A year ago, the Sarhad Chamber of Commerce and Industry (SCCI) and the Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) signed an MoU to boost trade between Pakistan and Afghanistan, only to experience difficulties in 2025.
Due to the recent geopolitical tensions between the two states, the Afghan Taliban’s minister of commerce declared a trade boycott against Pakistan. While the move is driven by geopolitical rifts, it is a miscalculated decision given the region’s geography.
Despite opposition to the Durand Line, Pakistan has been an indispensable partner in Afghan trade and commerce under the Afghanistan-Pakistan Transit Trade Agreement (APTTA). From 2017-2024, Pakistan remained Afghanistan’s largest trading partner and export destination. Pakistan has also been the largest single transit hub for Afghanistan and the Central Asian Republics (CARs). Afghanistan’s trade relies on major border crossings such as Torkham, Chaman and Ghulam Khan to connect with the rest of the world via ports, including Qasim and Gwadar.
In 2023-24 alone, Afghan transit traffic through Pakistan was approximately 73974 Twenty-Foot Equivalent Units (TEU). The overall pattern indicates asymmetric trade interdependence between the two states, with landlocked Afghanistan at the vulnerable end.
Kabul’s recent decision to divert its trade away from Pakistan may be desirable for the Taliban leadership amid political tensions, but it is not a viable option. The three major alternatives the Afghan government could pursue are Iran, CARs and China. These alternatives, however, cannot substitute Afghan trade through Pakistan but can only supplement indirect Afghan dependence on Pakistan.
While the Iranian route appears to be an attractive alternative to the Pakistani route, it is fraught with numerous challenges. First, Iranian ports lack sufficient capacity to accommodate a surge in trade inflows, as Bandar Abbas is already congested and Chabahar is a relatively costly option. In the aftermath of the trade shutdown between Pakistan and Afghanistan, the Taliban government has approached India as an alternative. However, given the geographical and geopolitical circumstances, trade with India, either via the 843 nautical mile route through Chabahar port or via air cargo bypassing Pakistan, is not feasible.
Second, the recurrent Western sanctions on Iran and the non-recognition of the Taliban government can complicate the transaction process. The economic fallout from geopolitical tensions in the Middle East could also further render Iran an unreliable trade route. Lastly, while Pakistan provides an efficient gateway to both the Eastern and Western markets, Iran cannot provide transit to Eastern markets such as China.
Similarly, the most critical challenge associated with the Central Asian trade route is that it is non-coastal. To further complicate the case, it is not accessible around the year due to the weather and terrain it is situated in; therefore, the CARs ultimately rely on Pakistan for the transit. For instance, Afghanistan recently had an MoU with Uzbekistan to divert its agricultural trade away from Pakistan. However, Uzbekistan has already signed the Transit Trade Agreement (TTA) and the Preferential Trade Agreement (PTA) with Pakistan for 17 items, including agricultural goods.
Another prospect the Afghan government is likely to consider is using China as a transit route through the Wakhan Corridor. Nevertheless, in line with China’s plan to extend CPEC to Afghanistan, Pakistan serves as the corridor linking China and Afghanistan. The route can supplement Afghan trade through Pakistan, but it cannot substitute it.
Afghanistan’s domestic economy also does not permit a sudden shift in trade routes or transaction systems. Pakistan has been a reliable source of economic depth for Afghanistan throughout history. The war against the USSR and the global ‘war on terror’, followed by the Taliban takeover, have left the Afghan domestic economy in shambles. Recognition of the Taliban government, as well as their policy entrenched in human rights abuses, has brought economic toll on the state in the form of sanctions and frozen foreign reserves.
Apart from hosting around 7.7 million Afghan refugees for over a decade, Pakistan has also been providing cross-border aid, medical, and educational services to the Afghan nationals. Thus, trade disruption between the two states can also culminate in a humanitarian crisis. Therefore, a trade boycott against the core trading and transit partner is not a pragmatic option for the Islamic
Emirate of Afghanistan to rely on.
Pakistan is relatively immune to the trade shutdown due to its diversified economy. The country is situated at the regional intersection and serves as an optimal route for regional connectivity. The pharmaceutical exports from Pakistan, denied by Afghanistan, can temporarily be channelled towards alternative markets like the CARs. However, the Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) has appealed to the government of Pakistan to take the necessary measures to resolve the issue and avoid long-term repercussions.
According to PAJCCI, nearly 6,000 cargo containers are stranded on both sides of the border, each costing approximately $150- $200. Considering the continuous stagnation in the diplomatic talks with the Afghan government, the government of Pakistan has maintained a steadfast position regarding counterterrorism. However, the economic fallout has prompted the Ministry of Commerce to consider at least a one-time movement of vehicles stranded at the border until further notice. Therefore, mutual resolve will guard the stakes of both sides in the long run.
Political rifts and military exchanges among regional states have marked 2025. However, throughout history, the economy has been a victim of every war. Political tensions are temporary; geo-economic realities are permanent. Therefore, the ultimate outcome of this political tension will be determined by the region’s geo-economic realities. Asymmetric trade interdependence is likely to reorient Afghan decision-making towards reconciliation. While Pakistan remains open to mutual reconciliation with a steadfast stance against cross-border terrorism, for a sustainable regional order.
The writer is a research assistant at the Centre for Aerospace & Security Studies (CASS), Islamabad, Pakistan. She can be reached at: [email protected]
