VZCZCXRO0554
PP RUEHDBU RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #0943/01 1051436
ZNR UUUUU ZZH
P 151436Z APR 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 8405
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0786
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 4465

UNCLAS SECTION 01 OF 02 KABUL 000943 
 
DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A 
DEPT PASS AID/ANE 
DEPT PASS USTR FOR GERBER AND KLEIN 
DEPT PASS OPIC FOR ZAHNISER 
DEPT PASS TDA FOR STEIN AND GREENIP 
CENTCOM FOR CG CFC-A 
NSC FOR JWOOD 
TREASURY FOR MHIRSON, ABAUKOL, AWELLER, AND MNUGENT 
COMMERCE FOR HAMROCK-MANN AND FONOVICH 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: ETRD ECON EINV AF PK
SUBJECT: ECONOMIC AGENDA ITEMS FOR AF-PAK TRILATERAL COMMISSION 
 
SUMMARY 
 
¶1. (SBU) The Mission recommends that Washington agencies build the 
following issues into the economic agenda for the upcoming meeting 
of the US-Af-Pak Trilateral Commission.  Action on these 
suggestions, mostly Afghan "asks" of the Pakistani government, would 
support the goals of the strategic review.  We believe Pakistani 
cooperation on these issues would serve shared Af-Pak national 
interests; would facilitate the upcoming U.S. troop increase in 
Afghanistan; and would boost economic development in Afghanistan and 
perhaps also Pakistan.  Afghan Minister of Commerce and Industries 
Shahrani plans to be in Washington at the time of the Trilateral 
Commission and would be a capable interlocutor on most of these 
issues.  End Summary. 
 
TRADE AND TRANSIT POLICY 
 
¶2. (SBU) Afghanistan and Pakistan urgently need to energize their 
bilateral dialogue on trade and transit issues and move from talk to 
action.  Their bilateral Joint Economic Commission (JEC) met in 
Kabul in late November 2008 and agreed to set up several working 
groups to work on long-standing transit trade, Customs, and border 
management issues.  To Post's knowledge, none of these has yet 
convened.  We believe practical action in these areas would support 
mutual Af-Pak interests and support U.S. regional objectives by 
building confidence and cooperation between the two countries. 
 
¶3.  (SBU) In particular, the two governments should commence 
negotiations as soon as possible on a new Afghanistan-Pakistan 
Transit Trade Agreement (APTA) to replace the existing one from 
1965, which does not well serve Afghan trade interests.  The GOP has 
had the GIRoA's proposed new agreement text for a year and undertook 
at the November JEC meeting to call a working group meeting to start 
negotiations in January.  To our knowledge, no meeting has taken 
place.  Major issues that the GIRoA seeks to resolve in a new APTA 
include: 
-- Afghanistan may not import across the Waga border crossing point 
goods from India or third countries and transship them across 
Pakistan. 
-- Afghan trucks may not travel into Pakistan beyond Peshawar or 
Chaman, whereas Pakistani trucks may travel throughout Afghanistan 
and on to third countries.  Afghan exporters say the resulting 
required unloading/reloading adds time and costs and results in 
significant export losses, especially for fresh produce. 
-- Afghan shippers may not choose even among various Pakistani 
trucking firms but must ship to and from Pakistani ports using the 
military-owned National Logistics Cell (NLC) trucks.  Imports at 
Karachi destined for Afghanistan must also be loaded on NLC 
transport.  Afghan trucks are not allowed. 
-- Afghan traders also complain about fees charged by the GOP on 
transit goods, which they say violate even the existing transit 
trade agreement and represent a significant non-tariff barrier to 
open trade between Afghanistan and other countries. 
 
INDIAN WHEAT DONATION 
 
¶4. (SBU) Despite assurances from President Zardari to President 
Karzai at a meeting in Islamabad earlier this year, Pakistani 
ministries have not enabled the transshipment of 250,000 metric tons 
of Indian wheat to Afghanistan.  This issue is important beyond the 
shipment of the donated wheat.  It demonstrates a lack of political 
will on the Pakistani side to deal seriously with transit trade 
issues that have plagued Afghan-Pakistani trade since the 1965 TTA 
was signed.  It also is increasing incentives for the Afghans to 
turn toward Iran as a solution to transit trade obstacles, and the 
Iranians have, at least initially, been forthcoming and encouraging 
to Afghanistan's shift toward Iranian ports.  Some GOP officials 
cite phyto-sanitary concerns with Indian wheat as reason for their 
 
KABUL 00000943  002 OF 002 
 
 
opposition to transshipping it.  While these are legitimate, they 
could be overcome by milling the wheat into flour.  No one on this 
side of the border believes health concerns are the real reason for 
Pakistani non-cooperation. 
 
PAKISTANI BAN ON WHEAT AND FLOUR EXPORTS 
 
¶5. (SBU) Private sector wheat/flour exports from Pakistan to 
Afghanistan have been prohibited since May 2007.  Pakistan's wheat 
supply situation, however, is expected to ease considerably in the 
next several months due to the recent purchase of nearly one million 
tons of wheat on the international market and the expected record or 
near-record wheat crop currently being harvested.  Consequently, the 
GOP should be encouraged to lift its ban on exports of wheat/flour 
to Afghanistan so that Afghanistan can better meet its wheat needs 
before the domestic wheat crop is harvested beginning in June. 
 
BORDER CROSSING OPENING HOURS 
 
¶6. (SBU) Longer and better coordinated opening hours at Af-Pak 
border crossing points would facilitate transit not only of 
commercial goods, but military supplies vital to supporting the 
troop increase.  The Mission has been urging GIRoA officials to call 
a high-level bilateral meeting of Customs officials to coordinate 
additional opening hours, particularly at Torkham in Nangahar and 
Weesh-Chaman in Kandahar.  The need is for Border Control Posts to 
be open from 0600 - 1800 seven days per week.  This will likely 
require a commitment of additional resources for parking, lighting, 
electricity and security on both sides of the Duran line.  We expect 
the GIRoA and GOP also to request budgetary support to cover the 
overtime and increased personnel support necessary to implement 
expanded border crossing hours.  The Mission understands DOD may be 
willing to assist in providing these resources.  If not resolved by 
then, the U.S. should use the Trilateral Commission to press for 
prompt Af-Pak Customs cooperation on this issue.  (The JEC also 
agreed that a Joint Customs Committee should be created.) 
 
REGIONAL ECONOMIC COOPERATION CONFERENCE (RECCA) 
 
¶7. (SBU) Although this conference has been postponed three times, we 
are hopeful that the third RECCA, May 13-14 in Islamabad, will 
result in concrete progress, specifically, through donor agreement 
to fund short-to-medium term "high impact" projects.  We believe 
projects that come out of the RECCA must demonstrate visible 
progress to the Afghan public.  The RECCA can also be another 
vehicle for pushing Afghanistan and Pakistan to engage substantively 
on APTA.  Occurring just about a week before the RECCA, the 
Trilateral Commission is an opportunity for U.S. planners to flag 
any last-minute issues ahead of that multilateral forum. 
 
RECONSTRUCTION OPPORTUNITY ZONES 
 
¶8. (SBU) Afghan and Pakistani officials will be eager for the 
Administration's assessment of prospects for early Congressional 
passage of pending ROZ legislation.  The Trilateral Commission is an 
opportunity for U.S. officials to reaffirm what ROZs are (a tariff 
preference scheme meant to support private investment) and what they 
are not (a government-led foreign assistance program) - we find 
Afghan officials often need reminding.  The U.S. could also describe 
the labor, environmental and other requirements in proposed 
legislation for establishing ROZs and draw the visitors out on their 
plans to meet them. 
 
RICCIARDONE