Pakistan, Afghanistan Sign Preferential Trade Agreement

In a significant step toward enhancing regional economic ties, Pakistan and Afghanistan have signed a one-year Preferential Trade Agreement (PTA), which is set to take effect on August 1, 2025. The deal will significantly reduce tariffs on select agricultural goods, aiming to increase bilateral trade and support farmers and traders on both sides of the border.

Reduced Tariffs on Agricultural Goods

Under the PTA, Afghanistan will export tomatoes, grapes, apples, and pomegranates to Pakistan, while Pakistan will send potatoes, mangoes, kinnows, and bananas to Afghanistan. The agreement reduces tariffs from over 60% to as low as 22%, with a cap at 27%. For example, the duty on Afghan tomatoes (400,000 tons) will be set at 22%, while grapes (230,000 tons), apples (100,000 tons), and pomegranates (100,000 tons) will face a duty of 27%. Similarly, Pakistani potatoes (400,000 tons) will receive the 22% rate, with mangoes, kinnows, and bananas enjoying similar reductions.

Early Harvest Programme and Implementation

The PTA also includes an Early Harvest Programme, allowing both countries to grant each other preferential tariff concessions for one year, renewable by mutual consent. The initiative is expected to enhance trade volumes and benefit farming communities.

To ensure proper implementation, a PTA Implementation Committee will be formed, including officials from the customs and agricultural departments of both countries. The committee will meet monthly to monitor progress and recommend changes. Certificates of origin will be issued by Pakistan’s Trade Development Authority and Afghanistan’s Ministry of Industry and Commerce.

Trade Deal Amid Political and Security Tensions

The agreement comes despite ongoing tensions, especially over cross-border militancy and concerns related to the TTP. However, both countries have chosen to move forward with economic cooperation. The deal follows high-level diplomatic engagements, including Pakistan’s decision to elevate diplomatic ties and recent visits by Afghan officials to Islamabad.

This new trade framework is seen as a “win for farmers and traders” and a step toward regional economic integration, while also reflecting efforts to stabilise bilateral relations and address shared security challenges.