Afghanistan Diversifies Trade Routes as Rift with Pakistan Deepens

After more than a month of border closures and failed negotiations, Afghanistan’s Taliban-led administration has instructed local traders to reduce their dependence on Pakistan and explore alternative trade routes through neighboring nations.

At a high-level meeting with Afghan business leaders, Deputy Prime Minister Mullah Abdul Ghani Baradar emphasized that continued reliance on Pakistan is no longer sustainable. He reportedly told attendees that the Afghan government would not support those who persisted in using Pakistani corridors.

The directive comes as cross-border commerce has been halted for over 30 days, leaving hundreds of trucks loaded with essential goods stranded along key checkpoints.

Islamabad Responds: “A Blessing in Disguise”

Pakistan’s Defence Minister reacted to Kabul’s announcement by asserting that the move would not hurt Pakistan’s economy — in fact, he suggested it could bring financial relief.

According to him, a significant portion of goods imported through Karachi for Afghanistan end up being resold within Pakistan, undercutting local industries. He argued that a slowdown in such cross-border flows could curb smuggling, enhance border control, and strengthen Pakistan’s internal markets.

Focus on Pharmaceuticals and Payment Deadlines

Afghanistan’s deputy premier highlighted that medicines make up a large portion of imports from Pakistan. He has granted Afghan importers a three-month period to settle all outstanding payments with their Pakistani suppliers before the government shifts its procurement strategy elsewhere.

Observers see this as a clear signal of Kabul’s determination to restructure its economic dependence away from Islamabad.

Economic Stakes for Both Neighbors

While political rhetoric intensifies, economists warn that the ongoing impasse could be damaging for both sides.

Afghanistan, a landlocked nation, has long relied on Pakistan’s ports under the Afghan Transit Trade Agreement (ATTA). Conversely, Pakistan counts Afghanistan among its top 10 export markets.

Official data from Pakistan’s Trade Development Authority (TDAP) indicates that in the last fiscal year, exports to Afghanistan were valued at USD 1.4 billion, while imports stood at USD 610 million. Exports had been growing steadily — up 31% this fiscal year — before trade was disrupted.

However, business leaders suggest these figures vastly underestimate the true volume of informal, unrecorded trade that flows daily across the porous frontier.

Eroding Market Share and Regional Competition

Pakistan’s exports to Afghanistan typically include rice, fresh produce, cement, plastics, motorbikes, medicines, and textiles, while Afghanistan sends coal, dry fruits, and agricultural commodities the other way.

Trade experts, such as former TDAP head Zubair Motiwala, note that Pakistan’s once-dominant 95% share of Afghanistan’s import market has now dropped to around 65%, with Iran and India rapidly expanding their presence.

Afghanistan’s coal exports to Pakistan remain one of the few consistent trade links, primarily due to proximity and lower logistics costs compared to imports from Southeast Asia.

“A Mutually Painful Standoff,” Warn Experts

Junaid Makda, President of the Pakistan–Afghanistan Joint Chamber of Commerce, described the current border freeze as a lose-lose scenario.

“Afghanistan remains a vital outlet for Pakistani goods, particularly food staples and industrial materials,” he said. “On average, around 300 Pakistani trucks crossed the Chaman border daily before the closure — now, trade has virtually stopped.”

He warned that prolonged disruptions could create permanent shifts in regional supply chains, allowing India and Iran to entrench their market share inside Afghanistan.

Security Priorities Overshadow Trade Interests

Pakistan’s Coordinator for Commerce, Rana Ihsan Afzal, defended the government’s tough stance, emphasizing that security takes precedence over trade.

“Even if we lose exports worth a couple of billion dollars,” he said, “it’s still less than the cost terrorism imposes on investment and national stability.”

He acknowledged that militancy has already scared off investors and disrupted key industries, particularly manufacturing and mining.

Kabul Strengthens Links with Tehran and New Delhi

Facing repeated disruptions at its Pakistani borders, Afghanistan has begun redirecting trade through Iran’s Chabahar and Bandar Abbas ports, which provide direct access to the Indian Ocean.

Although these routes are longer and more expensive, the Taliban government has cut import taxes to offset costs and incentivize traders. This has opened the door for India to increase exports of food, medicine, and consumer goods via Iranian ports.

Still, analysts say Pakistan’s corridor remains the most efficient and affordable route for Afghan trade — and losing that connection could permanently alter the region’s logistics map.

Transit Trade Agreement Under Pressure

The Afghanistan–Pakistan Transit Trade Agreement (APTTA), renewed in 2010, grants Afghan traders access to Pakistan’s seaports.

Yet data from the Pakistani Embassy in Kabul shows a sharp decline in trade under the pact: from USD 6.5 billion in 2023 to USD 2.3 billion in 2024, and now around USD 1 billion in 2025.

While international law — including the WTO and Geneva Convention — obligates Pakistan to allow landlocked neighbors access to maritime routes, trade experts note that national security exceptions can supersede these commitments when terrorism or sovereignty issues arise.

A Regional Realignment in the Making

As both countries harden their positions, the border impasse risks becoming more than just a temporary setback. Analysts warn it could mark the beginning of a permanent shift in regional trade alliances, particularly within the Muslim-majority economies of South and Central Asia.

For Pakistan, losing Afghanistan’s market could mean the erosion of one of its most dependable export destinations. For Afghanistan, it could mean higher import costs and deeper reliance on Iran and India.

Unless diplomatic channels reopen soon, the situation may reshape trade patterns across the broader Islamic world — with long-term geopolitical and economic consequences that neither side can afford to ignore.