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DE RUEHBUL #3000/01 2711457
ZNR UUUUU ZZH
P 281457Z SEP 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 1714
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 003000 
 
SIPDIS 
SENSITIVE 
 
SRAP FOR MARY BETH GOODMAN AND BOB DEUTSCH 
DEPT PASS USTR DEANGELIS 
 
E.O. 12958: N/A 
TAGS: ETRD PREL AF PK
SUBJECT: AF-PAK Transit Trade Talks Hit Snag 
 
REF: (A) KABUL 2943 
     (B) KABUL 2825 
 
¶1. (SBU) Summary: Foreign Affairs Minister (FM) Spanta recently 
rejected the Terms of Reference (TOR) for the re- 
export/smuggling study that both the Afghan and Pakistan 
governments agreed upon in principle during the third round of 
APTTA talks, according to Commerce Deputy Minister Farhadi. 
This rejection is an APTTA Qdeal-breakerQ for the Pakistan side, 
which has refused to participate in the upcoming fourth round of 
talks, slated for October 10-12, until the Afghan Foreign 
Ministry reverses its decision, according to Farhadi.  Foreign 
Minister Spanta is currently in New York participating in the 
United Nations General Assembly (UNGA) until October 5.  Embassy 
recommends senior U.S. officials meet with Spanta on the fringes 
of the UNGA to seek his agreement that the TOR go ahead in order 
to keep the APTTA on track for completion by the end of 2009. 
(Comment: Spanta and Afghan Commerce Minister Shahrani have had 
differences on other aspects of this negotiation, including over 
the importance of the Wagah border crossing to India. End 
Comment.) End summary. 
 
¶2. (SBU) Commerce Deputy Minister (and Chief APTTA negotiator) 
Adib Farhadi told EconCouns September 28 that FM Spanta rejected 
the TOR for the re-export/smuggling study in early September and 
had so notified the Pakistan side at that time via the Afghan 
embassy in Islamabad.  The Pakistan side later notified the 
Afghan Commerce Ministry which has subsequently and 
unsuccessfully tried to discuss the issue with FM Spanta and to 
raise it in the Afghan cabinet.  To date, the issue remains 
unresolved. 
 
Re-export/Smuggling Study Key to APTTA 
- - - - - - - - - - - - - - - - - - - 
 
¶3. (SBU) Deputy Minister Farhadi says the Pakistan side 
considers FM SpantaQs rejection of the TOR (funded by USAID) a 
Qdeal breakerQ for the APTTA talks.  As previously reported in 
ref (A), the Pakistan side had counted on Afghan concurrence 
that the key recommendations of the re-export study would be 
implemented upon the studyQs completion in the next 6-12 months 
and such an understanding would be incorporated into the APTTA. 
The Afghan side, lead by the Commerce Ministry, had accepted 
this position in principle, making it clear they must, in 
return, receive unimpeded access to PakistanQs Wagah border 
crossing with India.  As a result of the FMQs recent rejection, 
the Pakistan side has refused to participate in the upcoming 
fourth round in Kabul, now slated for October 10-12, until the 
FM has reversed his decision. 
 
Spanta Objects... 
- - - - - - - - - 
 
¶4. (SBU) Foreign Minister Spanta reportedly has two objections 
to the re-export/smuggling study, according to Farhadi: 
 
--the study is unnecessary to advance AfghanistanQs initiative 
to improve transit trade access through Pakistan.  Since 
Afghanistan currently places no barriers on PakistanQs 
lucrative access to Central Asia, Pakistan should not seek to 
impose this additional condition in the APTTA; 
 
--and the study appears to be a U.S.-driven and U.S.-led 
initiative that involves U.S. policy objectives related to its 
anti-corruption agenda.  As such, the study is not germane to 
the APTTA. 
 
...But Spanta is Missing Key Points 
- - - - - - - - - - - - - - - - - - 
 
¶5. (SBU) Foreign Minister SpantaQs trade policy staff do not 
have the influence or clout to advise him that his reported 
views on the re-export study do not reflect key realities, 
according to Farhadi.  Deputy Minister Farhadi noted that 
SpantaQs views appear to be shaped by an outside economic 
advisor and/or the Presidential Palace.  He added that the re- 
export/smuggling study addresses the issue of AfghanistanQs 
tariff-free imports (coming in largely from Karachi and Qre- 
exportedQ or smuggled into Pakistan, to avoid duties) but also 
addresses the delays of those imports initially transiting 
through Pakistan and their relatively high transit costs.  He 
argued that Spanta must realize that it is just as important 
that the study address the delays of Afghan imports transiting 
Pakistan as it is for Pakistan to resolve their perceived 
problems of re-exports.  In this sense, the re-export study 
offers both sides a potential win-win, if the studyQs 
recommendations are binding on the APTTA and implemented. 
 
 
KABUL 00003000  002 OF 002 
 
 
¶6. (SBU) In addition, Spanta reportedly argues that this 
initiative is U.S.-led and U.S.-driven to advance anti-smuggling 
goals.  On the contrary, Farhadi told us the Pakistani and 
Afghan negotiators made clear in the third round that the TOR 
and subsequent study was their initiative -- and noted that 
launching the study would mark a major step toward a final APTTA 
agreement.  The U.S. role was, and is, solely confined to 
funding the TOR and re-export study as a contribution to 
advancing this important trade initiative for both sides.  In 
addition, he stressed the U.S. government has had no direct role 
in shaping or approving the TOR or in approving the advisors to 
carry it out.  Finally, he noted that the Afghan and Pakistan 
sides plan to select the consultants to carry out the actual re- 
export study, without any U.S. government concurrence. 
 
¶7. (SBU) Comment and Recommendation: Foreign Minister Spanta is 
in New York participating in the United Nations General Assembly 
until October 5.  Embassy recommends that senior U.S. officials 
meet with Spanta on the fringes of the UNGA to seek his 
understanding that the TOR go ahead as agreed upon in order to 
keep the APTTA on track for completion by the end of 2009.  We 
understand Spanta may believe the re-export study is a U.S. 
policy tool.  However, he should be reminded that the U.S. 
played only a facilitating, supportive role.  Following a 
readout on U.S. meetings with FM Spanta on this issue, we will 
pursue additional meetings here to ensure that both the Afghan 
and Pakistan sides can keep the APTTA talks on track for October 
¶10.  (We not, however, that Foreign Minister Spanta has told us 
previously that he disagrees with this Commerce Ministry over 
another key issue: the Priorities which that Ministry has put on 
reaching a solution to access for Afghan goods to India via the 
Wagah border crossing.  Spanta has argued to senior U.S. 
officials that the Wagah issue should not block an APTTA 
accord.)  If the issue remains unresolved by that date, the next 
round of talks would likely occur on or around November 10. 
However, such a postponement could delay the APTTA process into 
¶2010.  End comment. 
 
EIKENBERRY