Despite deep historical, cultural, and geographical ties, meaningful cooperation between Pakistan and Afghanistan has long remained elusive, undermined by cycles of violence, terrorism, and a history of fraught, often adversarial relations. Diplomatic overtures have frequently faltered under the weight of security anxieties and entrenched grievances. Yet, in a notable shift, the two neighbors signed a Preferential Trade Agreement (PTA) earlier this week, an initiative aimed at reducing tariffs and facilitating bilateral trade. On the surface, it appears modest in scope, focused primarily on easing the flow of agricultural goods. Beneath the surface, however, lies a calculated strategic move, one that signals a broader bid for regional economic integration, geopolitical repositioning, and long-term stabilization in a historically volatile region.
The Agreement
Finalised on July 23, 2025, the PTA was signed by Pakistan’s Commerce Secretary Jawad Paul and Afghanistan’s Deputy Minister Ahmadullah Zahid after two days of negotiations. The agreement comes into effect on August 1 for a one-year trial period, and includes a significant tariff reduction, from more than 60% down to 27%, on eight key agricultural commodities.
Under the terms of the deal, Afghanistan is set to export grapes, pomegranates, apples, and tomatoes to Pakistan. In return, Pakistan will export mangoes, kinnows, bananas, and potatoes to Afghanistan.
According to official estimates, Pakistan is set to export 400,000 tons of potatoes, 230,000 tons of bananas, and 100,000 tons of mangoes, while Afghanistan will send 400,000 tons of tomatoes, 230,000 tons of grapes, and 100,000 tons of apples and pomegranates.
A Trade Relationship in Decline
Bilateral trade between the two countries has seen dramatic fluctuations. A decade ago, trade volumes peaked at nearly $2.5 billion. But political instability, border closures, and frequent cross-border attacks caused that figure to drop to about $1.5 billion in FY2024.
In the first half of 2025, trade stood at around $1 billion, with $712 million in Pakistani exports and $277 million in Afghan exports. The PTA is a clear attempt to reverse this trend, and to institutionalise what has largely been an informal, and often exploitative, trading relationship.
Why Afghanistan Needs This Deal
For Afghanistan, the agreement is more than a revenue generator, it’s a lifeline. After the fall of Kabul in 2021, the Afghan economy went into freefall. GDP shrank by 20.7% in 2021, fell another 6% in 2022, and is only now beginning to recover, with an expected 2.7% growth in 2024
Agriculture is the backbone of Afghanistan’s economy, contributing 34–36% of GDP and employing between 45% and 67% of the population. The country produces over 1.5 million tons of fresh fruits annually, including nearly 984,000 tons of grapes and 217,000 tons of apples.
Access to Pakistan’s 240 million-strong consumer market offers Afghan farmers a chance to sell their perishable produce at fairer prices, with reduced risk of spoilage or extortion at the borders. For the Taliban administration, which remains diplomatically isolated and cash-strapped, the PTA provides not just legitimacy, but a path to economic normalisation.
What Pakistan Stands to Gain
Pakistan’s gains from the agreement are more strategic than purely economic. While Pakistani exporters stand to benefit from expanded market access, Islamabad’s primary objective is stability along its western frontier. The underlying logic is pragmatic: a more connected and functional Afghan economy is less likely to serve as a breeding ground for militancy, illicit trade, or refugee outflows.
Crucially, by fostering cross-border trade and economic interdependence, Pakistan also hopes to raise the cost of harbouring militant actors. The aim is to create economic incentives for both the Afghan authorities and local communities in eastern Afghanistan to oppose the presence and activities of the Tehreek-e-Taliban Pakistan (TTP). A stake in legal commerce and regional development could help shift local dynamics away from complicity or passivity toward rejection of armed non-state actors.
Beyond immediate security goals, the trade agreement reflects Pakistan’s broader aspiration to position itself as a regional transit and trade corridor linking South Asia with Central Asia. For this vision to materialise, a stable and cooperative Afghanistan is essential. The PTA, limited though it may be, is a step toward reviving long-stalled infrastructure projects,energy pipelines, transnational railways, and digital corridors, that hinge on regional connectivity.
In essence, Afghanistan gains short-term economic relief, while Pakistan lays the groundwork for long-term regional stability and integration.
Not Without Risks
Despite strong optimism, the Preferential Trade Agreement (PTA) remains a fragile experiment. Its implementation is a major concern, as border crossings like Torkham and Chaman are plagued by corruption, poor infrastructure, and chronic delays. Furthermore, political volatility poses a constant threat, as the agreement relies on sustained cooperation between two governments. The one-year term of the agreement itself reflects mutual caution, with no guarantee of extension without demonstrable success.
What makes this agreement noteworthy is its pivot from confrontation to a future rooted in pragmatic cooperation. By focusing on trade that benefits ordinary citizens, from farmers in Kandahar to exporters in Multan, the deal builds a grassroots constituency for peace and mutual dependence.
In a region where diplomacy frequently falters under the weight of ideology and history, this small, calculated leap of faith by both countries may prove to be a positively consequential move.
A Fragile Opening: What the Pak-Afghan Trade Deal Really Means
Despite deep historical, cultural, and geographical ties, meaningful cooperation between Pakistan and Afghanistan has long remained elusive, undermined by cycles of violence, terrorism, and a history of fraught, often adversarial relations. Diplomatic overtures have frequently faltered under the weight of security anxieties and entrenched grievances. Yet, in a notable shift, the two neighbors signed a Preferential Trade Agreement (PTA) earlier this week, an initiative aimed at reducing tariffs and facilitating bilateral trade. On the surface, it appears modest in scope, focused primarily on easing the flow of agricultural goods. Beneath the surface, however, lies a calculated strategic move, one that signals a broader bid for regional economic integration, geopolitical repositioning, and long-term stabilization in a historically volatile region.
The Agreement
Finalised on July 23, 2025, the PTA was signed by Pakistan’s Commerce Secretary Jawad Paul and Afghanistan’s Deputy Minister Ahmadullah Zahid after two days of negotiations. The agreement comes into effect on August 1 for a one-year trial period, and includes a significant tariff reduction, from more than 60% down to 27%, on eight key agricultural commodities.
Under the terms of the deal, Afghanistan is set to export grapes, pomegranates, apples, and tomatoes to Pakistan. In return, Pakistan will export mangoes, kinnows, bananas, and potatoes to Afghanistan.
According to official estimates, Pakistan is set to export 400,000 tons of potatoes, 230,000 tons of bananas, and 100,000 tons of mangoes, while Afghanistan will send 400,000 tons of tomatoes, 230,000 tons of grapes, and 100,000 tons of apples and pomegranates.
A Trade Relationship in Decline
Bilateral trade between the two countries has seen dramatic fluctuations. A decade ago, trade volumes peaked at nearly $2.5 billion. But political instability, border closures, and frequent cross-border attacks caused that figure to drop to about $1.5 billion in FY2024.
In the first half of 2025, trade stood at around $1 billion, with $712 million in Pakistani exports and $277 million in Afghan exports. The PTA is a clear attempt to reverse this trend, and to institutionalise what has largely been an informal, and often exploitative, trading relationship.
Why Afghanistan Needs This Deal
For Afghanistan, the agreement is more than a revenue generator, it’s a lifeline. After the fall of Kabul in 2021, the Afghan economy went into freefall. GDP shrank by 20.7% in 2021, fell another 6% in 2022, and is only now beginning to recover, with an expected 2.7% growth in 2024
Agriculture is the backbone of Afghanistan’s economy, contributing 34–36% of GDP and employing between 45% and 67% of the population. The country produces over 1.5 million tons of fresh fruits annually, including nearly 984,000 tons of grapes and 217,000 tons of apples.
Access to Pakistan’s 240 million-strong consumer market offers Afghan farmers a chance to sell their perishable produce at fairer prices, with reduced risk of spoilage or extortion at the borders. For the Taliban administration, which remains diplomatically isolated and cash-strapped, the PTA provides not just legitimacy, but a path to economic normalisation.
What Pakistan Stands to Gain
Pakistan’s gains from the agreement are more strategic than purely economic. While Pakistani exporters stand to benefit from expanded market access, Islamabad’s primary objective is stability along its western frontier. The underlying logic is pragmatic: a more connected and functional Afghan economy is less likely to serve as a breeding ground for militancy, illicit trade, or refugee outflows.
Crucially, by fostering cross-border trade and economic interdependence, Pakistan also hopes to raise the cost of harbouring militant actors. The aim is to create economic incentives for both the Afghan authorities and local communities in eastern Afghanistan to oppose the presence and activities of the Tehreek-e-Taliban Pakistan (TTP). A stake in legal commerce and regional development could help shift local dynamics away from complicity or passivity toward rejection of armed non-state actors.
Beyond immediate security goals, the trade agreement reflects Pakistan’s broader aspiration to position itself as a regional transit and trade corridor linking South Asia with Central Asia. For this vision to materialise, a stable and cooperative Afghanistan is essential. The PTA, limited though it may be, is a step toward reviving long-stalled infrastructure projects,energy pipelines, transnational railways, and digital corridors, that hinge on regional connectivity.
In essence, Afghanistan gains short-term economic relief, while Pakistan lays the groundwork for long-term regional stability and integration.
Not Without Risks
Despite strong optimism, the Preferential Trade Agreement (PTA) remains a fragile experiment. Its implementation is a major concern, as border crossings like Torkham and Chaman are plagued by corruption, poor infrastructure, and chronic delays. Furthermore, political volatility poses a constant threat, as the agreement relies on sustained cooperation between two governments. The one-year term of the agreement itself reflects mutual caution, with no guarantee of extension without demonstrable success.
What makes this agreement noteworthy is its pivot from confrontation to a future rooted in pragmatic cooperation. By focusing on trade that benefits ordinary citizens, from farmers in Kandahar to exporters in Multan, the deal builds a grassroots constituency for peace and mutual dependence.
In a region where diplomacy frequently falters under the weight of ideology and history, this small, calculated leap of faith by both countries may prove to be a positively consequential move.
SAT Commentary
SAT Commentary
SAT Commentaries, a collection of insightful social media threads on current events and social issues, featuring diverse perspectives from various authors.
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