While India is not in the loop, China is very much in the APTTA picture. This is clear from the go ahead to the transit of goods to Afghanistan through Sust border Post. This is an unusual development. First, Pak-China border was never allowed to transport Afghan bound goods. Second, Chinese goods are smuggled through Sust into Pakistan and Afghanistan alike. The smuggling will become a flood. Thirdly and most importantly, Sust doesn’t give any advantage to either Pakistan or Afghanistan. In fact, Kabul will find it prohibitively costly to transport goods through Sust, which is about 1200 km away where as Karachi, the traditional unloading port for Afghan goods is at a distance of under 1000km.  

Pakistan leadership appears to have overruled all technical objections to create a green channel to the fair-weather friend that China has been since 1962 when the two countries became fairly close to each other. President Asif Ali made his fifth visit in July to Beijing since October 2008. And that visit lacked the display of usual bonhomie and in fact was marked by cold vibes. So, it is possible, the Mr. Ten percent opted for the time tested trade route to please his Chinese friends.

How his government will grapple with smuggling and truckers mark up which have been undermining the already fragile Pakistan economy remains to be seen since Islamabad has big plans for the Central Asian market. One negative fall-out could be Pakistan finding itself out priced in countries like Tajikistan. Already, Pakistan cement has become costly with its price quoted at three times the price of the nearest competitor.

So, what tilted the Islamabad scales in favour of APTTA?  Since one of the troika of ‘A’s is openly in favour of the deal, the second was brought into the picture after the visiting  Secretary of State had a long meeting with the army chief, Gen Pervez Kayani. After the Hillary-Kayani meeting, the General Headquarters and the Inter Services Intelligence (ISI) who have big stakes in the Afghan theatre overruled the concerns of the Commerce Ministry which was insisting on ironclad guarantees against ‘unauthorised’ trade.  

A signed dispatch in the Karachi business daily, ‘Business Recorder’ (July 20) quoted Commerce Ministry officials as saying, ‘What measurers we had suggested to the government with regard to smuggling have not been given weight’.  Only one power structure has the capacity and ability to stand up to such pressures. And it is the army and its ISI. Both were completely on board the transit trade agreement with Afghanistan, which, in a manner of speaking, guarantees for its successful implementation.

Pakistan government is selling APTTA to its people as an opening to the multi-billion dollar Central Asian market and the bridge over trust deficit with the neighbours’. It has lined up noted analysts like Haroun Mir, who expect Afghan-Pak trade turnover to go up from $1.5 billion a year to $ 5 billion a year by 2015. And Michael Capstick, Afghanistan country director for Peace Dividend Trust — a charity working to boost economic recovery — said ‘The deal looks to create jobs in trucking, shipping, freight forwarding, brokerage services and banking, and cut trading delays’.

 Pakistan can hope to become a major trade corridor through the Karachi and Gwadar seaports just like Iran which is developing a free trade zone at the Chahbahar seaport on the Makran coast in its Sistan-Balochistan province. This Iranian port is just a few kilometers away from Gwadar which has come up with as pearl in Chinese maritime garland.

Afghanistan also has chipped in with its Finance Minister Omar Zakhilwal saying, “It symbolises our commitment to ongoing cooperation between our two governments to build regional prosperity”. Almost 50 percent of Afghanistan’s trade is with five neighbours — Pakistan, Iran, Tajikistan, Turkmenistan and Uzbekistan.

But, if the reaction to the agreement featured in Pakistan’s elite English media and the down-to-earth Urdu press is taken as a barometer to the public mood, the effort has fallen flat.  The business community of the twin cities of Rawalpindi and Islamabad said the government had conceded too much in the agreement.  Rawalpindi Chamber of Commerce and Industry (RCCI) President Kashif Shabbir cautioned that APTTA might prove destructive for the local industry.

An editorial in a business daily said the trade deal reflected not the domestic political considerations but US objectives in the region, which include enhancing trade between Afghanistan and India requiring the opening of the Wagah border.   For the Frontier Post from Peshawar, the APTTA is simply a ‘national ignominy’. It castigated President Zardari as a proven American stooge and saw in the trade deal the hand of ‘irresistibly formidable US industrial-military complex’ and ‘the powerful India caucus in the US Congress’. And wondered aloud: ‘What is it that has enslaved the Islamabad establishment so obediently to the overlordship of an unquenchably demanding Washington?’

While the ruling People’s Party of Pakistan (PPP) and the main opposition, Pakistan Muslim League (Nawaz) have little time to spare for trade issues, embroiled as they are in issues that are threatening the status quo, other parties, notably, Muttahida Qaumi Movement (MQM), have come out openly to denounce the trade deal. MQM, which is a partner in the Zardari government, is angry that it was not taken into confidence on APTTA. Party senior and Minister for Overseas Pakistanis Dr Farooq Sattar met Prime Minister Yousuf Raza Gilani and conveyed the reservations. Significantly, the MQM leader also raised his finger at the potential for increased smuggling under the APTTA.

The Pakistan Muttahida Kissan Mahaz (PMKM) President Ayub Khan said only India stands to benefit because it could sell goods to Afghanistan and other neighboring countries hampering Pak-Afghan trade worth $200-400 billion.  The entire nation, he said in Lahore, has expressed its anger and disappointment over the agreement.

For the Pakistan observers, particularly the analysts based in the Big Apple, New York, the Pakistani reaction to US brokered trade deal with Afghanistan, should be gobbledygook. It also could appear as a traditional Pakistani reflection action of seeing Indian phantoms at every corner and as a time tested Pakistani guerilla techniques to ambush Delhi in every sub-continental twist and turn. Because, India doesn’t figure directly anywhere in APTTA fine print.  

In fact, APTTA clearly shows that Pakistan has stuck to its guns on refusing to let Afghan imports from India through the Wagah border post (near Amritsar, India). The permission is to let Afghan exports to India pass through Wagah. ‘Afghan trucks will be allowed access on designated routes up to Wagah where the cargo will be off-loaded on the Indian trucks back to back’, the agreement says.

There is no denying that Duchess Hillary, as the Frontier Post likes to describe the US Secretary of State,  would have been pleased had the Afghan trucks been allowed, instead of returning empty, to carry Indian perishables for the Kabul market.  The concession, indeed only worthwhile concession, Pakistan granted to Afghanistan is waiver of visas for Afghan truck drivers and their helpers. They will get permits to drive through Pakistan to Karachi, Gwadar or Wagah. For issuing permits biometric devices will be installed at the entry points that will be established by the two countries.

Another concession, if it can be termed so is that Afghanistan is allowed to use its own trucks to carry export goods to India through the Wagah border. This was not the case under the earlier trade agreement signed in 1965. Strictly speaking, this is not a concession to Afghanistan. Most Pakistan truck operators are unwilling to send their vehicles to Afghanistan or transport Kabul bound NATO cargo for fear of coming under the Taliban bullets. To overcome the hiccup, the Afghan authorities started turning to their Northern road routes in recent months.

Yet, voices are becoming loud and louder that “back to back transfer of Afghan cargo on Indian trucks” also meant that Afghanistan could purchase Indian goods and then transfer these through trucks to Kabul. Pakistan’s commerce secretary Zafar Mehmood’s assertion that India will not be able to export its products or goods to Afghanistan under the current arrangement is getting drowned. Islamabad hasn’t given the most favoured nation (MFN) status to New Delhi nor does its trade with India take place through Wagah, except for some items on which decisions are taken on a case-to-case basis, to quote Zafar’s interview to the Karachi daily, Dawn (July 20)

Both Afghanistan and Pakistan have hit upon the mechanism of what they call ‘Side letter’ to address issues related to Indian exports for Afghanistan. The ‘Side Letter’ gives Pakistan’s promise to Afghanistan that it will make a ‘feasible proposal’ in this regard at ‘an appropriate time’ in future. However, the ‘Side Letter’ willn’t be a part of the APTTA,” according to a ‘record note’ signed by commerce and trade ministers of the two countries. Zafar Mehmood is clear that even the ‘side letter is a non-binding understanding’. Because Pakistan and India have many miles to go before they can establish normal trade ties.

Pakistan’s Federal Minister for Information and Broadcasting Qamar Zaman Kaira also has joined the damage control over APTTA. “Under the Pak-Afghan transit trade arrangement, only transport of trade goods from Afghanistan will be allowed and that too up to Wagah border only. No Indian goods will be transported to Afghanistan through this route”, he told a press conference held at the Prime Minister Secretariat in Islamabad on July 20.

He prefaced his media interaction with the observation that ‘Confusion is prevailing from the very first day and reports, editorials and special reports contrary to the facts and against the interests of the country are being published’.

And, the minister made it clear that ‘only a letter of understanding’ on A-P Transit Trade has been signed till now and a ‘MoU will be signed only after approval of the cabinet’ after which it would become a bilateral agreement.

The minister’s remark and the outcry in the media which appears orchestrated give rise to the question: Is the military establishment entertaining second thoughts over the APTTA?

Things will become clear after the dust over the high profile International Conference hosted by President Hamid Karzai in Kabul settles down and the GHQ gets to see and read the fine print on the balance sheet. For the present this much is clear. It has put in place the roll back option, true to its natural instinct on matters bilateral.