ISLAMABAD | July 24, 2025
In a rare display of diplomatic progress amid ongoing political friction, Pakistan and Afghanistan have signed a preferential trade agreement (PTA) that could mark a new chapter in regional economic cooperation.
The deal, finalized in Islamabad on Wednesday after two days of intense negotiations, aims to slash tariffs on key agricultural products by as much as 22% — a major step forward given that some existing duties exceed 60%.
Tariff Cuts to Unlock New Trade Opportunities
The agreement was signed by Afghanistan’s Deputy Minister of Industry and Commerce, Mullah Ahmadullah Zahid, and Pakistan’s Commerce Secretary, Javed Paul. Both sides described the pact as a “historic breakthrough” in efforts to strengthen trade ties between the two neighboring countries.
Under the one-year agreement — which will take effect from August 1, 2025 — both countries have agreed to reduce import duties on a range of fruits and vegetables, a move expected to significantly boost cross-border trade volumes.
From the Afghan side, tomatoes, grapes, apples, and pomegranates will benefit from reduced tariffs when exported to Pakistan. In return, Pakistan will enjoy lower levies on the export of mangoes, oranges (kinnows), bananas, and potatoes to Afghanistan.
Volume-Based Tariff Relief
According to the details of the agreement, the PTA rate (which includes customs duties and related levies) for Afghan tomatoes has been set at 22% for up to 400,000 tons. Grapes (230,000 tons), apples (100,000 tons), and pomegranates (100,000 tons) will be taxed at 27%.
In parallel, Pakistan will export 400,000 tons of potatoes at a 22% tariff, while kinnows (100,000 tons), bananas (230,000 tons), and mangoes (100,000 tons) will be subject to 27% duties.
A Step Forward Amid Strained Political Ties
The agreement comes at a delicate time in Pakistan-Afghanistan relations. Islamabad has repeatedly voiced concerns over the presence and activities of Tehreek-e-Taliban Pakistan (TTP) operatives inside Afghanistan — an issue that has soured ties in recent months. Nonetheless, both sides managed to set aside political differences to focus on economic cooperation.
A senior Pakistani official involved in the talks described the PTA as “a win-win move” that acknowledges the interdependence of the two economies, especially in agriculture and trade logistics.
Early Harvest Programme Launched
In a bid to institutionalize this cooperation, the agreement includes the launch of an Early Harvest Programme — essentially a fast-track mechanism to begin implementing tariff reductions before a broader free trade arrangement is explored.
The programme will be overseen by a newly formed PTA Implementation Committee, featuring officials from customs and agricultural ministries of both countries. The committee will meet monthly to monitor trade flows, address any technical issues, and suggest adjustments based on market realities.
Preferential trade concessions under the programme are expected to apply from August 1, 2025 to July 31, 2026, with an option for extension through mutual consent.
Rules of Origin and Certification
To ensure clarity and prevent misuse, both governments have also agreed on procedures for verifying the origin of traded goods. The Trade Development Authority of Pakistan (TDAP) will issue Certificates of Origin for Pakistani exports, while Afghanistan’s Ministry of Industry and Commerce will perform the same function on its end.
Looking Ahead
While the current agreement focuses primarily on eight key agricultural commodities, officials hinted at the possibility of expanding the list in future rounds of talks — provided the initial implementation phase delivers the expected results.
For now, this deal represents more than just lower tariffs; it’s a calculated step toward rebuilding trust, stimulating economies on both sides of the Durand Line, and offering a glimmer of hope in a region too often defined by conflict rather than cooperation.
