On July 23, 2025, Pakistan and Afghanistan formalized a Preferential Trade Agreement (PTA) aimed at strengthening economic ties between the two neighboring countries. Signed in Islamabad by Pakistan’s Commerce Secretary Jawad Paul and Afghanistan’s Deputy Minister of Industry and Commerce Mullah Ahmadullah Zahid, the agreement marks a significant step toward enhancing bilateral trade and fostering regional stability.
The PTA, effective from August 1, 2025, reduces tariffs on eight agricultural products—four from each country—from over 60% to 27%. Afghanistan will benefit from lower tariffs on exports of grapes, pomegranates, apples, and tomatoes to Pakistan, while Pakistan’s mangoes, kinnows, bananas, and potatoes will face reduced tariffs in Afghanistan. This one-year, renewable agreement allows for the inclusion of additional items in the future, signaling potential for broader trade cooperation.
The agreement comes amid a notable increase in trade volume, with bilateral trade reaching $1.9 billion in the 2024-25 fiscal year, a 25% rise from the previous year. Pakistan’s exports to Afghanistan, including sugar, industrial goods, and food items, surged by 38.68% to $773.89 million, while Afghanistan’s exports, such as cotton, coal, and dry fruits, doubled to $25.89 million. This growth reflects the deep economic interdependence between the two nations, despite occasional political and security challenges.
The PTA is part of an Early Harvest Programme (EHP), designed to lay the groundwork for a comprehensive trade framework. A PTA Implementation Committee, comprising representatives from both countries’ commerce, customs, and agriculture ministries, will meet monthly to monitor progress and address issues. This initiative aims to streamline trade processes, reduce barriers, and promote smoother cross-border commerce.
Posts on X highlight the agreement’s significance, noting its potential to ease trade tensions and strengthen economic ties. The deal is seen as a pragmatic move to separate trade from political disputes, fostering mutual economic benefits. For landlocked Afghanistan, Pakistan remains a vital trade conduit, while Afghanistan offers Pakistan access to Central Asian markets.
This agreement underscores a shared commitment to economic cooperation, with both nations aiming to revive formal PTA negotiations stalled for nearly a decade. By prioritizing trade, Pakistan and Afghanistan are taking concrete steps to build a more stable and prosperous regional economic landscape.
Published in SouthAsianDesk, July 24th, 2025
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