COMMERCE MINISTER OUTLINES VISION FOR AF-PAK TRANSIT TRADE TALKS

C O N F I D E N T I A L SECTION 01 OF 02 KABUL 002965



SIPDIS



SRAP FOR MARY BETH GOODMAN AND BOB DEUTSCH

DEPT PASS USTR DEANGELIS



E.O. 12958: DECL: 09/23/2019

TAGS: ETRD, EAGR, EAID, PREL, AF, PK

SUBJECT: Commerce Minister Outlines Vision for AF-PAK Transit Trade

Talks



REF: KABUL 2825



Classified By: CDDEA Ambassador E. Anthony Wayne reasons 1.4(b) and

(d).



1) (C) Summary: Access for Afghan trucks through Pakistan to its

Wagah border crossing with India is "absolutely essential" for the

Afghan government to conclude the Afghanistan-Pakistan Transit Trade

Agreement (APTTA),Commerce and Industry Minister Shahrani said

September 23. In return for unimpeded access to Wagah, Afghanistan

is willing to include language addressing Pakistan's concerns about

re-export/smuggling. Shahrani said he will ask USG help in

encouraging Pakistan to be more forthcoming when Shahrani visits

Washington in October (septel). In particular, Shahrani hopes the

U.S. will press Islamabad to send their Commerce Minister Makhdoom

Amin Fahim to the upcoming trilateral meeting in Washington

(tentatively slated for late November) to ensure APTTA remains a

central element of a pro-growth strategy for both countries. In a

meeting earlier in September, Afghanistan's lead APTTA negotiator,

Commerce Deputy Minister Farhadi had also stressed the Government of

the Islamic Republic of Afghanistan's (GIRoA) belief that both

parties could sign the APTTA by the end of the year. Farhadi noted

Afghanistan's chief negotiating goals for the upcoming fourth

negotiation round (slated for October 10-12 in Kabul) are to reach

agreement on the transportation protocols, including the new railway

article, and dispute settlement resolution mechanisms. End summary.



Shahrani Focused on APTTA

- - - - - - - - - - - - -



2. (C) Meeting with Senior Deputy Coordinating Director for

Development and Economic Affairs and Econ Counselor September 23,

Commerce and Industry Minister Shahrani stressed he recently briefed

the Afghan cabinet on APTTA, and it had unanimously agreed

Afghanistan's unimpeded access to Pakistan's Wagah border crossing

with India is essential to the Transit Trade Treaty's successful

conclusion. Noting that Afghanistan's access to the burgeoning

Indian market is critical to the Afghan government's economic growth

strategy, Shahrani said the 1967 UN convention on landlocked

countries clearly supports Afghanistan's position. He added

Afghanistan places no barriers on Pakistani trade through Afghanistan

to Central Asia and that Afghanistan simply seeks reciprocal

treatment.



Smuggling/re-export concerns

- - - - - - - - - - - - - -



3. (C) Responding to emboffs' questions, Shahrani said Pakistan is

worried about "re-exports," i.e., smuggling, along the

Afghan-Pakistani border and said that the Afghan government is

committed to complying with GOP security and anti-smuggling concerns.

Shahrani argued, however, that the problematic re-export situation

is actually occurring more in Pakistan's Federally Administered

Tribal Areas (FATA) where truck loads destined for Afghanistan are

increasingly unloaded for resale in Pakistan rather than re-exported

from Afghan territory. Shahrani stressed the GIRoA is willing to

include Pakistan's draft anti-smuggling language in the APTTA, if it

would give Afghanistan the access it needs/wants to Wagah and India's

growing markets for fruits, dried fruits, nuts, and other Afghan

products. He added that the Afghan government also supports the

USAID-funded joint assessment study of the economic impact of

re-exports, expected to take six to twelve months to complete.



4. (C) Shahrani claimed many Pakistani authorities, particularly in

the security forces, unofficially obstruct anti-smuggling actions

since smuggling creates thousands of jobs in Pakistan's FATA adjacent

to Afghanistan. Shahrani opined that the Pakistan Government is

hesitant to dismantle these FATA smuggling operations for fear that

increased unemployment and poverty would drive new recruits into

insurgency groups. The Minister also noted the major Afghan,

Pakistan, and international coalition military operations underway in

or near the border and suggested this reality argues for Islamabad to

take a different approach to the issue in the transit trade talks.



Looking for Fahim

- - - - - - - - -



5. (C) Shahrani observed he had to cancel his participation in the

third round of APTTA talks in August because Pakistan's Commerce

Minister Makhdoom Amin Fahim was unable to participate. In early

September Shahrani again sought a meeting with Fahim in Pakistan, but

Fahim was not in country. Shahrani requested USG assistance to

encourage inclusion of Minister Fahim in the Pakistani delegation to

the upcoming Washington trilateral, because an inter-ministerial

exchange is crucial to keep APTTA on track. Shahrani described Fahim

as a "clean" minister with a solid reputation. In this light,

Shahrani reiterated his personal belief that any effort to foster a



KABUL 00002965 002 OF 002





good rapport between both Commerce Ministers may prove key to

successful conclusion of APTTA by the end of the 2009.



Commerce Ministry's APTTA Lead Negotiator Optimistic

- - - - - - - - - - - - - - - - - - - - - - - - - -



6. (C) In an earlier meeting (September 5),Afghanistan's Lead APTTA

Negotiator Farhadi had also stressed his minister's belief that both

parties could sign APTTA by the end of the year. He also noted

Afghanistan's bottom line is access for Afghan trucks to the Wagah

border crossing. Farhadi said Pakistan's principal goal is to

resolve smuggling issues and obtain Afghanistan's help in bringing

the Indian government back to the table for the Composite Dialogue

with Pakistan. (See para 9.)



Round Four Challenges

- - - - - - - - - - -



7. (SBU) During the upcoming APTTA round slated for October 10-12 in

Kabul, Farhadi said the two sides need to complete the transport

protocol and develop the rail protocol, both introduced during Round

Three in Islamabad. The dispute settlement mechanism is particularly

important for the Afghan side because they anticipate implementation

issues down the road. While the Pakistani team agreed to the

principle of arbitration during Round Three, it did not agree to

specifics of the dispute settlement mechanism. The Afghan

negotiators requested legal technical assistance from the U.S. to

help out with these issues, and a USAID-funded international trade

lawyer arrived on September 5 to provide them short-term assistance.

8. (C) Farhadi also talked about the border trade. According to

Farhadi, the two sides have informally agreed to Terms of Reference,

but the Pakistanis want the study results to be included as an annex

to the agreement. The Afghan side recognizes doing so would delay

signature and wish to de-couple the two. As noted above, the Afghan

side appears willing to agree to Pakistani language on re-exports in

return for Wagah access.



Composite Dialogue with India

- - - - - - - - - - - - - - -



9. (C) Farhadi reported the Pakistanis were pushing the Afghan side

to intervene with India to restart its Composite Dialogue with

Pakistan halted after the Mumbai bombings. Farhadi referred to

President Karzai's exchange with S/SRAP Holbrooke on August 21

concerning APTTA, noting that when President Karzai referred to

bringing the Indians along on the agreement, he was referring to

Afghan government efforts to seek agreement from India that Afghan

trucks would be able to enter India from Wagah and that these efforts

would help to bring India back to the negotiating table with

Pakistan.



Next Rounds

- - - - - -



9. (C) Farhadi anticipates a final round early November in Islamabad

following Round Four in Kabul. He envisions follow-up sessions at a

more senior level to wrap up APTTA by the end of 2009 and noted he

was prepared for 'marathon' sessions, if need be. Farhadi added that

the agreement needs no Afghan or Pakistani Parliamentary ratification

prior to signature.



EIKENBERRY