VZCZCXRO4985
OO RUEHLH RUEHPW
DE RUEHIL #0265/01 0371445
ZNR UUUUU ZZH
O 061445Z FEB 09
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1358
INFO RUEHBUL/AMEMBASSY KABUL 9770
RUEHLO/AMEMBASSY LONDON 9595
RUEHNE/AMEMBASSY NEW DELHI 4396
RUEHKP/AMCONSUL KARACHI 1010
RUEHLH/AMCONSUL LAHORE 6707
RUEHPW/AMCONSUL PESHAWAR 5631
RHEFDIA/DIA WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL

UNCLAS SECTION 01 OF 02 ISLAMABAD 000265 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON PREL AF PK
SUBJECT: AFGHAN-PAKISTAN TRADE AGREEMENT MOVES FORWARD WITH 
WORLD BANK HELP 
 
¶1.  (SBU)  Summary:  The GOP is working with the Afghan draft 
amendment to the Afghanistan Pakistan Transit Agreement, 
which was provided to them in November at the Joint Economic 
Commission, to identify concerns of the private sector, in 
particular the transport industry, before finalizing their 
position.  Although they have no major differences with the 
Afghan draft, according to Ministry of Commerce officials, 
the GOP does not expect to be ready to engage substantively 
with the GOA at the upcoming Regional Economic Cooperation 
Committee, scheduled for early April in Islamabad.  The GOP 
is happy with the facilitating role that the World Bank is 
playing.  End Summary 
 
¶2.  (SBU)  Both the World Bank and the Ministry of Commerce, 
in separate discussions, characterized negotiations to update 
the Afghan Transit Trade Agreement (ATTA) as "on track." 
Syed Ahmed Zaidi, the Ministry's project director for transit 
trade, told Econ Counselor February 4 that Pakistan had 
received Afghanistan's proposed draft (now retitled as the 
Afghan-Pakistan Trade Agreement, or APTA) in November, and is 
working from that document as it consults various domestic 
stakeholders on changes they would like to see.  With 
assistance from the World Bank, the GOP organized a private 
sector working group on January 12, and is currently 
reviewing comments from that meeting.  Zaidi said the GOP 
also planned to meet with transport companies before 
finalizing its views, which would then be presented to the 
Cabinet for approval. (Note:  Cabinet approval can take quite 
some time.  End Note)  The GOP then plans to meet with the 
GOA in some third country (possibly Uzbekistan) "in a few 
months," under the auspices of the World Bank, to continue 
negotiations.  The World Bank intends to hold a 
private-sector meeting in Kabul, prior to the Tashkent 
meeting.  Zaidi does not believe that Pakistan will be ready 
to engage in substantive discussions with the GOA on the APTA 
at the upcoming Regional Economic Cooperation Committee 
(RECC), planned for April.  While Zaidi did not entirely 
close the door to an offer of U.S. technical assistance in 
the future, Kamal Zaman Chaudhry, Chief Additional Secretary 
at the Ministry of Commerce, said the GOP was currently 
content with both the assistance provided by the World Bank 
and the pace of the work to conclude a new agreement. 
 
¶3.  (SBU)  Amer Durrani, Senior Transport Sector Specialist 
at the World Bank and resident in Islamabad, had a similar 
assessment.  Durrani told us that it was important that the 
agreement be done correctly, and cautioned against rushing 
the process in order to achieve what he called immediate 
border security objectives.  Durrani assessed that the Bank's 
deliberate approach was paying dividends:  the Pakistani 
security agencies were on board with the process, as was 
Finance Advisor Shaukat Tarin.  Durrani cited a "notable 
reluctance" to change the agreement on the part of entrenched 
private sector interests that did not want a new system that 
would rock the boat.  He noted that the private sector 
meeting in Kabul had been postponed when the Afghan 
government got cold feet, but that he was confident that the 
World Bank would get the meeting back on track soon.  In 
light of this delay, the six-month timetable to complete the 
process agreed upon at the November Joint Economic Commission 
meeting might be too ambitious. 
 
¶4.  (SBU)  A local television station reported February 4 
that Pakistan was likely to allow the entry of Afghan 
vehicles up to Karachi for transit trade purposes, after they 
submit bank guarantees.  The station also reported that 
Pakistan Customs opposed another Afghan proposal to allocate 
50 percent of the total transit trade to Afghan vehicles, as 
this would have serious implications for Pakistan's transport 
industry. 
 
¶5.  (SBU)  Comment:  Although the process has been long and 
drawn out, the good news is that progress is being made. 
Zaidi and Durrani both told us that the GOP had no major 
difficulties with the text proposed by the Afghans, which is 
another positive sign.  However, the convoluted process of 
loading and unloading vehicles and the prohibition of Afghan 
vehicles under ATTA has provided many opportunities for 
profit and pure and simple graft over the forty plus years 
the Agreement has been in effect.  As a result, identifying a 
strong base of Pakistani support for simplifying and 
modernizing these procedures has been time consuming. 
 
ISLAMABAD 00000265  002 OF 002 
 
 
Addressing the concerns of those with a vested interest in 
the status quo, which is what the World Bank process has been 
designed to do, is the key to finalizing the negotiations. 
PATTERSON