies agreed to by respective national leaderships interpret into implementation on the ground at the border.

 

Prioritize clearance of perishable good during peak season – Put in place a rotation system that allows for the release of 3 trucks carrying perishable goods and 1 truck carrying non-perishable goods and/or empty containers during peak fruit and vegetable export season.

 

Balance clearance of perishable vs non-perishable good during the off-peak – The agreed to mechanism should allow for clearance of 1 truck carrying perishable and 1 truck of non-perishable goods and/or empty containers as standard practice in the off-season.

 

Develop infrastructure – Afghanistan should undertake a permanent solution for this issue, including increasing the number of lanes at the Torkham port to accommodate a minimum of 800 trucks per day. In addition, the provision of a dedicated lane for perishable goods would mitigate delays related to overcrowding at the border.

 

Increase working hours – Ensure that national leaders’ commitments to keep the ports operational 24/7 are implemented and adhered to.

 

Support bilateral high-level coordination – PriSEC should support MoIC in taking the lead in regular coordination between Islamabad and Kabul to ensure that issues are identified and resolved quickly. This coordination should include high-level discussion on existing gaps and agreements on further provisions to support increased trade between the two neighbors.

 

Build capacity – The Torkham port is well equipped and well-staffed. ASYCUDA is installed and operations. However, issues related to high staff turnover create gaps in knowledge and capacity among customs staff. A training and capacity building program should be developed and deployed as part of the induction of new staff. Periodic refresher modules for existing staff should also be considered.

 

Monitor compliance – PriSEC should provide technical support to develop a monitoring strategy to ensure that agreed mechanisms are adhered to at the border. The FVP is exploring the possibility of establishing a dedicated ombudsman and install CCTVs at Afghanistan’s port. This would allow the ombudsman’s monitoring team a real-time picture of the situation at the ports. This provision should also include daily customs clearance reports sent to the monitoring team, the FVP and PriSEC.

 

 

Potential impact

It is said that Agriculture is the backbone of the Afghan economy, and Pakistan, as Afghanistan’s leading trade partner, is the top destination for Afghan fruits and vegetable. The 2014 World Bank report, Islamic Republic of Afghanistan Agricultural Sector Review: Revitalizing Agriculture for Economic Growth, Job Creation and Food Security, made a “compelling case for investing in agriculture in Afghanistan,” which accounts for about one quarter of national GDP and is the second largest sector after services.”[4] According to the Review, agriculture employs 40 percent of the workforce and is one of two sectors (the other is mining) with the greatest protentional to drive economic growth, including job creation and revenue generation.  In this light, it’s not difficult to appreciate the economic impact of suspended trade during peak season, when hundreds of trucks carrying millions of dollars in perishable goods languish at the Torkham border, where their produce stands to spoil, especially in rising temperatures. In the first instance, a durable solution will positively impact Afghan traders’ ability to increase and solidify their market share, ensure livelihoods for Afghan citizens, particularly in rural areas and for women. In addition, it will help increase profits for other value chain actors such as fruit aggregators, wholesalers and transport companies, which will in term lead to increased urban jobs and enhanced private sector investment in the export of fresh fruits and vegetables. However, to fully understand positive outcomes, a comprehensive value chain impact study is recommended. Finally, a positive resolution will support the country’s ambitious revenue target of 216 billion AFN for 2021.[5]

 

As mentioned above, in recent years, the volume of trade between Afghanistan has steadily declined. The closures also have eroded business relationships based on “long-established system that relies heavily on trust: Pakistani fruit traders send advance payments to their Afghan counterparts, who then send the fruit after it’s harvested.” Finding a durable solution would go a long way in rebuilding the trust relationship between traders on both sides of the border and entice Pakistani vendor, who have opted for sourcing produce from other markets, to start importing Afghan fruits and vegetables with confidence.

 

Finally, producers and traders in the agriculture sector operate on low-profit margins, making them unable to absorb financial losses resulting from customs delays. In recent years, farmers and traders alike have complained that they have been unable to recoup losses incurred due to border closures and delays. A potential consequence of this could be that farmers might start investing their resources in poppy production, which offers higher profit margins and virtually no risk of perishing. This would confound Afghanistan’s counter-narcotics efforts and contribute to the growth of the illicit economy.

 

Resources:

[1] http://www.worldstopexports.com/afghanistans-top-10-exports/

[2] These are some examples: https://www.freshplaza.com/article/2188413/pakistan-refuses-afghan-fruit-imports-at-torkham-gate/; https://www.voanews.com/east-asia/border-closure-hurts-afghan-pakistan-produce-trade; https://www.dawn.com/news/1305951; https://www.aa.com.tr/en/asia-pacific/afghan-traders-decry-curbs-on-imports-by-pakistan/1877485.

[3] https://tribune.com.pk/story/1359335/reaping-losses-torkham-border-controls-drive-fruit-vendors-edge

[4] http://documents1.worldbank.org/curated/en/245541467973233146/pdf/AUS9779-REVISED-WP-PUBLIC-Box391431B-Final-Afghanistan-ASR-web-October-31-2014.pdf

[5] Afghanistan National Budget for Fiscal Year 1400 https://www.budgetmof.gov.af/images/stories/DGB/BPRD/National%20Budget/1400_Budget/1400%20National%20Budget%20Decree%20(Enacted)%20Dari.pdf

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