A significant stride towards enhanced regional economic cooperation has been marked by the signing of a Preferential Trade Agreement (PTA) between the interim Taliban government in Afghanistan and Pakistan. This landmark one-year accord, set to commence on August 1, 2025, is a testament to both nations’ shared commitment to fostering a mutually beneficial economic partnership, aiming to transform their borders into active trade routes rather than barriers.
Historic Context and Future Potential
Historically, trade relations between Pakistan and Afghanistan have experienced considerable fluctuations. While bilateral trade once peaked beyond an impressive $3 billion annually, recent years have witnessed a notable decline. Between 2020 and 2023, for instance, annual trade volumes remained under $1 billion. More recently, in the first half of 2025 alone, bilateral trade crossed $1 billion, with Pakistan’s exports to Afghanistan standing at $712 million and Afghan exports to Pakistan at $277 million. This new PTA is strategically poised to reverse this downward trend and unlock the immense untapped potential that exists between these two geographically proximate partners, fostering a new era of economic vibrancy.
A Landmark Agreement for Tariff Reduction
The agreement, meticulously crafted over two days of discussions by Afghanistan’s Deputy Minister Mawlawi Ahmadullah Zahed and Pakistan’s Deputy Commerce Minister Mian Javed Paul, is designed to significantly lower customs tariffs on specific exports. Previously, these tariffs often exceeded 60%, posing a substantial impediment to the smooth flow of goods. With the implementation of the PTA, these duties will be dramatically reduced to a cap of 27%, reflecting a tangible commitment to fair trade principles and long-term economic growth for both sides. This reduction directly addresses a key barrier to trade, promising increased profitability for businesses and more affordable goods for consumers.
Boosting Agricultural Trade and Livelihoods
The core focus of this preferential access lies squarely in agricultural products, a sector vital to the livelihoods of countless farmers and producers in both countries. Afghanistan is set to gain preferential access for its grapes, pomegranates, apples, and tomatoes, which are highly sought after in Pakistani markets due to their quality and seasonal availability. Conversely, Pakistan will facilitate the export of its mangoes, oranges, bananas, and potatoes to Afghanistan. This strategic emphasis on agriculture is expected to directly benefit local economies, enhancing food security within both nations and significantly boosting cross-border economic activity, creating new opportunities for rural communities.
Strategic Implications for Regional Integration
Beyond the immediate economic advantages, this tariff-cutting deal carries profound strategic implications for the broader region. It is more than just a reduction in duties; it represents a strategic step toward deeper regional integration. By strengthening bilateral trade ties, Pakistan reinforces its role as a stabilizing economic partner in the region, actively promoting a framework of cooperation over conflict. This agreement sets a powerful precedent for future trade expansions, envisioning a more connected and cooperative South and Central Asia. The enhanced economic self-reliance fostered through increased agricultural trade is also expected to strengthen people-to-people connections, building bridges of understanding and shared prosperity across the border. In essence, the new PTA is a visionary move towards mutual prosperity, creating unprecedented opportunities for increased trade and economic growth for both Pakistan and Afghanistan.
Also Read: Pak-Afghan Economic Relations and Trade Potential
