Channelizing Afghanistan to Pakistan Informal Trade into Formal Channels

Abstract

Along with other routes, the Afghanistan-Pakistan Transit Trade Agreement (APTTA) is being used by informal traders for smuggling goods into Pakistan. Despite enforcement measures, smuggling continues. Informal traders import goods into Afghanistan, and then route those goods back to Pakistan through informal channels to take advantage from the arbitrage opportunity provided by the differences in applied tariff/taxes between the two countries. Therefore, in addition to strict enforcement measures, the issue of informal trade needs to be handled through incentive measures.