International trade

Strategic Goal: Integrate Afghanistan into the regional and global economy

Integrating Afghanistan’s markets with the global and particularly regional economies will be of critical importance to the achievement of the goals of the MoC. In order to capitalize on its strategic location, the Ministry is committed to maintaining an outward orientation in its policies.
 

Linkages with global and regional markets will not only ensure the competitiveness of domestic industries but also add to the attractiveness of Afghanistan for investors. With the development of an effective system for international trade and transit, a large portion of future investments will aim to capitalize on Afghanistan’s strategic position as a land-bridge in the Central and South Asia region – using Afghanistan as a regional platform for export.
 

The key objectives in this area are to:
1. Pursue opportunities to liberalize and expand trade within the region
In the last three years, the MoC has actively participated in regional economic initiatives including the Economic Cooperation Organization (ECO) as well as bilateral negotiations with neighboring countries including Iran, India, Pakistan, Tajikistan and Uzbekistan.
The priorities for the immediate future will require a review of the existing regional trading arrangements with regard to their effectiveness and implementation – identifying areas in which these agreements can be strengthened. Further opportunities for regional integration include possible participation in the South Asia Free Trade Area (SAFTA) and the Central Asian Regional Economic Cooperation (CAREC) program.
 

2. Pursue WTO Accession
Having received observer status in December 2004, the focus now is for Afghanistan to move as quickly as possible through the accession process. Accession will allow Afghanistan to become a full member of the global economic community and send a strong signal to international investors and traders with regards to the stability and parameters of the trade regime.
As the lead ministry for WTO accession, the MoC is developing a strategy and timetable for accession as well as a plan to take advantage of the capacity building resources and opportunities provided by observer status.
 

3. Maximize the benefits of preferential market access agreements for Afghan exporters
Outside of the region, Afghanistan is currently eligible for preferential import duties under the European Union’s (EU) “Everything but Arms” Initiative (EBA), the United States’ Generalized System of Preferences (GSP) program as well as LDC preferences granted by Canada and Japan. Additionally, the Government of Afghanistan has recently concluded a “Trade and Investment Framework” (TIFA) agreement that could provide additional benefits in terms of strengthening the trading relationships.
In order to take maximum advantage of these preferences, the MoC will undertake systematic trade analysis to identify and exploit the market opportunities provided for Afghanistan’s exports.

Relevant links and downloads: 

Consultative Group for Trade and Investment (T&I CG)

WTO Accession Update

Currently there are 150 member countries in the WTO and in the nearest future this number will increase. This means that almost every nation aspiring to create a modern and effective economy and to participate in the world trade equally strives for WTO membership. Afghanistan is not an exception.

The Islamic Republic of Afghanistan renewed its request for WTO membership on 21 November 2004. Shortly thereafter, a WTO Working Party was established at the General Council meeting on 13 December 2004, and Afghanistan was granted observer status. A draft for the Memorandum on the Foreign Trade Regime was initiated. Afghanistan has a relatively open trade regime, and major policy changes are not needed to bring it into line with WTO standards. However, it does need a greater political and administrative capacity.

Accession to the World Trade Organization requires a wide-ranging commitment from both government and industry in the mastery and implementation of a wide range of technical standards and procedures.

Formal WTO requirements include:

• Conformity of national legislation with obligations under all WTO agreements.
• Negotiating schedules on market access concessions for industrial and agricultural goods.
• Negotiating schedules on agricultural support.
• Negotiating schedules on specific commitments for market access and national treatment for services.
• Implementing the notifications and transparency    requirements under WTO agreements.

Accession to the WTO will help consolidate economic reform and the rule of law in Afghanistan. The WTO membership offers a range of benefits. Enjoying these benefits is, pragmatically, the goal of joining the WTO. By acceding to the WTO, Afghanistan pursues the following goals:

• Improvement of existing conditions for access of Afghanistan’s products to foreign markets and provision of non-discriminatory treatment for Afghan exporters;
• Access to the international dispute settlement mechanism;
• Creation of a more favorable climate for foreign investments as a result of legal system change in accordance with the WTO standards;
• Expansion of opportunities for Afghan investors in the WTO member-countries;
• Creation of conditions for growth of domestic production, quality and competitiveness as a result of increased flows of foreign goods, services and investments to the Afghanistan’s market;
• Participation in negotiations of the international trade agreements taking into account national interests;
• Improvement of the image of Afghanistan as a competent international trade participant.

The objective of the accession negotiations is to achieve the most favorable conditions for Afghanistan joining the WTO, i.e. the best balance possible between the benefits of accession and the concessions in forms of tariffs reduction and domestic market opening. The balance of rights and obligations of Afghanistan during its accession to the WTO should contribute to its economic growth and not vice versa.