Afghanistan National Trade Policy 2019-2023

1.1. DOMESTIC POLITICAL, SOCIAL AND ECONOMIC CONTEXT OF THE AFGHANISTAN NATIONAL TRADE POLICY 1

1.2. EXTERNAL CONTEXT OF THE AFGHANISTAN NATIONAL TRADE POLICY 3 2. AFGHANISTAN NATIONAL TRADE POLICY RATIONALE AND OBJECTIVES 5

2.1. RATIONALE 5

2.2. VISION 5

2.3. OBJECTIVES 6

2.4. GUIDING PRINCIPLES 8 3. POLICY AREAS 10

3.1. POLICY AREA 1 : PROMOTING AFGHAN PRODUCTS’ EXPORT COMPETITIVENESS BY ADDRESSING SUPPLY-SIDE CONSTRAINTS 11

3.2. POLICY AREA 2 : PROMOTING DOMESTIC PRODUCTION AND TRADE 18

3.3. POLICY AREA 3 : ENHANCING THE TARIFF REGIME 20

3.4. POLICY AREA 4 : INCREASING THE EFFICIENCY OF IMPORT AND EXPORT ADMINISTRATION, CUSTOMS AND BORDER-CONTROL MEASURES 21

3.5. POLICY AREA 5 : PROMOTING MARKET ACCESS FOR AFGHAN GOODS AND SERVICES 23

3.6. POLICY AREA 6 : MAKING TRADE-ENHANCING INSTITUTIONS MORE EFFECTIVE 26 4. IMPLEMENTATION ARRANGEMENTS 29

4.1. IMPLEMENTATION PRINCIPLES 29

4.2. THE MOIC’S ROLE 29

4.3. ANTP ACTORS AND THEIR ROLES 30

4.4. TRADE-RELATED PUBLIC–PRIVATE DIALOGUE 31

4.5. THE LEGISLATIVE DIMENSION 32

4.6. MONITORING AND EVALUATION 32

4.7. DONOR SUPPORT 33 v ANNEX I THE ANTP RESULTS FRAMEWORK 35 ANNEX II THE ANTP’S ROLE IN THE CONTEXT OF THE AFGHANISTAN NATIONAL PEACE AND DEVELOPMENT FRAMEWORK ( ANPDF ) 39 ANNEX III MATCHING ANTP POLICY AREAS AND ACTIVITIES WITH THE MOIC STRATEGIC PLAN ACTIVITIES 40 ANNEX IV COHERENCE BETWEEN THE ANTP AND THE NPP PSD 41 FIGURES Figure 1 : ANTP objective tree 7 Figure 2 : ANTP policy areas and measures – overview 10 Figure 3 : ANTP measures related to Policy area 1 : Promoting export competitiveness 11 Figure 4 : ANTP measures related to Policy area 2 : Promoting domestic production and trade 18 Figure 5 : ANTP measures related to Policy area 4 : Trade facilitation 21 Figure 6 : ANTP measures related to Policy area 5 : Promoting market access for Afghan goods and services 24 Figure 7 : ANTP measures related to Policy area 6 : Strengthening Afghan trade policy and trade support institutions 27 Figure 8 : ANTP monitoring structure 32 BOXES Box 1 : The Islamic Republic of Afghanistan’s accession to the WTO 2 vi ACRONYMS AND ABBREVIATIONS ACBR-IP Afghanistan Central Business Registry MoF Ministry of Finance and Intellectual Property MoFA Ministry of Foreign Affairs ACDR Afghanistan Centre for Dispute Resolution MoMP Ministry of Mines and Petroleum AfRA Afghanistan Railway Authority MoPH Ministry of Public Health ANPDF Afghanistan National Peace and Development MoT Ministry of Transport Framework MUDL Ministry of Urban Development and Land ANSA Afghanistan National Standards Authority NEPA National Environmental Protection Agency ANTP Afghanistan National Trade Policy NES National Export Strategy APTTA Afghanistan–Pakistan Transit Trade Agreement NPA National Procurement Authority ARAZI Afghanistan Independent Land Authority NPP PSD National Priority Program for Private Sector ASYCUDA Automated System for Customs Data Development DAB Da Afghanistan Bank NRRCP National and Regional Resource Corridors EBA Everything But Arms Programme ECOTA Economic Cooperation Organization Trade NTBs Non-tariff barriers Agreement OSS One-stop shop EPD Export Promotion Directorate PPD Public–private dialogue EU European Union PRISEC E xecutive Committee on Private Sector FDI Foreign direct investment Development GDP Gross domestic product SAARC South Asian Association for Regional Cooperation GSP Generalized System of Preferences SAFTA South Asian Free Trade Area HEC High Economic Council SATIS SAARC agreement on trade in services IFD Investment Facilitation Directorate SEZ Special economic zone IPR Intellectual property rights SMEs Small and medium-sized enterprises LDCs Least developed countries SMQT Standardization, metrology, quality assurance M&E Monitoring and evaluation and testing MAIL Ministry of Agriculture, Irrigation and Livestock SPS Sanitary and phytosanitary MoIC Ministry of Industry and Commerce TBT Technical barriers to trade MoEC Ministry of Economy TIR Transport International Routiers MoEW Ministry of Energy and Water WTO World Trade Organization 1 1. BACKGROUND In the era of globalization, trade has become an all-per- vasive part of economic life. Trade issues affect, and are affected by, almost all other economic and social policies. A trade policy can, therefore, constitute a potent tool for the government to achieve economic objectives and influence growth and development. Effective trade policies can pro- mote economic development by encouraging more pro- ductive investment, which will lead to a more internationally competitive private sector. Up until now, the Islamic Republic of Afghanistan has not had a national trade policy. The Afghanistan National Trade Policy ( ANTP ) 2019–2023 presented in this document fills this important gap in the country’s policy landscape. It provides an evidence-based, structured and coherent ap- proach to enhance the country’s trade competitiveness and benefit from increasing insertion into the global economy. The ANTP document is organized as follows : The re- mainder of this first section summarizes the domestic and external environment in which trade takes place and busi- © ITC / David Fox nesses operate in the Islamic Republic of Afghanistan. Section 2 outlines the core principles, rationale and objec- tives of the ANTP. Section 3 presents the policy areas and actions that the ANTP comprises. Section 4 outlines the implementation arrangements. Annexes present the de- tailed results framework as well as address issues of policy coherence.

1.1. DOMESTIC POLITICAL, SOCIAL AND ECONOMIC CONTEXT OF THE AFGHANISTAN NATIONAL TRADE POLICY The Afghan Government has been committed to economic the Islamic Republic of Afghanistan’s participation and lead- growth-oriented trade policies, with an emphasis on main- ership in bilateral and region-wide initiatives. Regional trade taining relatively low trade barriers for exports and imports, and transit facilitation, therefore, remain high priorities, not while taking into account domestic revenues and the need only because they will increase trade, but also because to support increased production of goods and services by they will strengthen regional cooperation, contribute to re- the private sector. The Islamic Republic of Afghanistan’s re- gional stability and prosperity, and increase investment. The cent successful accession to the World Trade Organization Islamic Republic of Afghanistan is a member of significant ( WTO ) ( see Box 1 ) underlines the country’s determination to regional trading arrangements, including the South Asian conduct its external trade according to laws, rules and pro- Free Trade Area ( SAFTA ) and the Economic Cooperation cedures that are internationally recognized and accepted. Organization Trade Agreement ( ECOTA ), and is an observer The Islamic Republic of Afghanistan occupies a key stra- in the Shanghai Agreement. tegic location linking Central Asia with South Asia, providing the People’s Republic of China and the Far East with direct trade routes to the Middle East and Europe. Making the most of this geographic location will depend on deepening [ BACKGROUND ] 2 Box 1 : The Islamic Republic of Afghanistan’s accession to the WTO The Islamic Republic of Afghanistan became a Member of the WTO Furthermore, the Islamic Republic of Afghanistan will encourage in July 2016, after completing an accession process that began increased trade in 11 service sectors and greater opportunities for on 21 November 2004. WTO membership represents a major investment in the provision of these services within the country. opportunity for the Islamic Republic of Afghanistan to strengthen These include the telecommunications, banking and insurance, economic ties and greatly expand opportunities for trade with and distribution sectors, which are essential for higher sustainable countries in the region and with the entire world. The government growth of the entire economy. will actively use the rights and benefits of full membership in the A major benefit of WTO membership is the maintenance of con- WTO to attract investment, create jobs and improve the economic sistent laws and regulations governing trade, which will be of welfare of all Afghans. particular benefit for Afghan exporters seeking to expand access As part of accession, the Islamic Republic of Afghanistan com- to foreign markets. As a part of the WTO accession process, the mitted to establishing upper limits on import tariff rates for Ministry of Industry and Commerce ( MoIC ) has been engaged in all products on an average of 13.5 %–33.6 % for agricultural reforming the country’s commercial laws and regulations to meet products and 10.3 % for non-agricultural products. Tariffs on international standards. some of the country’s exports are mostly bound at 10 % or less. The domestic environment in which the notable achieve- ments have been realized has been anything but easy. Severe conflict has done enormous damage to production facilities, physical infrastructure and the readiness to invest. The legacy of institutional difficulties has been no less detri- mental to progress. Above all, the critical intangible assets of trust and confidence have been shattered, and their recon- struction takes longer than that of material assets. The openness to imports, coupled with serious limitations on domestic production capacity, are compounded by the Islamic Republic of Afghanistan’s location as a landlocked country. Transport, especially over land, is fundamental to rapid and relatively low-cost movement of goods. Ease, speed and low cost of Customs and related transactions are required if the impact of geographic constraints is to be mini- mized. Yet the same legacy problems that are detrimental to the hardware of trade ( the goods themselves ) are equally a constraint on improvement in the software of trade ( the x smooth movement of traded items at low transaction cost ). Fo v id The outcome of this forbidding array of obstacles has / Da I TC © been that the Islamic Republic of Afghanistan’s balance of trade is exceptionally negative. The value of goods imports is presently about seven times the value of exports – in 2018, for local or international markets, are usually contingent on Afghanistan’s exports were around $ 875 million, which is imported materials. Against this, the ability to reach a wide only 4 % of GDP, while the imports of goods were $7.4 billion, set of possible export markets is limited by both the trans- or 37.7 % of GDP. The average goods trade deficit is around port difficulties and the time and resources necessary to 33 % of GDP. For services, exports in 2018 stood at an esti- convince foreign buyers of the quality and attractiveness of mated $ 482 million, compared to imports of close to 1.2 bil- the Islamic Republic of Afghanistan’s export offering.1 lion, amounting to a services trade deficit of $ 714 million. Growth cannot be realized without major reliance on imports, 1.– Trade data for Afghanistan in 2018 provided by UN COMTRADE (and, on and this will continue to be the case over the next few years. that basis, ITC TradeMap) are very different from the above numbers (which Substantial imports are still required to repair and recon- are taken from the WTO statistical database). For example; COMTRADE struct every kind of production and infrastructure. Efforts to reports total exports of USD 1.8 B and total imports of USD 14.8 B. This is something that should be discussed with the UN and WTO in order to diversify into new branches of production, whether destined reconcile the statistics. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 3

1.2. EXTERNAL CONTEXT OF THE AFGHANISTAN NATIONAL TRADE POLICY The external environment in which the Islamic Republic of Afghanistan operates is now, and will remain in the foresee- able future, exceptionally complex and volatile – both glob- ally and regionally. Globally, growth in the world economy has, in the past few years, dropped to a much lower band than in the previ- ous decade. World trade growth has likewise fallen sharply. Demand expansion is no longer driven by developed econ- omies. The Islamic Republic of Afghanistan has mirrored those falls, with present rates of GDP growth down to ap- proximately one-fifth of rates in earlier years. While forecasts in this epoch of major economic upheaval and realignment are hazardous, it would be unwise to operate on the as- sumption of a quick return to rapid expansion. (cc) Canada in Afghanistan In Central Asia, several resource-rich and landlocked countries are making efforts similar to those of the Islamic Republic of Afghanistan, namely to diversify export offerings, Everything But Arms ( EBA ) programme. In other signifi- diversify the markets to which goods are sold, attract for- cant markets, such as the United States of America, Japan, eign investments in manufacturing and agro­processing ( as Canada and the People’s Republic of China, there are also well as in extractive industries ), and make the first tentative favourable conditions of entry for Afghan products com- steps in developing more sophisticated service sectors. This pared with those from most other suppliers. The Republic creates a situation of increased competition between the of India, both within WTO and as a more developed member countries in the region. Care must be taken that this does of SAFTA, has instituted important preferential arrangements not lead to the erection of unnecessary barriers to trade for for least developed countries ( LDCs ), in particular under its Afghan exports. Enhanced and expanded trade within the Duty Free Tariff Preference Scheme, from which the Islamic region will benefit all countries and lead to a stronger region Republic of Afghanistan can benefit. However, even these better able to withstand global competition. A good example elements of stability have some limitations, such as strin- of how cooperation in trade and transit can help is the re- gent rules of origin requirements, as well as doubts about cent conclusion of bilateral agreements between the Islamic the future evolution of demand in at least some of these Republic of Afghanistan and the Republic of Uzbekistan, economies. which should help expand Afghan exports. Finally, linked to the Islamic Republic of Afghanistan’s The Gulf and members of the South Asian Association position as a landlocked country, the importance of tran- for Regional Cooperation (SAARC) have significant potential sit trade is high. Fortunately, the country’s dependence on for Afghan exports, but also, to a certain extent, compete only a few corridors has been improved in recent years, with the Islamic Republic of Afghanistan in regional mar- both through the conclusion of transit agreements ( such kets. The People’s Republic of China and the Republic of as the Chabahar Agreement in 2016 with the Republic of India have rapidly growing and rapidly changing economies, India and the Islamic Republic of Iran, the agreements already very strong in manufacturing and several areas of with the Republic of Uzbekistan in late 2017 and the recent services, and their actions, including in the financial area, Lapis–Lazuli Transit and Transport Route Agreement with continue to significantly alter the international perspectives the Republic of Azerbaijan, Georgia, the Republic of Turkey, of their Central Asian neighbours. The Islamic Republic of and Turkmenistan ) and infrastructure initiatives ( such as the Afghanistan must pay close attention to trade and invest- opening up of the Chabahar port ). ment channels that may be offered by these two crucial Afghanistan has now exported a number of consign- countries. ments through Chahbahr port to Mumbai, India, and in early Although the overall external trade panorama is one 2019 it also dispatched consignments of marbles and fresh of fluidity and uncertainty, there are some foreign markets fruits, via the Lapis Lazuli Route to Turkey and Azerbaijan. where the Islamic Republic of Afghanistan can operate un- The ANTP builds on these recent achievements and der stable conditions. Its exports to the European Union aims to ensure that they will lead to actual increases in ( EU ), which currently absorbs some 12 % of all exports, Afghan exports, including through effective implementation benefit from duty-free and quota-free access under the of these agreements. [ BACKGROUND ] (cc) @flickr / Heimo Liend 5 2. AFGHANISTAN NATIONAL TRADE POLICY RATIONALE AND OBJECTIVES

2.1. RATIONALE A gradual movement towards an improved balance of trade With regard to strengthening the Islamic Republic of and of international payments more generally requires the Afghanistan’s presence in external markets, the ANTP can creation of an economic environment conducive to invest- be invaluable in, among others : ment, production and export within the Islamic Republic of ƒƒ Helping exporters to obtain information on those markets Afghanistan. This should be matched by the growth of other ( market research ) ; domestic activities, which, properly costed, can substitute ƒƒ Organizing and supporting initiatives to reinforce the goods that currently, and largely out of necessity, are be- Islamic Republic of Afghanistan’s reputation ( brand crea- ing imported. That environment can only be put in place tion and development ) ; and through the concerted efforts of a wide range of entities, ƒƒ Negotiating arrangements of diverse kinds to create more public and private, which together agree on the goals and and more favourable market space for Afghan traders, use their combined capacities to achieve them. It is in this and ensuring that trading partners do not impose unwar- profound sense that a trade policy for the Islamic Republic ranted barriers on Afghan exports ( trade diplomacy ). of Afghanistan has to be conceived as a national endeavour. The challenge for a trade policy is to provide a coherent This is accomplished by creating a domestic economic en- framework for these and other policy actions that respond to vironment that : the most important bottlenecks affecting Afghan businesses ƒƒ Offers macroeconomic conditions that are as stable as involved, or potentially involved, in trade. The ANTP does so possible ; through a two-pronged approach : ƒƒ Is governed by clear and consistent policies that are sta- ƒƒ It is based on an analysis of the barriers from the bottom ble and free from arbitrary change ; up ; but ƒƒ Provides maximum encouragement to exporters, con- ƒƒ It defines the necessary measures to overcome the sistent with the requirements of other key needs and ob- barriers in an integrated strategic way, from the top. ligations of the Islamic Republic of Afghanistan ( such as Accordingly, the following subsections present the over- revenue generation, maintenance of fair competition, and all ANTP vision, objectives and principles, and Section 3 working within the international trade rules to which the describes the comprehensive set of individual measures country has subscribed ) ; and to be taken as part of the ANTP. ƒƒ Attracts foreign direct investment ( FDI ).

2.2. VISION “  The Afghanistan National Trade Policy is a market-driven, development-led, sustainable trade policy that aims to catalyse expanded economic growth, increase employment and incomes, and reduce poverty to attain improved ” living standards for all Afghans . [ AFGHANISTAN NATIONAL TRADE POLICY RATIONALE AND OBJECTIVES ] 6 The ANTP vision is aligned with the Strategic Plan of Islamic Republic of Afghanistan’s position in regional and the Ministry of Industry and Commerce ( MoIC ) and the international value chains and captures a higher proportion Afghanistan National Peace and Development Framework of value added in its traditional export activities. The trade ( ANPDF ).2 regime will be fully consistent with the international legis- The ANTP will provide support to the internal and exter- lative and institutional structure as developed through the nal competitiveness of Afghan goods and services, thereby WTO and with the government’s multilateral and regional also contributing to an export composition that improves the trade and transit commitments, while ensuring that other countries also comply with their commitments made and 2.– Annex II matches the ANTP to the relevant ANPDF goals and activities, refrain from applying unjustified barriers to trade. and Annex III does the same with the MoIC Strategic Plan.

2.3. OBJECTIVES In line with the ANTP vision, the mission statement defining ƒƒ The domestic market is heavily import-dependent, which the ANTP’s overall objective is aligned with the long-term has led to an unsustainable trade balance. goal of the MoIC as identified in the Strategic Plan : “To de- ƒƒ The tariff regime is characterized by a high incidence of velop the Afghan economy so that investment flows, trade exemptions, and tariff policy in general lacks a strategic expands, and industries and SMEs develop.” Focusing this approach. goal on the specific area of trade policy, the ANTP’s overall ƒƒ Partly as a result of being a landlocked country, trade objective, which is aligned with the MoIC’s four strategic costs in the Islamic Republic of Afghanistan are high by objectives, is : international standards, in terms of both cash costs and time costs. ƒƒ Reliable and timely trade statistics are absent, and trade To expand Afghan exports and domestic production skills and negotiation capacity are poor. that leads to economic growth, creation of jobs and ƒƒ Lastly, institutional capacities for trade policy formulation poverty reduction, thereby reducing the trade deficit, and supporting exporters need constant improvement in by facilitating trade and promoting export opportu- order to remain competitive. nities and market access, developing competitive businesses and industrial sectors catering for the domestic market, building the capacity of the MoIC The ANTP, in response to these challenges, distinguishes and trade support institutions, and strengthening the the following specific objectives contributing to the overall trade-enabling business environment. goal. i. Specific objective 1 : To increase Afghan products’ export competitiveness, through removing supply-side In order to achieve this objective, which promotes a bal- constraints affecting exporters, including through promo- anced relationship between trade integration and sustaina- tion of FDI and the establishment of special economic ble domestic economic development, the ANTP will address zones ( SEZs ) ; providing export promotion services, multiple constraints for firms to invest, produce and export. including the provision of a targeted and agile trade Despite the progress made in recent years, structural information system that offers exporters the opportunity bottlenecks continue to hold back the Islamic Republic of to consolidate and expand existing markets and support Afghanistan’s competitiveness and limit trade. in entering new markets ; and enhancing the business ƒƒ First, few Afghan firms participate in international mar- environment, including through developing improved kets, suggesting low productivity levels. The quality of dispute resolution processes and further streamlining goods and services produced in the Islamic Republic of the process for obtaining and renewing business and Afghanistan is generally low, not least due to the low level trade licences. of technology and lack of value chains, but also due to the high cost of doing business and a weak policy and ii. Specific objective 2 : To promote domestic production regulatory environment for trade. and trade, considering comparative advantages, and ƒƒ Furthermore, exports are highly concentrated on very through supporting sectors and producers with potential few, mostly unprocessed agricultural products and few to supply the domestic market, ensuring fair competi- destination markets, making the Islamic Republic of tion and protecting the domestic industry against unfair Afghanistan vulnerable to economic shocks. import competition. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 7 iii. Specific objective 3 : To rationalize the tariff policy, vi. Specific objective 6 : To increase the effectiveness through institutional changes for the tariff setting as well of trade-enhancing institutions, including the MoIC, as a simplification of the regime for exemptions, and a through streamlining institutional structures to ensure review of tariffs, with a view to balancing revenue genera- decisions affecting trade conditions and performance tion and industrial development purposes. are made with maximum speed, capacity building of trade support institutions, and enhancing trade-related iv. Specific objective 4 : To reduce the time and cost of public–private dialogue. trading across borders, through provision of a trade facilitation framework aimed at simplifying import, ex- port and transit formalities, including documentation and Figure 1 provides a graphical overview of the objective border procedures. tree. The complete ANTP results framework is presented in Annex I. The starting points for the results framework were v. Specific objective 5 : To promote market access for the ANPDF and the MoIC Strategic Plan 2016–2020. This Afghan goods and services both regionally and glob- ensures, to the extent possible, that ANTP policy measures ally, through the consolidation of the Islamic Republic of are in line with the wider economic development framework Afghanistan’s regional trading and transit arrangements, as well as the already approved strategic document for the including the potential identification of alternative transit MoIC, the key entity in charge of implementing the ANTP. routes, ensuring fair access of the country’s exports to The ANTP results framework has been expanded and deep- regional markets, and taking measures to benefit from ened based on the coverage of trade policy measures that preferential trade agreements and WTO membership, are required to address the various identified trade-related including the WTO Trade Facilitation Agreement ( TFA ). issues requiring the government’s attention. Figure 1 : ANTP objective tree Developmental objective: To catalyse expanded economic growth, increased employment and incomes, and reduced poverty to attain improved living standards for all Afghans Overall objective: To expand Afghan exports and domestic production Specific Specific Specific Specific Specific Specific objective 1: objective 2: objective 3: objective 4: objective 5: objective 6: To increase To promote To enhance To reduce the To promote To increase the export domestic the tariff time and cost market effectiveness competitive - production policy of trading access for of trade- ness of Afghan and trade across Afghan goods enhancing products borders and services institutions In sum, while the Islamic Republic of Afghanistan’s endow- endowments, remove the identified constraints, and make ments represent the necessary conditions and potential a transformational paradigm shift from the present position for successful insertion in the global economy in the near of low trade and commerce, export concentration in primary future, they are not sufficient. What the country needs in products, and importation of processed and final products. order to use trade and commerce for sustained overall in- The ANTP aims to contribute to this shift. clusive economic development is to effectively harness its [ AFGHANISTAN NATIONAL TRADE POLICY RATIONALE AND OBJECTIVES ] 8

2.4. GUIDING PRINCIPLES The implementation of all actions and measures foreseen under the ANTP will be guided by some fundamental and cross-cutting principles : ƒƒ Promotion of policy coherence and consistency through the distinction of direct and indirect trade policy issues ; ƒƒ Promotion of gender equality ; and ƒƒ Good governance and transparency of policy and meas- ures.

2.4.1. PROMOTION OF POLICY COHER- ENCE AND CONSISTENCY – DIRECT AND INDIRECT TRADE POLICY ISSUES The ANTP is being drafted in a period of primarily ad- x Fo verse conditions. In response, for the period 2019–2023, vid a the Islamic Republic of Afghanistan will seek to enhance /D TC trade competitiveness primarily through facilitating produc- ©I tion and investment aimed at the domestic market, on the The ANTP recog- one side, and through strengthening supply-side capaci- nizes and addresses the chal- ties for exports and promoting existing exports on the oth- lenges faced by women as they engage in trade in the er. The ANTP thus comprises a mix of actions that are not Islamic Republic of Afghanistan, in the region as well as per se aimed at trade, but that nevertheless encourage it internationally. These challenges range from a lack of financ- ( the ‘indirect trade policy measures’ ), and changes to ing options to non-tariff barriers to trade, the lack of access existing rules and procedures that mostly constitute spe- to alternative economic opportunities due to operation in cific barriers to trade ( the ‘direct trade policy measures’ ). the informal sector, and the lack of capacity to grow busi- Linkages between the various policy actions foreseen un- nesses. The challenges are addressed by the ANTP through der the ANTP are comprehensive and internally coherent. the following means : in trade sectors with a predominance However, coherence with other government policies – such of women, all efforts will be made to ensure they are sup- as tax issues, private sector development, and social and ported to increase their productivity, diversifying their busi- education policy, etc. – is equally important. To ensure this, nesses from only handicraft, dry fruit and a few other sectors alignment of the ANTP with the ANPDF has been the start- to a range of tradable sectors in which they feel their interest ing point, and coherence with other policies and strategies, and the business environment in which they operate will be such as the National Export Strategy (NES) and the National facilitated by the ANTP. Where possible, indicators, targets Priority Program for Private Sector Development 2019–2023 and monitoring are disaggregated by gender in order to ( NPP PSD ), has been ensured in the drafting process. fine-tune measures with a view to promote gender equality. However, during implementation, ongoing coordination will be achieved through the comprehensive and inclusive insti- tutional set-up for the policy ( see Section 4 below ). 2.4.3. GOOD GOVERNANCE AND TRANSPARENCY OF POLICY

2.4.2. PROMOTION OF GENDER AND MEASURES EQUALITY Predictability and transparency of laws and regulations af- It is the goal of the Afghan Government to eliminate discrimi- fecting the private sector are an integral part of an enabling nation against women, develop their human capital, and business environment and a precondition for both domes- promote their leadership in order to guarantee their full and tic and international trade. A stable environment for trade equal participation in all aspects of life. Under Article 22, the and investment warrants the transparent development of national Constitution enshrines the policy of non-discrimina- trade rules and their enforcement. Furthermore, transpar- tion and equality in rights and duties between women and ent and predictable rules are important safeguards against men. The MoIC is also fully committed to gender equality. corruption. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 9 However, achieving the nation’s vision for economic trans- The ANTP fully recognizes the crucial position and dominant formation and trade requires not only a transparent and pre- influence of politics and political issues in the management dictable trading regime, but good governance and the rule of the nation’s trade affairs over the years. To ensure that of law at a fundamental level. This includes a number of key Afghan businesses benefit from clear and predictable rules elements, including : and regulations, the implementation of the ANTP will comply ƒƒ A system of governance in which the citizens, especially with the following guiding principles : women, and civil society groups are free to participate ƒƒ The MoIC, which has primary responsibility for encourag- effectively and without obstacles for participation ; ing private sector development and the implementation of ƒƒ Transparent and accountable government institutions, a supportive policy environment for the sector, will ensure promoting cooperation and coordination among stake- that regulations impacting on trade are transparent, ac- holders in the interest of common national development cessible, easily understood and efficiently implemented. goals, and discouraging corruptive practices ; This will involve publication of all laws and regulations on ƒƒ A political culture that discourages the politics of self- the internet ; interest and sectionalism and downplays patronage and ƒƒ The private sector ( all the chambers ) will be consulted on clientelism for policies and programmes as they affect all trade-related Bills under development, enabling stake- trade ; holders to submit their views on the proposed regulatory ƒƒ A bureaucracy that is efficient and effective with the in- measures ; and tegrity, self-respect and confidence to carry out the good ƒƒ The MoIC will aim to prepare regulatory impact as- intentions of government fairly and expeditiously ; and sessments ( RIAs ) for legislative initiatives to avoid un- ƒƒ A judiciary that is impartial, independent from govern- necessary regulatory compliance costs for the trading ment and pressure groups, and easily accessible to the community. population and legal persons. kr @ flic tion lle c Co o to Ph nk Ba l or d W 0) 2. N D N C- BY- (C C [ AFGHANISTAN NATIONAL TRADE POLICY RATIONALE AND OBJECTIVES ] 10 3. POLICY AREAS This section discusses the policy areas that are the core of objectives identified above. Under each policy area, a num- the ANTP as well as those that have an important effect on ber of policy measures have been identified that are aimed the Islamic Republic of Afghanistan’s trade performance. to address key bottlenecks. Figure 2 provides an overview. To facilitate implementation and monitoring, the ANTP policy areas are aligned one-to-one with the six specific Figure 2 : ANTP policy areas and measures – overview Overall objective: To expand Afghan exports and domestic production Policy area 1: Promote export competitiveness of Afghan products 1.1: 1.2: 1.3: Enhance Enhance Improve business 1.5: 1.6: Enable 1.7: Sector- 1.4: Develop trade infra - quality environment Promote trade specific SEZs structure infra - & investment exports finance support and services structure climate Policy area 2: Promote domestic production and trade 2.1:Support sectors 2.4: Protect producers 2.2:Support businesses 2.3:Protect and with potential against unfair on the domestic market strengthen IPRs competitiveness competition Policy area 3: Enhance tariff policy 3.1:Review tariff exemptions Policy area 4: Trade facilitation 4.1:Remove export restrictions 4.2: Facilitate trade 4.3: Improve Customs procedures Policy area 5:Promote market access for Afghan goods and services 5.1: Regional trade agreements 5.2 : Benefit from preferential 5.3 : Benefit from WTO and integration trade schemes membership Policy area 6: Increase effectiveness of trade-enhancing institutions 6.1: Strengthen capacity of MoC -Iand policy 6.2 : Strengthen capacity of trade support setting institutions institutions [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 11 The government is equally committed to all of these poli- In terms of implementation, it should be noted that the policy cy areas. The order of presentation is arranged by going areas and actions foreseen under the ANTP are under the from specific interventions that the Islamic Republic of responsibility of a wide range of ministries and agencies, of Afghanistan can implement unilaterally ( the first four policy which the MoIC is only one. The present policy document areas ) to initiatives that depend on negotiations or joint ac- provides more detail for those areas and actions that are tion with regional or international partners ( Policy area 5 ) under the direct responsibility of the MoIC. In other policy and institutional issues ( the last policy area ). Indeed, in the areas, the definition of precise actions and measures is presence of multiple binding constraints, a clear prioritiza- the prerogative of the relevant entity responsible, and the tion of actions is difficult. At the same time, the ANTP does ANTP accordingly addresses the rationale and objectives. not aim to address everything – a number of policy actions For these policy areas, the MoIC may assist the ministry or that are without doubt required in order to expand the com- agency in charge in the formulation of specific measures petitiveness of the Afghan private sector, but that are not and will ensure coordination of measures. In formulation of directly trade related, are not addressed. These include is- all specific measures, including tariff policies, the private sues such as access to finance ( apart from trade finance ) sector ( all chambers ) should be consulted in advance. or improvements in economic infrastructure such as elec- For each of the identified policy areas, the ANTP sets tricity, water and telecommunications ( although trade infra- out in the following sections the rationale underlying the structure is included ), which are addressed in other policy measures within each designated policy area, the specific documents. objectives pursued, indicators, baselines and targets for measuring progress, the main activities and the entities re- sponsible for implementation. Where appropriate, linkages with other policies are also described.

3.1. POLICY AREA 1 : PROMOTING AFGHAN PRODUCTS’ EXPORT COMPETITIVENESS BY ADDRESSING SUPPLY-SIDE CONSTRAINTS The limited export competitiveness of Afghan goods and This requires overcoming a number of constraints, including services – apart from some selected, mostly agricultural limited availability and quality of both hard and soft ( quality ) products – results in high export concentration, which in infrastructure and the lack of support available for (potential) turn leads to high vulnerability of the Afghan economy to exporters. Therefore, ANTP measures under this policy area external shocks. A core objective of the ANTP, therefore, is ( Figure 3 ) will address problems related to the trade and to create conditions that will increase and diversify exports, quality infrastructure, the business environment and invest- which can be expected to stimulate economic growth and ment climate for export purposes ( including through special reduce the trade deficit. economic zones ), export promotion ( including through an expanded use of commercial attachés ), trade finance and sector-specific issues. Figure 3 : ANTP measures related to Policy area 1 : Promoting export competitiveness Policy area 1: Promote Afghan products’ export competitiveness 1.1: 1.2: 1.3: Enhance Enhance Improve business 1.5: 1.6: Enable 1.7: Sector - 1.4: Develop trade infra - quality environment Promote trade specific SEZs structure infra- & investment exports finance support and services structure climate [ POLICY AREAS ] 12 Objective : To upgrade the trade and transport infrastructure ( including storage facilities ) in order to reduce wastage and facilitate the delivery of goods from Afghan producers to domestic and export markets at reduced costs. Responsibility for implementation : The MoIC will support the relevant ministries and agencies to address infrastruc- ture constraints that inhibit trade – these include, among ­others, MoF, MoT / AfRA, MoMP, MoEW, MoLSA, MAIL, MUDL and NPA.

3.1.2. IMPROVING QUALITY INFRASTRUCTURE Rationale : The capacity to meet both mandatory norms and voluntary quality requirements and standards is a key requirement for effective participation in international trade. Abiding by international standards in the global market- © ITC / David Fox place requires that Afghan products meet certain specified health and safety, environmental and technical standards. In sophisticated consumer markets, products and services

3.1.1. IMPROVING AND ENHANCING that do not meet these standards are automatically exclud- TRADE INFRASTRUCTURE AND SERVICES ed. Without proof that an Afghan product meets these re- quirements, there will be no exports. In view of the Islamic Rationale : A functioning transport infrastructure is an es- Republic of Afghanistan’s export basket, which is dominated sential condition for trade to happen and in particular for by primary agricultural products, the importance of meet- export competitiveness. Conversely, deficient roads and ing international health and safety standards cannot be rail, and lack of appropriate facilities at airports, dry ports overstated. and border posts can be major constraints on exports and Compliance with such international standards involves imports ; in particular, they can prevent the export of perish- costs for both government and businesses – it typically re- able products. quires notable investments in new infrastructure, equipment, The Islamic Republic of Afghanistan greatly suffers from management systems and human capital as well as recur- these shortcomings, which extends to all types of trans- rent costs such as for inspection and testing. port infrastructure. In the latest ( 2018 ) World Bank Logistics The Afghanistan National Standards Authority ( ANSA ), Performance Index ( LPI ), the country’s trade infrastructure in coordination with the MoIC, the Ministry of Public Health ranks 158 out of 160 countries, just above For example, ( MoPH ) and MAIL, has already developed a regulatory there is still a general lack of storage infrastructure that is framework for product standards that would facilitate Afghan required to enable trade in perishable agricultural exports. goods’ access to foreign markets. The private sector has These facilities would allow exporters to store their produce, repeatedly requested the ability to obtain guidance with re- thereby avoiding losses and wastage from export delays. gard to trade-related standards and technical regulations In response to the infrastructure development require- both in the Islamic Republic of Afghanistan and as required ments, the National and Regional Resource Corridors in export markets. Programme ( NRRCP ) has focused on taking advantage of ANSA’s responsibilities include supporting producers investments being made in the minerals and natural resourc- that are required to conform, for example, to standards and es sectors, including supporting infrastructure, to develop technical regulations, which are related to technical barri- the Afghan economy more broadly. Transport and other ers to trade ( TBT ), and for agricultural products that must infrastructure, including power generation and supply, are additionally meet sanitary and phytosanitary ( SPS ) require- integral components of the NRRCP, as well as of the NPP ments. The Islamic Republic of Afghanistan’s new SPS- and on national infrastructure. TBT-related laws will address these issues. At the same time, government has limited funds avail- able for infrastructure development. Private participation in Objective : To reap the benefits from trade, the Afghan qual- infrastructure ( PPI ) can fill these funding gaps and increase ity infrastructure needs to be further developed and the le- the efficiency of public service provision. Such PPI will, gal framework must be completed. Exporters and potential in turn, depend on a sound investment climate, also ad- exporters need support in meeting international standards, dressed under the ANTP ( see Section 3.1.3 below ). while at the same time the government needs to ensure that [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 13 standards, technical regulations, conformity assessment MoIC’s DM for Trade Affairs, ACBR-IP and Investment procedures and SPS measures are not applied by import- Facilitation Directorate, which is responsible also for the ing countries in an overly strict or complex way that make implementation of the Afghanistan Investment Promotion them barriers for Afghan exports. The objectives are thus : Policy and serves as secretariat for the Supreme Board of Investments, which is recently approved by the High ƒƒ To fully implement an effective and efficient quality infra- Economic Council ( HEC ). However, despite the govern- structure, comprising standardization, metrology, quality ment’s efforts, FDI inflows have remained very low in re- assurance and testing ( SMQT ) support services, with a cent years ; clear definition of roles and responsibilities of the par- ticipating institutions and avoiding duplication of services ƒƒ Further enhancing the business licensing regime : The and redundant controls. This will ensure that all exports establishment of businesses in the Islamic Republic of are in compliance with international norms and stand- Afghanistan has been simplified recently by the creation of ards, and will also ensure that substandard imports are the MoIC Directorate General for Afghan Central Business prevented from entering the domestic market ; and Intellectual Property Registration ( ACBR-IP ). The registry acts as a single window, combining com- ƒƒ To increase Afghan firms’ export potential by providing pany registration, tax registration and publication in technical assistance to the productive sector on quality the official gazette, and charges a flat registration fee. related issues, and thereby help it to comply with health, Streamlined and more efficient licensing procedures have safety, environmental and technical standards ; been developed and implemented, while licence renew- als have been extended from one year to three years. ƒƒ To establish a regulatory framework for SPS and TBT in Additional reforms are, however, still necessary to further line with international best practice. reduce transactions costs, making firms more competi- tive in both domestic and export markets. For example, Responsibility for implementation : ANSA will have the depending on the sector of operation, companies are still primary responsibility, with the MoIC taking a coordinating required to obtain permits from line ministries ; and role. The close involvement of and collaboration with other relevant ministries and agencies, including MoPH, MAIL and ƒƒ Building capacity for an effective and efficient system the National Environmental Protection Agency ( NEPA ), as for the resolution of trade disputes : Commercial dispute well as producers themselves, is central to successfully im- resolution relates both to domestic trade and interna- plement improvements to the quality infrastructure and its tional trade disputes. Commercial courts are cumber- use by Afghan businesses. some and time-consuming, with the average time to settle a contract dispute being 1,258 days, according to the Doing Business index, and are generally unre-

3.1.3. ENHANCING THE BUSINESS sponsive to the needs of enterprises. This calls for the ENVIRONMENT AND INVESTMENT development of an alternative dispute resolution mecha- nism outside the court system. The Afghanistan Centre CLIMATE for Dispute Resolution ( ACDR ) has been recently estab- lished to offer mediation and expert witness services in Rationale : The foundation of international competitiveness a limited number of cases referred by the commercial is maintaining a strong and consistent business-friendly courts and in the future plans to expand its services to policy environment for trade and investment, including for- include arbitration. eign direct investment ( FDI ) and private business activity. In this context, Afghanistan’s Ease of Doing Business Rank Objectives : To increase the inflow of export-oriented FDI, in 2016 – 183rd of 190 countries – is not only of concern, thereby generating employment and increasing export but unacceptable. Addressing this issue goes beyond the earnings. This will be achieved by a combination of meas- scope of the ANTP and is addressed more extensively in the ures ranging from simplifying rules and procedures to pro- NPP PSD, but the ANTP will nevertheless contribute in those viding incentives, while ensuring that incentives are WTO areas that are trade related. This includes : compliant. A particularly important instrument will be SEZs ( see Section 3.1.4 below ). Additional objectives are to fur- ƒƒ Promoting export-oriented foreign and domestic invest- ther simplify, speed up and reduce costs for businesses, ment : For the Islamic Republic of Afghanistan to signifi- the process of obtaining and renewing business and invest- cantly increase exports, it will require large increases in ment licences, as well as to improve the efficiency of the investment, particularly FDI. These investments bring Afghan legal system in terms of adjudicating trade-related not only funds ; they also support increased transfer of commercial disputes, both of a domestic and of a trans- skills, technology and increased employment. The key boundary nature. agency for investment attraction and promotion is the [ POLICY AREAS ] 14 Main policy actions : c. ACBR-IP will work to establish an online system for licensing issues. i. Promote foreign and domestic investments in export- d. Further reduce the time required to renew a licence oriented activities, simplify investor requirements, and by separating the renewal process from tax clear- streamline and enhance transparency of the investment ance, to ensure that trading activities and business approval process. FDI involving the transfer of skills, ac- financing are not disrupted by the delay in licence cess to improved technology and increased employment renewal. for Afghans will be prioritized. This will be facilitated by developing and implementation of the FDI strategy. vi. With respect to the resolution of disputes, the following actions will be taken : ii. Reforms will include the granting of visas for skilled a. Further develop the alternate dispute resolution foreign staff as part of the approvals process for FDI so mechanism to strengthen the ability to enforce that the granting of a licence to invest results in auto- contracts, emphasizing mediated solutions that are matic approval of visas for the agreed number of foreign quicker, less expensive and supportive of parties staff. The requirement to renew residence permits and resuming business with each other. visas for intra-corporate transferees annually ( as per the b. Provide information about the ACDR to businesses Islamic Republic of Afghanistan’s commitment to the when they register, and encourage businesses to WTO in the Services Schedule ) will be removed ; these use their services when appropriate rather than the permits and visas will remain valid for as long as the judicial system. conditions in the FDI approval are met. iii. Develop targeted support and investment incentives Responsibility for implementation : MoIC ( in particular the for investors, which might include expedited business ACBR-IP and IPD ), in cooperation with MoF. Close coordi- registration and licensing, legal and regulatory advice, nation with the investment climate reform plan as well as support in acquisition and leasehold of land, advice in the Executive Committee on Private Sector Development researching and assessing specific investment oppor- ( PRISEC ) will be ensured. The MoIC will also closely col- tunities, discounted commercial electricity rates, expe- laborate with ACBR-IP ( for licensing ) and ACDR ( for com- dited Customs clearance for capital equipment needed mercial dispute resolution ). to implement the investment, and tax holidays ( under conditions to be determined ).

3.1.4. DEVELOPMENT OF SPECIAL iv. Strengthen the ACBR-IP, Investment Facilitation Direc- ECONOMIC ZONES torate ( IFD ) and the Commercial Attachés’ Directorate in facilitating and supporting FDI. The IFD will provide Rationale : Special economic zones ( SEZs ) are instru- packages and incentives for attracting investment and ments for promoting private investment, employment, ex- facilitating FDI procedures and provide after-care ser- port growth and diversification of economic activity. They vices to the investors. Road shows and exhibitions will are specific geographic locations where natural resources be organized to engage directly with potential investors exist or complementary production requirements can be and promote opportunities in the Islamic Republic of provided, and are subject to special provisions designed Afghanistan. to make conditions for production and export particularly attractive. SEZs can be a valuable mechanism for captur- v. With respect to business licensing, the following actions ing the value added from existing Afghan export activities, will be taken : such as in areas including precious stones, marble, fruits a. The ACBR-IP framework will be rolled out to the and nuts, saffron, medicinal herbs, carpets, handicrafts and remaining provinces, thereby further decentralizing some branches of mining. At the same time, they can serve the business licensing process. The full introduction as platforms for the introduction of assembly and process- of the new system will require a number of comple- ing for export in non-traditional activities, such as electron- mentary measures. These include capacity building ics ( export processing zones ), benefitting from the Islamic on the use of the system and a public awareness Republic of Afghanistan’s low labour costs. In export pro- campaign targeting businesses and traders ; to the cessing zones ( EPZs ), imported inputs are assembled and extent feasible, a more complete electronic delivery then exported, which limits the value added and, hence, net of the services. export earnings, but the employment and training effects are b. Review the fees for new business licences and for nevertheless important benefits. licence renewals and reduce them to a level that In the Islamic Republic of Afghanistan, an additional reflects the costs of providing ACBR-IP services. benefit of SEZs is that security concerns by investors can be better addressed, as well as infrastructural issues. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 15 In recognition of this, the government has already taken 3.1.5. EXPORT PROMOTION steps for the establishment of SEZs, such as through the Presidential Decree transforming eight airfields into SEZs, Rationale : Consistent with the government’s objective to on which the ANTP will build. increase the Islamic Republic of Afghanistan’s export com- The ANTP actions in relation to the development of SEZ petitiveness, it is important to increase the number of export- are, therefore, closely related to, and will be coordinated ers, expand the volume of exports and diversify exports. with, actions aimed at improving the trade infrastructure (see In addition to other instruments foreseen under the ANTP, Section 3.1.1 ) and the investment climate ( Section 3.1.3 ). this also requires export promotion. Many firms, including Indeed, SEZs are often used as pilots to test certain reforms exporting firms, are not aware of Customs tariffs and market that are then, if deemed successful, rolled out countrywide. access conditions that their products face in foreign mar- kets, except in the traditional markets. Preferential regimes Objective : To increase the volume of and diversify exports and the requirements to export under them, such as rules by attracting investors into one or more SEZs. of origin, are also not well known. The Export Promotion Agency of Afghanistan ( EPAA ) Main policy actions : was established in 2006 to increase exports by providing assistance to improving access to foreign markets, strength- i. Create specific legislation, policies and procedures for ening marketing efforts and being a one-stop shop for all regulating and managing SEZs. export-related documents. EPAA was recently moved back into the MoIC as the Export Promotion Directorate ( EPD ). ii. Create coordination and joint participatory mechanisms In addition, the network of commercial attachés located in for managing and regulating the zones. a certain number of the Islamic Republic of Afghanistan’s foreign embassies also provides export promotion services. iii. Identify potential locations of zones as well as the priority The EPD has recently been restructured and assigned products and industries to be located in these zones, a more focused mandate to implement policies, strategies and carry out feasibility studies. This will be an important and export plans in support of the ANTP. Under the new element of the National Infrastructure Plan ( NIP ). mandate, its goals are : ƒƒ Implement the NES to enhance export competitiveness iv. Develop a WTO-compliant incentive regime for the SEZs, across key sectors including the necessary legal instruments. Incentives ƒƒ Suggest and implement strategies for targeting and ac- could cover selective reductions or waivers of import cessing new markets after Afghanistan’ WTO accession tariffs, adjustment in regulations, tax incentives and ƒƒ Develop and implement export promotion and marketing targeted export promotion activities. Non-tax incen- plans for target markets tives, such as grants for developing human resources ƒƒ Promote Afghanistan’s brand internationally and diversify and research and development, will also be needed to the range of goods exported from the country attract investment to the zones. The incentive effects of ƒƒ Facilitate and streamline the export process these measures can be significantly enhanced by the ƒƒ Provide advisory and support services to Afghan export- provision of advanced infrastructure located in or near ers and enhance their skills in the areas of export proce- those SEZs located at the trading points at the border or dures compliance. close to ports or airports. Objective : To substantially increase access and expand v. Encourage substantial private and donor-funded invest- the range of export services available to Afghan business- ment in key infrastructure projects to support the SEZ es seeking to export goods and services, including a trade strategy. Experience in other countries demonstrates information system that offers exporters the fullest oppor- that direct private sector investment and management of tunities to consolidate and expand existing markets and SEZs can be highly effective in attracting other domestic supports them in efforts to enter new markets. and foreign investors. Main policy actions : i. Identify potential new markets in which selected Afghan Responsibility for implementation : The MoIC, in conjunc- products might have a level of competitive advantage tion with other relevant ministries and agencies, including the and elaborate the actions that would be required by Ministry of Energy and Water ( MEW ), the Ministry of Urban Afghan exporters to realize these opportunities. Development and Housing ( MUDH ), Da Afghanistan Bank ii. Expand the activities of the EPD, as well as the Trade ( DAB ), the Afghanistan Airfields Economic Development Services General Directorate to include a greater role in Commission ( AAEDC ) and ARAZI, will be responsible for export promotion, providing support services, technical implementation of SEZs, as well as coordination of the assistance, capacity development and marketing sup- measures, also with those foreseen in the NPP PSD. port. In particular, these services will include : [ POLICY AREAS ] 16 © World Bank »» Information provision and market intelligence cover- iv. Expand and enhance the work of commercial attachés ing : the existing size of these markets; the competitors as facilitators for Afghan exports by organizing regular Afghan producers face in those markets ; the chan- meetings with the business community and providing nels through which different products are marketed relevant refresher trainings to commercial attachés. and distributed ; the quality and safety requirements that must be met ; and the conditions regarding tariffs v. Periodically report on export progress and update the that Afghan products may face. export action plan. Furthermore, the development of a »» Developing the Afghan brand : at present, a number of national export strategy is already underway and will be trade exhibitions are organized abroad. These can be implemented during the ANTP period. supplemented by, for example, the electronic distribu- tion of information leaflets, videos and other materi- Responsibility for implementation : MoIC, in particular als that inform foreign markets about the availability of through the EPD, in coordination with key ministries and Afghan products. agencies, including MAIL and ANSA, and in consultation »» Facilitation of specific marketing arrangements : the with the private sector. The MoIC’s ability to assess the pos- core to effective entry into foreign markets is linkage sible impact of the change processes will also be improved with the powerful traders and distributors in those mar- by establishing links with foreign institutions that have the kets. While Afghan firms, and especially sector asso- capacity to provide detailed information and analyses help- ciations focused on specific products, will generally ful to the Islamic Republic of Afghanistan. have some contacts, commercial attachés can pro- mote deals very effectively through their presence on the ground ( see below ). 3.1.6. ENSURING ACCESS TO EXPORT INSURANCE AND TRADE FINANCE iii. Provide information and advice to exporters on how to take advantage of trade agreements into which the Rationale : The Islamic Republic of Afghanistan does not yet Islamic Republic of Afghanistan has entered, including have available adequate banking and insurance services advice on requirements for taking advantage of preferen- necessary to support international trade. The difficulty in tial trade arrangements such as those under the EU EBA finding trade finance is a major impediment to business de- programme and the Generalized System of Preferences velopment and growth, placing Afghan exporters at a com- ( GSP ) arrangements offered by the United States and mercial disadvantage. Small and medium-sized enterprises other countries ( see Section 3.5.2 below ). ( SMEs ) in particular find it difficult to obtain trade credit on suitable terms. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 17 Objective : To increase the availability and accessibility of result ; most carpets are exported to the Islamic Republic of trade finance and export credit finance for Afghan busi- Pakistan for the final cut and wash processes and are then nesses, in particular exporters. marketed internationally as Pakistan carpets. The Islamic Republic of Afghanistan is, therefore, losing export revenue Main policy actions : and domestic employment possibilities. Furthermore, it is not enjoying the international market reputation its own re- i. The MoIC will support DAB and MoF in developing sources merit. In a business world where major returns can a strategy to increase access to trade finance and be obtained on the basis of name alone, reputation forgone insurance, including the potential establishment of an is a serious loss. export–import bank to enable Afghan exporters to more There is significant potential to generate additional add- effectively compete internationally. Trade-related insur- ed value in a number of areas, including in the exports of ag- ance and credit services would also be made available ricultural goods and gemstones. Specific sectors with export to transport companies to improve their commercial potential include carpets, cashmere, silk, several agricultural viability. As a first step, a study will be undertaken to goods and processed agricultural goods such as nuts and determine the supply of and demand for export finance, dried fruits, fruit juices, pomegranates, medicinal herbs and and analyse the export finance situation and make saffron, marble, and gemstones and jewellery. recommendations for the structuring of a trade finance scheme. Objective : To introduce new value-added exports in key ex- porting sectors and expand value-added exports in general. ii. Develop as an interim measure an export finance scheme for carpet producers to allow them to extend Main policy actions : credit to importers and better compete in the regional and global markets. i. Develop strategies, using a value chain approach, for the already identified priority sectors. Examples include : iii. Develop a system to provide insured bonds to cover the a. Adding value in the agriculture and agribusiness Customs duties on goods in transit that have not been sectors that will address needs for increased storage cleared by Customs ; pre-clearance bonds will be pro- capacity and improved packaging and branding. vided through the commercial banking sector or through b. Development of a cut and wash industry for car- the establishment of a dedicated export–import bank. pets, with specific attention to investment funding requirements. Responsibility for implementation : MoIC, in collaboration c. Development of cutting and polishing services for with DAB, MoF and the PRISEC committee, with additional gemstones, drawing on the experience of the marble inputs from exporters, commercial banks and insurance industry. companies. The strategies will identify specific bottleneck and the corresponding measures to overcome them, in coopera- tion with the players in the value chain.

3.1.7. PROVIDING SECTOR-SPECIFIC SUPPORT – ADDING VALUE ii. In general, give special emphasis to promoting sectors in which the Islamic Republic of Afghanistan already has a TO EXPORTS level of comparative advantage and where value added can be profitably increased locally. Rationale : For a long time, there was a consensus that poli- cies should not support specific sectors, as governments could not ‘pick winners’. However, in recent years, global Responsibility for implementation : MoIC, through EPD, governmental practice and policy frameworks supported by in collaboration with other government entities, including international organizations such as the World Bank and the MAIL and the Ministry of Mines and Petroleum ( MoMP ), Organisation for Economic Co-operation and Development and the private sector ( including individual firms and sector ( OECD ) have shifted to some form of sectoral intervention. associations ). The ANTP will be aligned with this shift towards more active support at a sector level. In the Islamic Republic of Afghanistan, exports are domi- nated by agricultural commodities and goods that have been processed only to a minimal level. The country has excellent raw materials, but these are not generally receiv- ing much domestic processing. The value and image of export products such as carpets, for example, suffer as a [ POLICY AREAS ] 18

3.2. POLICY AREA 2 : PROMOTING DOMESTIC PRODUCTION AND TRADE As described in the MoIC Strategic Plan, the Islamic In addition, as these sectors mostly consist of SMEs, they Republic of Afghanistan’s industries have been devastated also have the potential to create a substantial number of by more than three decades of civil strife and war that left jobs. many factories, and even much of the cottage industry, in- Therefore, in addition to specific support to exporting operative or struggling to compete even in the domestic sectors, as addressed in the preceding section, the gov- market, thereby contributing to the unsustainably high trade ernment will also support Afghan producers and traders deficit. targeting the domestic market. Such support requires both A number of sectors do, however, have the potential to horizontal policy measures and specific assistance at the be competitive, first on the domestic market, but potentially sector or firm level. Key measures in this regard are the as- even for regional exports. An efficiently functioning domes- sistance to sectors and producers aiming at the domestic tic market ensures the production of competitive products market, facilitating access to raw materials, access to land, through the forces of demand and supply and fosters pro- access to financial services, the protection and strengthen- ductivity through competition, thereby establishing the basis ing of intellectual property rights ( IPR ), and the protection for increased exports through the creation of a critical mass of domestic businesses against unfair import competition of productive, export-ready businesses. ( Figure 4 ). Figure 4 : ANTP measures related to Policy area 2 : Promoting domestic production and trade Policy area 2: Promote domestic production and trade 2.1: Support sectors 2.4: Protect producers 2.2: Support businesses 2.3: Protect and with potential against unfair on the domestic market strengthen IPRs competitiveness competition Main policy actions :

3.2.1. SUPPORTING SECTORS WITH POTENTIAL FOR DOMESTIC i. Undertake value chain analyses for sectors that have tentatively been identified to be potentially competi- PRODUCTION tive domestically, in order to identify key constraints to improved performance. Based thereon, develop Rationale : In some sectors, imports might be reduced by sector action plans for promising sectors, including the the expansion of competitive local production. The MoIC assessment of investment risk and appropriate govern- and Ministry of Economy ( MoEC ) have identified some sec- ment interventions that would reduce risk and facilitate tors in which there appears to be potential for increasing development of the sector. These might include joint domestic production that leads to economic growth and ventures with government or facilitating access to finan- trade promotion, including : cement ; production of rebar, cial services and loans by the government. steel beams and profile steel ; eggs and live chickens ; light manufacturing ; edible oils ; sugar ; dairy ; plastic piping and ii. Facilitate improved access to industrial land and other simple plastic products ; packaging ; and fruit juices. services required to facilitate investment in these and relat- ed sectors. The MoIC, through the investment Facilitation Objective : To expand production of selected goods and department, Directorate for Industrial Parks and General services that are currently imported, but can be competi- Directorate of Trade Policies and the General Directorate tively produced in the Islamic Republic of Afghanistan. of Trade Services will actively seek increased FDI and domestic investment in these promising sectors. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 19 iii. Support the strengthening of trade in service sectors and Responsibility for implementation : MoIC, NPA and MAIL. support investment attraction for trade in services under Mode 3, in line with the Islamic Republic of Afghanistan commitments in the WTO. 3.2.3. PROTECTING AND STRENGTHENING INTELLECTUAL Responsibility for implementation : MoIC and other min- istries such as MAIL, MUDH and the Ministry of Economy PROPERTY RIGHTS ( in terms of analysing the impact on economic growth ). Rationale : Intellectual property rights ( IPRs ) are not well protected in the Islamic Republic of Afghanistan. Judicial

3.2.2. SUPPORTING PRODUCERS protection is afforded through the country’s civil court sys- AND TRADERS SERVING tem, yet serious enforcement of intellectual property rights is lacking, and awareness for IPR as well as the capacity to THE DOMESTIC MARKET protect, enforce and benefit from IPR is very limited. Rationale : In addition to sector-specific support, the provi- Objective : The protection of IPR has the dual objectives of sion of significant encouragement to investors is required to encouraging innovation and the development of new tech- translate potential into actual production. In particular, inves- nologies in the Islamic Republic of Afghanistan and protect- tors look for protection against downside risks, and access ing inventors, thus ensuring continued development of these to suitable industrial land and services. In this regard, the new technologies and ideas within the country. policy actions aimed at promoting FDI ( see Section 3.1.3 above ) will also benefit businesses servicing the domestic Main policy actions : market. Complementary measures can, however, also be used i. Undertake a study for strengthening the IPR regime in to specifically support businesses operating in the domes- the Islamic Republic of Afghanistan, with a focus on pro- tic marketplace. An important instrument is public procure- tecting the IPRs of Afghan businesses, in particular in the ment. Already, the government has launched an initiative to creative industries ( including carpet designs ). improve public procurement through the Afghan First policy involving preference for local producers and suppliers for ii. Implement the study recommendations. meeting public sector requirements. In addition, other ac- tions aimed at SMEs are already being designed and imple- iii. Develop and implement training programmes and public mented by the MoIC as part of its Strategic Plan. awareness programmes on IPR issues for public and private sector representatives, with follow-on capacity Objective : To promote and support the creation and growth building of selected private sector representatives and of formal and scalable local manufacturers and stimulate firms, in particular in the creative industries. demand for locally produced goods and services. Responsibility for implementation : MoIC and international Main policy actions : partners. i. To help implement the preferential public procurement policy, the MoIC will identify and qualify local suppliers of 3.2.4. PROTECTING DOMESTIC needed goods and services. The MoIC will also promote PRODUCERS AGAINST UNFAIR the Afghan First public procurement policy to encourage government procurement officers to purchase Afghan- COMPETITION made goods when they meet ( or can be made to meet ) established standards for cost and quality. Rationale : The Islamic Republic of Afghanistan does not have a comprehensive mechanism in place to protect ii. Develop proposals in line with the special and differ- domestic producers against unfair, substandard or illicit ential treatment ( SDT ) provisions in the Government imports, or against sudden import surges. The Law on Procurement Agreement ( GPA ) ( the Islamic Republic of Safeguards has been approved and is being implemented, Afghanistan has committed to starting GPA accession but other instruments are still lacking. negotiations within one year of WTO accession ). Objective : To protect domestic producers against injury iii. Develop policies and strategies to assist small and from unfair import competition, in particular dumped and medium-sized enterprises to increase competitiveness subsidized imports, substandard and illicit imports, and in domestic ( and potentially foreign ) markets. sudden import surges. [ POLICY AREAS ] 20 Main policy actions : i. Draft and enact anti-dumping and anti-subsidy laws in line with WTO rules. ii. Establish and operationalize a new unit within the MoIC’s General Directorate of Trade Policies to be responsible for implementation of actions on safeguards, anti- dumping and countervailing duties. Responsibility for implementation : MoIC. x Fo id av D / C IT ©

3.3. POLICY AREA 3 : ENHANCING THE TARIFF REGIME Trade taxes, which, to a large extent, are affected by tar- Granting some exemptions from the payment of import du- iffs, are currently the largest source of domestically derived ties is inevitable ; however, haphazard and poorly admin- revenue for the Afghan Government. Tariff rates are set istered tariff exemptions generally result in an excessive and revenues collected in conjunction with the Ministry of loss of governmental revenues and can also substantially Finance ( MoF ). A key issue for the ANTP is to address the undermine the country’s intended trade policies, effectively trade-off between the collection of import duties ( and other rendering the tariff rate structure meaningless. Inappropriate trade taxes ) and establishing an economic environment that exemptions may also violate the provisions of the WTO will maximize productive investment and employment gen- or other trade agreements to which the country is legally eration. As a result of this, a component of the ANTP is the bound. It is, therefore, important that there be a single, further development of the country’s tariff regime. The key suitable mechanism for granting exemptions and effective issue in this respect is to rationalize tariffs. monitoring of the exemptions that are realized. Furthermore, it is essential that this mechanism be fully integrated with the mechanism for setting tariff rates.

3.3.1. REVIEWING TARIFF A tariff-setting mechanism needs to be transparent, in- MECHANISMS clusive in terms of stakeholders’ participation, in line with countries’ commitments in WTO, SAARC and other regional Rationale : The Islamic Republic of Afghanistan is one of the agreements and in compliance with trade policies aimed at most open economies in the region. The tariff regime was facilitating international trade. recently simplified and is now characterized by generally low tariffs and a limited number of tariff bands. A few principal Objective: To rationalize the Islamic Republic of Afghanistan’s issues arise in relation to tariffs : tariff regime by limiting the extent of and streamlining the procedures for duty and border tax exemptions and ration- i. The significant number of exemptions to tariffs ; and alize the tariff policy through implementing a transparent mechanism on tariff setting. ii. The need to harmonize the government’s revenue goals with those of facilitating trade and ensuring the competi- Responsibility for implementation : MoF, the Ministry of tiveness of domestic businesses depending on imported Economy ( MoEC ), MoMP, MAIL and other ministries as ap- inputs. propriate, coordinated by the MoIC. In order to support the tariff-setting process, the MoIC will increase its capacity to iii. To develop a transparent mechanism for fixing tariff evaluate trade policies, including its capacity to analyse tar- rates, in consideration of the need to support domestic iffs from an economic standpoint. productions, facilitate international trade, Afghan com- mitments in WTO and regional cooperation organiza- tions such as SAARC. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 21

3.4. POLICY AREA 4 : INCREASING THE EFFICIENCY OF IMPORT AND EXPORT ADMINISTRATION, CUSTOMS AND BORDER-CONTROL MEASURES In addition to tariffs, trade today is equally affected by non- infrastructure enables the smooth flow of transit goods tariff barriers ( NTBs ). Trade facilitation, which aims at the through the country, thereby contributing to the Islamic reduction of NTBs, can have a significant impact on eco- Republic of Afghanistan’s role as a transit hub for Central nomic development, contribute to export growth, and im- Asia and further increasing revenue collection. prove the competitiveness of Afghan goods and services in Trade facilitation is, therefore, an essential component the global market. In addition, improving Customs services of the ANTP, and the measures aimed at increasing the ef- will enhance revenue collection and regulatory control ( as ficiency of Customs and border control – which facilitate ex- well as collection of better and more reliable trade statis- ports and imports – are all considered as core activities of tics ) and combat fraud and trafficking of prohibited and the ANTP ( Figure 5 ). restricted goods. Meanwhile, improved border and transit Figure 5 : ANTP measures related to Policy area 4 : Trade facilitation Policy area 4: Trade facilitation 4.1: Remove export restrictions 4.2: Facilitate trade 4.3: Improve Customs procedures The importance of trade facilitation has also been highlight- Although a number of measures have been taken to remove ed at the WTO Ministerial Conference in Bali in the Republic export restrictions, such as the removal of compulsory ex- of Indonesia in December 2013, which resulted in the adop- port quality certificates, the implementation of these meas- tion of the WTO Trade Facilitation Agreement, which has ures has been incomplete. been ratified by the Islamic Republic of Afghanistan upon accession to the WTO in July 2016. Given the potentially Objective : To eliminate export restrictions that serve no wide-ranging technical support requirements that the imple- economic or other purpose and those that are inconsist- mentation of the agreement’s provisions entail, the govern- ent with the Islamic Republic of Afghanistan’s international ment will strive to benefit from support made available under commitments. A focus of actions in this policy area will be the agreement in order to implement the various measures enhanced implementation of measures already put in place. described below. Furthermore, the agreement includes special and differential treatment provisions for developing Main policy actions : and LDCs. i. The MoIC will seek to eliminate all unnecessary export authorization requirements in both the public and the

3.4.1. REMOVING EXPORT private sectors. RESTRICTIONS ii. The MoIC will ensure that the removal of the requirement Rationale : A number of measures currently in place restrict to obtain a certificate of origin ( COO ) is fully implement- exports from the Islamic Republic of Afghanistan. These in- ed. Preferential COOs will be available on a voluntary crease transaction costs and reduce the ability to compete basis to exporters wishing to benefit from preferences in foreign markets. Some of these measures are inconsist- granted by the importing country or if a certificate is ent with the principles of the WTO and SAFTA aimed at the required by the importing country. elimination of export restrictions. [ POLICY AREAS ] 22 iii. The requirement to obtain veterinary and phytosanitary Goods Under Cover of TIR Carnets ( TIR Convention ), which certificates for exports of animals and animal products was reactivated in 2013 and 2014, but more work in this area and the export of plants and plant products as compul- is required ( also see Section 3.5.1 on transit agreements ). sory documents, but it will be made voluntary. They will be issued at the request of the exporter to meet specific Objective : To reduce the cost and time required to move requirements of importing countries. goods across the border and make it possible to easily transport goods for trade beyond the border, including iv. Mandate all the government ministries and relevant documentation, border procedures and transit matters agencies to send competent and authorized rep- associated with international transactions, thereby con- resentatives to operate the export one-stop-shops tributing to the international competitiveness of Afghan ( export OSS ) at the Kabul Airport and Kabul Customs businesses. and exporters should not be required to go to the line ministry for export-related matters except when there is Main policy actions : a major issue that the one-stop shop cannot handle. i. The MoIC will take the lead in harmonizing the roles of v. Mandate that the export one-stop shop at the Kabul different agencies and local authorities in areas that are Airport be linked up with the Automated System for normally the domain of trade ( e.g. MoIC for oil imports, Customs Data ( ASYCUDA ) and other data information MoTCA for road fees and weight certificates, and the management systems of MoF and the MoIC. Afghanistan Customs Department ( ACD ) of MoF for transit permits ). vi. Expedite the establishment of a trade information portal, a single location that lists all requirements for ii. In collaboration with Customs and other agencies, con- trade documents and other trade-related information. sider the consolidation of all trade-related regulatory requirements under a one-stop shop ( OSS ) or single- window facility to minimize the time and costs for traders Responsibility for implementation : MoIC in cooperation to submit all necessary forms and obtain all necessary with MAIL, the Ministry of Information and Culture, and approvals for international trade transactions. This will MoMP, ANSA and Customs. include a review and reform, where appropriate, of all administrative and commercial formalities, procedures and documents required for exporting.

3.4.2. FACILITATING EXPORTS, IMPORTS AND TRANSIT TRADE iii. Review all trade and transit fees and charges to ensure that they properly reflect the cost of the services pro- Rationale : Afghan exporters face unnecessarily high costs vided, and reduce fees and charges where appropriate. due to excessive delays at the border, transport and ware- housing practices, and heavy dependence on imported iv. Synchronize the operational hours of the border raw materials for production. ( The Islamic Republic of Customs office with the neighbouring Customs of- Afghanistan is ranked 177 th of 190 countries by the World fices ( e.g. Aqina–Turkmenistan, Hairatan–Uzbekistan, Bank in terms of Trading Across Borders in the Doing Zaranj–Chabahar, Spin Boldak–Pakistan ( Chaman ) and Business Indicators 2018, and 158 out of 160 countries in Torkham–Pakistan ). the trade infrastructure indicator of Logistics Performance Index in 2018 ) This encourages smuggling and results in v. Document border requirements and procedures and traders realizing very small profit margins, restricting their make them readily available to all interested parties, ability to grow their trading businesses. Efficient and reli- undertake an ongoing awareness programme, and pre- able border procedures and logistics services, along with pare an import and export guide that provides traders adequate infrastructure are essential to reducing the time it with sufficient information about what they must do to takes to trade and to drive down costs such as storage fees complete formalities. and inspection charges. With regard to imports, for many businesses in the vi. Full implementation of the TIR system will be ensured Islamic Republic of Afghanistan, imported capital goods and by the MoIC ; this will require adoption of the TIR regu- inputs are essential to maintain production and competi- lation ( currently in draft form ) and capacity building to tiveness. In view of this, apart from exceptional cases, the Customs staff as well as all players in transit logistics. country will maintain an open trade regime without creating non-tariff barriers to imports. vii. Support the development of private sector transit ser- Finally, transit trade is facilitated through the ongoing im- vices by improving the legal and regulatory framework plementation of the Convention on International Transport of for licensing freight forwarders and international carriers. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 23 Responsibility for implementation : MoIC, in collaboration with other ministries and agencies responsible for adminis- tration of international trade, in particular ACD-MoF.

3.4.3. IMPROVING CUSTOMS to ck PROCEDURES AND BORDER CONTROL ut ter s Sh © Rationale : The Islamic Republic of Afghanistan is an im- The ANTP will portant transit hub linking regional countries and should, contribute to a contin- therefore, capitalize on its position as a trading crossroad ued strengthening and deepening of the Customs reform between Asia and Europe. process, with emphasis on improved border facilities, risk In the trade setting, the time required for clearing management programmes and better data collection, in- goods at air, sea and land ports is vital to trade. Delays in cluding assessments of border trade, which is currently not the process of clearing goods translate into higher costs recorded. of commodities. Conversely, streamlining Customs and Border improvements realize their maximum poten- border management systems and procedures will have a tial when the agencies in neighbouring countries and the major impact on reducing trade costs. At the same time, Islamic Republic of Afghanistan work together. Efforts in this effective border controls will help curb illicit trade and respect will be increased, thereby optimizing the win-win smuggling, which not only deprives the government of rev- results ( also see Section 3.5.1 below ). enues, but also causes security and safety issues for the Afghan population. Objective : To promote speedy, effective and efficient The Islamic Republic of Afghanistan has achieved sig- Customs clearance, thereby reducing the cost to importers nificant progress in the facilitation and movement of goods and exporters. as a result of Customs reform, with Customs procedures reorganized, border facilities improved and the clearance Responsibility for implementation : MoF and Customs are of goods expedited. The introduction of the Automated responsible for this policy area. The MoIC will provide sup- System for Customs Data ( ASYCUDA ) was a significant port and coordinate with other entities, including the Central step forward. The transparency of cross-agency coordina- Statistics Office and related ministries ( including MoMP, tion in relation to Customs and tariffs has improved con- MoF and MoTCA ), as well as logistics service providers. siderably, although this is not yet reflected in the country’s Further enhanced collaboration and cooperation with other scoring in international rankings, such as the Logistics border agencies will be achieved through ( re‑ ) establishing Performance Index. a public–private national trade facilitation committee.

3.5. POLICY AREA 5 : PROMOTING MARKET ACCESS FOR AFGHAN GOODS AND SERVICES As part of the Islamic Republic of Afghanistan’s further in- Although regional trade and economic integration are im- tegration into the global trading system, the government portant components of the ANTP in order to diversify the will pursue, through negotiations, an agenda that supports Islamic Republic of Afghanistan’s exports and contribute to its developmental goals and secures its national interests, industrialization, a broader set of markets currently consti- thereby creating further opportunities for exports. tute the country’s main markets and will continue to do so in Regionally, tariff and non-tariff barriers continue to exist. the medium-term. Ensuring and widening exports to these Lack of personal security, in addition to complicated and markets is, therefore, an essential part of the ANTP. This will non-transparent border procedures, creates impediments to be achieved through a three-pronged strategy ( Figure 6 ) : smooth regional trade. The Islamic Republic of Afghanistan regionally, by engaging in further and deeper negotiations will support regional integration within the framework of pro- on trade and transit issues ; in relation to other markets, by moting free, fair and competitive trade between member proactive use of preferential trade agreements and prefer- states, leading to market access opportunities for Afghan ence schemes ; and globally, through the Islamic Republic producers and a wider range of competitively priced prod- of Afghanistan’s active participation in the WTO and reaping ucts for consumers. the benefits it provides. [ POLICY AREAS ] 24 Figure 6 : ANTP measures related to Policy area 5 : Promoting market access for Afghan goods and services Policy area 5: Promote market access for Afghan goods and services 5.1: Regional trade agreements 5.2: Benefit from preferential 5.3: Benefit from WTO and integration trade schemes membership Although progress has been made, regional trade is still af-

3.5.1. REGIONAL TRADE AGREEMENTS fected by numerous tariff barriers ( e.g. for sensitive goods AND INTEGRATION under SAFTA ) and a wide range of non-tariff barriers, in- cluding infrastructure constraints, SPS requirements, rules Rationale : Regional integration is key to successful tran- of origin, delays in border procedures and goods clearance, sition in the Islamic Republic of Afghanistan ; it promotes visa issues, and general differences in legal systems ; not all increased trade and connectivity within the region, cre- of these barriers are justified. In order for Afghan exports to ates links across the region to external markets and ena- succeed on the regional markets, such barriers need to be bles broader integration with large regional markets and addressed by the ANTP. Likewise, trade in services is gen- the global economy. In other words, bilateral and regional erally not covered by the agreements, although a SAARC trade agreements are important to Afghan producers not agreement on trade in services ( SATIS ) is currently being only because they provide preferential access to new mar- negotiated. kets, but also because the Islamic Republic of Afghanistan, Finally, the importance of transit trade arrangements is as a landlocked country, is dependent on transit routes high. Problems faced with some neighbouring countries, through neighbouring countries. The MoIC has been ac- driven by protectionist threats or sometimes political con- tive in this regard by negotiating and implementing bilateral flicts, such as the erratic closing of borders, constitute ma- and regional trade agreements. Among the former, agree- jor obstacles to the Islamic Republic of Afghanistan’s trade. ments have been signed with the Republic of India ( 2003 ), These ad hoc policies are going against the goal of open, the Islamic Republic of Iran ( 2005 ), the Islamic Republic of predictable and rule-based trade in the region. Significant Pakistan (2010), the Russian Federation (2011), the Republic progress has been made in recent years, such as : the sign- of Kazakhstan ( 2011 ), the Republic of Tajikistan ( 2011 ) and ing of the Afghanistan–Pakistan Transit Trade Agreement two separate bilateral agreements with the Republic of ( APTTA ) in 2010 ; the ongoing further development of the Uzbekistan on trade and economic cooperation and agree- agreement ; the conclusion of the Chabahar Agreement in ment on transit ( 2017 ). Additional trade agreements are be- 2016 with the Republic of India and the Islamic Republic of ing explored, and the scope has been shifting from bilateral Iran, which opens an alternative trade route for Kabul ; and to regional agreements. The Islamic Republic of Afghanistan the very recent conclusion of the Lapis–Lazuli Transit and is already a member of SAARC and its South Asian Free Transport Route Agreement with the Republic of Azerbaijan, Trade Area ( SAFTA ), the Central Asian Regional Economic Georgia, the Republic of Turkey and Turkmenistan, which Cooperation ( CAREC ) programme and ECOTA. will provide better access of Afghan products to the Black The Republic of India and the Islamic Republic of Sea and European markets. Nevertheless, further work in Pakistan account for more than 70 % of the Islamic Republic this area is required, not least due to problems with some of Afghanistan’s exports. These two countries have rela- of the existing agreements, such as the APTTA. tively high average tariffs, although the Islamic Republic of Afghanistan benefits from preferential access to the Objective : The objective of further developing regional Republic of India under the Duty Free Tariff Preference trade and transit agreements is to enable Afghan products Scheme, and practice seasonal changes in tariffs that hin- to compete freely in the regional markets and promote ex- der Afghan exports of products, in which it is very com- ports, as well as to take advantage of trade opportunities of- petitive. In terms of quick impacts on trade, it is here that fered in strategic regional markets. Also, reducing the list of gains could be obtained. If markets abroad were more open, sensitive goods under existing trade agreements will expand Afghan producers and traders would be well placed to sup- Afghan exports. Developing transit priorities and implement- ply them through increased exports. ing transit agreements will reduce the Islamic Republic of [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 25 Afghanistan’s dependence on one port and stabilize region- potential for increased trade with European markets via al trade flows. Finally, an assertive role in ensuring that trad- the most direct transit route. ing partners remove unwarranted barriers to Afghan exports will foster expanded and fair trade within the region. v. To ensure the openness of regional markets for Afghan exports, the government will engage in high-level bilater- Main policy actions : al policy dialogue (following the example of Afghanistan– Uzbekistan relations ), make use of existing mechanisms i. Review progress towards implementation, remaining for dispute settlement ( notably the WTO dispute settle- barriers to trade and investment, and economic perfor- ment mechanisms, where the partner concerned is also mance of all existing and prospective trade agreements, a WTO Member ), and facilitate bilateral dialogue of the and develop a detailed agenda for policymakers and business communities ( again, following the recently negotiators. In substantive terms, the MoIC will seek to established practice with the Republic of Uzbekistan ). strengthen and expedite the implementation of existing bilateral and regional trade agreements of economic vi. Conduct bilateral negotiations and arrangements with benefit to the Islamic Republic of Afghanistan. In par- countries of export destination, particularly the Islamic ticular, the MoIC will continue to negotiate SATIS with Republic of Pakistan, in order to avoid imposition of sea- SAARC partners, as well as aim to reduce the sensi- sonal tariffs and other unnecessary obstacles to trade. tive list of goods under the SAFTA, which could boost Afghan exports through privileged access to other vii. Ensure effective operationalization and sustainability SAFTA countries. This is important, particularly for trade of air corridors and expansion of air corridors to further with the Islamic Republic of Pakistan, which is a relatively potential export destinations. protected market and accounts for a large share of the Islamic Republic of Afghanistan’s exports. In this respect, the MoIC will closely follow developments regarding Responsibility for implementation : The MoIC, as the SAFTA and potentially consider an alternative agree- ministry with prime responsibility for international trade ment with the Islamic Republic of Pakistan and possibly negotiations, has to take the required actions in this field also the Republic of India – either bilaterally or in other of trade diplomacy, in coordination with the Ministry of configurations. As a complement, the government will Foreign Affairs ( MoFA ). In some circumstances, MoF will seek to advance the reduction of negative lists (for which be involved. Consultation with the private sector, particularly no tariff preferences are offered ) under ECOTA, and aim with associations and firms most affected by the actions of to further negotiations so that preferences under ECOTA regional trading partners, is essential. will come into effect. ii. A long-term, comprehensive strategy for the Islamic 3.5.2. ACCESS TO SELECTED Republic of Afghanistan’s engagement in trade agree- OTHER MARKETS : PREFERENTIAL ments will also be developed in order to streamline the current web of agreements concluded and being ne- TRADE AGREEMENTS gotiated. This will involve a quantitative analysis of the patterns of the Islamic Republic of Afghanistan’s bilateral Rationale : The Islamic Republic of Afghanistan is eligible trade, including comparative advantage and investment to benefit from preferential market access provided by flows, and the structure of consumption and production other countries under schemes such as the EU EBA pro- in partner countries. gramme and various countries’ GSPs, including Australia, the Republic of Belarus, Canada, the People’s Republic iii. For any proposed new trade agreements, analyse the of China, the Republic of India, Japan, New Zealand, the economic impacts in advance of commencing negotia- Kingdom of Norway, the Russian Federation, the Swiss tions, and assess existing trade agreements for possible Confederation, the Republic of Turkey, and the United States impact on the agreement to be negotiated. of America. However, all of these preferential schemes and agreements, just like bilateral and regional trade agree- iv. Expedite the implementation of all bilateral, regional ments, are linked to cumbersome rules of origin and other and multilateral transit agreements in order to reduce NTBs, which makes it difficult for Afghan businesses to transit costs. The MoIC will commence processes for exploit the opportunities offered. The 2013 Bali Package facilitating business with the People’s Republic of China provides for a number of improvements in this respect, and the Republic of India, including a transit agreement, but LDCs like the Islamic Republic of Afghanistan have and initiating negotiations for opening up transit routes the responsibility to ensure that these improved rules are with Turkmenistan and beyond, in order to access the actually enforced. [ POLICY AREAS ] 26 Objective : To enable Afghan businesses to take full advan- tage of any preferential schemes from which the Islamic Republic of Afghanistan benefits and to expand the list of countries that offer such preferences to the country. Main policy actions : i. Review the usage by traders, and economic impacts on the Islamic Republic of Afghanistan, of rules of origin (RoO) (cc) Hand in Hand International in existing ( and proposed ) preferential trade agree- ments, particularly including existing unilateral preference Objective : To complete the implementation of measures schemes such as EBA and GSPs; and establish guide- necessary to maximize the economic benefits from WTO lines for acceptable RoO for policymakers and negotiators. membership. ii. Engage with governments of countries providing pref- Main policy actions : erence schemes to simplify the administrative require- i. Actively participate in WTO working groups for newly ac- ments for exporting under preference schemes. ceding countries, including three neighbouring countries ( i.e. the Islamic Republic of Iran, Turkmenistan and the iii. Provide information about preference schemes to Afghan Republic of Uzbekistan ). producers and exporters and assist them in complying ii. Implement the WTO Post-Accession Implementation with the administrative requirements for export under Strategy ; in this context, technical assistance will be them ( also see Section 3.1.5 above ). requested from the WTO and donors. iii. Support to the Afghan mission to the WTO in Geneva. Responsibility for implementation : The MoIC, with inputs iv. Ensure the operationalization of duty-free quota-free from the private sector with regard to the practical issues (DFQF) and special differential treatment (SDT) for LDCs that exporters encounter when exporting under preferential under the WTO. regimes. v. To build the capacity of relevant departments in the Afghan mission to the WTO, in order to enable them to effectively raise and negotiate trade-related concerns

3.5.3. ACCESS TO INTERNATIONAL with WTO Members. MARKETS : BENEFITTING FROM vi. MOIC will Establish the Technical Team for all Trade Negotiation under Multilateral trading system and WTO WTO MEMBERSHIP Framework. The Negotiation team will be composed of all relevant authorities and will be structured as Rationale : The MoIC is the lead ministry for managing the per a Presidential Degree. The Team would scheme country’s relationship with the WTO. The Islamic Republic of Afghanistan trade negotiations with WTO permanent and Afghanistan’s recent accession to the WTO has the poten- acceding members and will also feed the Afghanistan tial to significantly benefit the country, for example, through Mission to WTO on negotiation mandates. increased investment and trade, but the government needs to ensure that these benefits materialize. Responsibility for implementation : The MoIC, MoF and MoFA.

3.6. POLICY AREA 6 : MAKING TRADE-ENHANCING INSTITUTIONS MORE EFFECTIVE Achieving the ANTP objectives will require effective and ef- Therefore, institutional strengthening of the relevant insti- fectively coordinated national institutions both at the policy tutions must constitute an integral part of the ANTP. This and implementation levels. It is generally acknowledged will be achieved through two sets of activities ( Figure 7 ) : that capacity constraints within the MoIC and other govern- at the policy level, capacities within the MoIC and other ment agencies as well as within private sector organizations ministries will be strengthened, while at the implementa- preclude effectively and efficiently addressing the multiple tion level a number of public and private institutions will be and technically complex tasks that a trade policy requires. strengthened. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 27 Figure 7 : ANTP measures related to Policy area 6 : Strengthening Afghan trade policy and trade support institutions Policy area 6: Increase effectiveness of trade-enhancing institutions 6.1: Strengthen capacity of MoCI and policy- 6.2 : Strengthen capacity of trade support setting institutions institutions

3.6.1. STRENGTHENING THE CAPACITY ii. Skills for the negotiation of trade and transit agreements, OF THE MOIC AND POLICY-SETTING including the opening of new bilateral and regional agreements, will also be strengthened through training INSTITUTIONS and coaching or secondment programmes. Rationale : Experience clearly demonstrates that proactive iii. The MoIC will facilitate greater coordination at the policy trade policies and measures to overcome institutional issues level, with particular attention being given to harmonizing are crucial to successful trade development. A key finding is negotiations on international trade agreements and the that government institutions that are involved with formulat- setting of tariff rates with the MoF, which has responsibil- ing and implementing trade policies require significant tech- ity for implementing the Customs law and Customs duty nical assistance if they are to be successful. Although the collection. MoIC has the procedures and strategies in place to make the analysis, negotiation and implementation of trade agree- iv. The government will ensure that decisions affecting in- ments efficient and effective, continuous improvement of the ternational trade conditions and performance are made ministry and its staff is necessary in order to compete with speedily and effectively, including, in particular, by the other trading nations. DM for Commerce and the EPD. The EPD will operate In addition, consultation and coordination on trade policy as a entity within the MoIC to guarantee the streamlining among the various government entities, and between the of export promotional support. government and representatives of the private sector, could still be improved. Although public–private dialogue ( PPD ) v. The MoIC will study the potential for more extensive and has improved, it continues to be weakly institutionalized. institutionalizing public–private dialogue between the Afghan Government and private sector investors. Objective : To ensure that the MoIC and other ministries and agencies involved in trade policy definition as well as trade vi. A trade and investment training institute will be estab- negotiations operate in line with international best practice, lished, where capacity building programmes will be con- and to enhance public–private dialogue on trade matters, ducted for both public and private sector representatives. and thus facilitate the ANTP’s efficient implementation and the achievement of the ANTP’s overarching objectives. vii. Develop the private sector’s capacity ( including the rep- resentative of trade and industry unions and workers ) Main policy actions : to fulfil the administrative and standard requirements of importing countries. i. Strengthen the capacity within the MoIC for trade policy analysis, including making improvements in trade-related viii. The MoIC will lead the development and implementa- databases. The MoIC, in collaboration with the MoF and tion of public awareness campaigns by all trade-related the Central Statistics Office ( CSO ), will also take steps to agencies in order to ensure that Afghan businesses and improve data collection on international trade, including other stakeholders are fully informed about the opportu- extending the coverage of data on overland foreign trade nities and services available. and improving the reliability of estimates of unrecorded border trade. Responsibility for implementation : The MoIC. Capacity building activities will require technical assistance supported by donors. [ POLICY AREAS ] 28 an st ni ha g Af in da a na )C (cc Main policy actions :

3.6.2. STRENGTHENING THE CAPACITY OF TRADE SUPPORT INSTITUTIONS, i. The MoIC will expand the role of the EPD in export pro- motion and the provision of support services and mar- INCLUDING EXPORT PROMOTION keting activities, and take responsibility for new initiatives such as an export access market fund ( EMAF ). Rationale : In addition to institutional constraints at policy level, the weakness of the export promotion system, al- ii. Capacity building of General Directorate of Trade though this has already been improved in the recent past, Policies, EPD, Investment Facilitation Department, Transit especially limits SME potential to export now or in the fu- Policies Department, WTO department and Trade and ture. Globally, successful exporting countries all have insti- Transit Agreements department and of Commercial tutions to facilitate the exporting potential of SMEs, while in attaches in promoting export and enhancing market the Islamic Republic of Afghanistan these institutions are access for Afghan Exports. still nascent and require significant capacity building. For example, trade support institutions have difficulties in iden- iii. ANSA, which will have an expanded role as a result of tifying promising products and markets, as they have limited WTO accession, will play a key role in ensuring greater capacity in strategic research and market analysis. harmonization of quality standards and guidelines required under international standards such as the Objective : To strengthen trade support institutions for pro- International Organization for Standardization ( ISO ). viding effective support to Afghan exporters and potential exporters in terms of market intelligence, market access and Responsibility for implementation : The MoIC will take entry, and facilitation of exports. the lead and coordinate the capacity building activities. Support institutions such as ANSA, the Trade Policies General Directorate, the ACBR–IP and IFD and others will be in charge of implementing the measures. Private sector organizations will also benefit from and contribute to actions in this policy area. [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 29 4. IMPLEMENTATION ARRANGEMENTS The ANTP is a national effort. To be successful, it requires As a general rule, the MoIC will propose the necessary connected government, in the sense that all involved public amendments to the laws related to or implied in the ANTP. entities buy into the objectives set, and allocate time and The MoIC, in collaboration with other trade-related ministries other resources to the actions where their participation is and agencies, will issue necessary notices, circulars and needed. The implementation and monitoring of the ANTP policy guidelines for the effective implementation, monitor- will, therefore, be effected through extensive collaboration ing and review of the ANTP. and strengthened partnership with relevant ministries and The following sections provide more details about the agencies. institutional and procedural arrangements for the implemen- The ANTP also relies on connection between public and tation of the ANTP. private sector actors. Without partnership, the prospects for success are small.

4.1. IMPLEMENTATION PRINCIPLES The core institutional principles underlying the effective im- of Afghanistan’s external trade performance, they will be plementation of the ANTP include : reformed through a transparent mechanism where all the relevant stakeholders, including the private sector, will be i. Mobilization and coordination of all the relevant minis- consulted in advance. tries and government agencies in order to ensure that all opportunities to expand trade are fully realized ; As a general rule, the role of public institutions in the ANTP is to facilitate, support and promote. ii. The MoIC will serve as a focal point for coordination of The role of private firms is to generate the export ( and, international trade-related actions on the part of govern- where appropriate, enhance production capacities) capabili- ment. Ministries and agencies will provide the central ties through investments in hardware and software. Some point for dialogue with the private sector on trade ; private firms, particularly those in the financial sector, while not exporters themselves, can play a pivotal role in encour- iii. To the maximum extent possible, single authority entities aging investors through offering them financing arrange- and mechanisms will be used to promote rapid and clear ments tailored to the needs of traders. decision-making on key trade issues ; To achieve the vital synergy between the public and pri- vate actors, there have to be channels for fluent and trans- iv. All existing and proposed trade-related rules, regula- parent communication among them so that actions can tions and procedures will be reviewed and, where they be taken in anticipation of problems, and targeted towards constitute unnecessary barriers to the Islamic Republic prompt resolution of specific problems as they arise.

4.2. THE MOIC’S ROLE The MoIC occupies the nodal position in the national en- and it is sometimes not the main actor. It is, however, usually deavour that the ANTP constitutes. It has a very wide port- the catalytic actor. Unless the MoIC takes steps, the likeli- folio of responsibilities that link it, directly or indirectly, with hood of success will be diminished. all the key issues. In many instances, it is not the sole actor, [ IMPLEMENTATION ARRANGEMENTS ] 30 The MoIC can operate through various channels and with provide new kinds of production centres. Examples of various levers. These include : what the MoIC is doing in these areas are the preliminary studies of enhancing production capacities, the efforts ƒƒ Direct decision-making and implementation, as it has to create dry ports and the exploration of the potential been doing, for example, with streamlining business reg- for SEZs. istration. ƒƒ Taking responsibility for external trade negotiations at bi- ƒƒ Oversight and facilitation of key trade-related areas where lateral, regional and international levels, as it has done dedicated entities are under its wing, for example, the with respect to, for example, the WTO. ACBR-IP and IPD and the EPD. ƒƒ Engaging in the vital field of trade diplomacy, where, ƒƒ Providing the information base fundamental to sound for example, its control and effective use of the Islamic decision-making on trade matters, as with the ongoing Republic of Afghanistan’s network of trade attachés is actions to create a registry of exporters. most important. ƒƒ Contributions to the HEC and collaboration with other ministries through the Inter-Ministerial Committee ( IMC ), This is an exceptionally wide set of channels that severely using the relevant IMC–WTO and trade facilitation, to en- stretches the capacity of the MoIC staff and resources. It sure that trade governance is as effective as possible. also raises expectations about what can realistically be ac- ƒƒ Dialogue with producers to understand their needs and complished, and thereby runs the risk of inviting criticism priorities, as it does through ongoing platforms with when, as is inevitably the case, not all the expectations can the Afghanistan Chamber of Commerce and Industries be fulfilled. ( ACCI ) and the Afghan Women Chamber of Commerce The MoIC is, therefore, confronted with major respon- and Industry ( AWCCI ). sibilities and major risks. The ANTP thus has to concen- ƒƒ Taking a lead role in the formulation, and subsequent trate on areas where the leverage and catalytic actions of drive for approval, enactment and implementation, of the MoIC, as well as the decisions that fall directly under laws and regulations necessary for a better-functioning its sphere, have a reasonable chance of success. These business and trading environment. areas will be chosen based on their expected impact, the ƒƒ Launching initiatives designed to encourage other actors, time profile of that impact, and the contribution the efforts public and private, to pursue activities that will improve will have on improving the Islamic Republic of Afghanistan’s the range of tradable goods, lower the cost of trading or trade balance.

4.3. ANTP ACTORS AND THEIR ROLES Within the public sector, in addition to the MoIC, several ƒƒ Line ministries with responsibilities in vital sectors of the ministries and agencies have their place in the ANTP. In Afghan economy. Of particular importance are MAIL schematic terms, three kinds of entities matter : and MoMP. ƒƒ Overarching ministries and entities that are critical to management of government revenue, and the establish- In the private sector, the Islamic Republic of Afghanistan ment and implementation of the legal framework within has a very large proportion of all activities that are informal. which businesses must operate. In this dimension, the Many of them are vital to the livelihoods of the people in- Ministry of Finance ( which oversees Customs ) and the volved, and some of them may involve unregistered foreign Ministry of Justice, along with the Taqnin ( the arm of the trade. In practice, trade policy is dealing essentially with the Ministry of Justice tasked with scrutinizing draft laws ), formal sector, grouped for representational purposes in the are key actors. MoFA also plays an important role due to Afghanistan Chamber of Commerce and Industries ( ACCI ), its management of relations with the Islamic Republic of Afghanistan Chamber of Industries and Mines ( ACIM ), the Afghanistan’s trading partners. International Chamber of Commerce ( ICC ) and the Afghan ƒƒ Infrastructure-related ministries charged with supplying Women Chamber of Commerce and Industry ( AWCCI ), and the physical supports for production, including utilities, in a significant number of sectoral associations focused on along with those responsible for transport and logistics. important activities in the Islamic Republic of Afghanistan In particular, Ministry of Transport, and Ministry of Urban ( such as carpet production, leather production, several ar- Development & Land play important roles for the ANTP. eas of agroprocessing and other activities ). The Ministry of Energy and Water also contributes to the In line with the distinction between ANTP direct and indi- success of the ANTP due to its responsibility for key eco- rect activities, responsibilities and implementation arrange- nomic infrastructure needed by exporters. ments will vary : [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 31 Fo x David © ITC / ƒƒ ANTP ‘direct’ activities : The MoIC will be responsible for ƒƒ ANTP ‘indirect’ activities : For indirect activities, the lead the strategic management, coordination and implementa- implementation agencies will be the ones under whose tion of the ANTP direct activities, working in partnership mandate the specific measures fall. The role of the MoIC with other ministries and agencies, the private sector and will be restricted to that of a subsidiary monitoring body, external organizations. The MoIC will also be directly re- while primary monitoring will be effected by the respon- sponsible for the monitoring of ANTP direct activities as sible institution. identified in this document. Central oversight over ANTP implementation will rest with the High Economic Council ( HEC ).

4.4. TRADE-RELATED PUBLIC–PRIVATE DIALOGUE Due to the involvement of a large number of stakeholders at the highest level of government. To ensure PPD in rela- in the ANTP, it is imperative that the ANTP has an effective tion to the ANTP, the following measures will be taken by mechanism for the coordination of the various government the MoIC : agencies involved in trade policy as well as effective com- munication with the legislature, economic actors, academia ƒƒ Create a public–private steering committee that would and civil society. An effective public–private dialogue ( PPD ) include the major private sector business associations on trade policy issues is needed in order to ensure that gov- and all chambers. ernment actions take due account of the experience and ƒƒ Increasing the levels of communication and cooperation represent the views of the private sector. between the public and private sectors. The dialogue process serves the government’s need ƒƒ Continue to organize provincial and central forums for for information and opens a channel for the expression regular PPD. of private opinions. Dialogue involves a mutual exchange ƒƒ Private sector organizations will need capacity building in of views, including bottom-up contributions to policymak- order to actively and constructively contribute to public– ing. Overall, PPD can serve as an umbrella process and private dialogue, including at the technical level. This will a focused outlet for engagement of all relevant actors. require technical support from international organizations Effective PPD takes place within a structured mechanism and donors. [ IMPLEMENTATION ARRANGEMENTS ] 32

4.5. THE LEGISLATIVE DIMENSION Measures under the ANTP that involve legal requirements For the ANTP period ( 2019–2023 ), further legal amend- will seek to meet some simple criteria : ments will be limited to the minimum required by interna- tional obligations and emergency type actions that might, ƒƒ They will be highly focused, with a minimum number of from time to time, be required. The priority will be on clearing objectives, and seek to meet them through actions that the existing backlog. are straightforward. This approach to the ANTP means that the emphasis in ƒƒ They will be easy for businesses to understand. the coming years will be on actions and initiatives that can ƒƒ Their implementation will make minimum demands on be taken in rvelatively direct terms, without excessive reli- public resources and on private capacities to make use ance on entering the full legislative cycle. of them. ƒƒ Laws will be flexible, allowing for quick modifications in terms of their practical operation.

4.6. MONITORING AND EVALUATION The ANTP is conceived as a framework for action. Given the implementation of ANTP indirect activities. To facilitate the ongoing, rapid and profound transformations taking place annual monitoring, further targets for each year will be de- in the global and regional architecture of trade, as well as in fined as part of the implementation planning of the ANTP. the actual nature of trade, it is essential that this framework The lead monitoring agency for the ANTP will be HEC. be implemented rapidly and any necessary modifications However, the ANTP-led implementing agencies will be in to it be made over time. The performance of the ANTP thus charge of direct monitoring of the ANTP subsidiary meas- requires close monitoring. ures that they implement, and periodically providing infor- Monitoring of ANTP progress will be undertaken at least mation about progress to HEC ( Figure 8 ). HEC will then on a semi-annual basis based on the indicators, base- pass on this information to the MoIC’s Directorate of Trade lines and targets established for each of the various policy Policy Development ( DTPD ), which will prepare the semi- areas identified in the ANTP and the results framework annual ANTP monitoring and progress reports. Monitoring ( Annex I ), as well as in policies and strategies guiding the of ANTP direct activities will be undertaken by the DTPP. Figure 8 : ANTP monitoring structure High Economic Council: Review and oversight over direct monitoring, strategic discussion and corrective actions Passes on information from other M&E units Report to MoCI DTPD: Direct monitoring of ANTP M&E departments in other ministries direct activities areas and preparation and agencies: Direct monitoring of of semi-annual monitoring and progress respective ANTP indirect activities reports [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] 33 (cc) Asian Development Bank / Feroza / Tailor In addition, a mid-term review of the ANTP will be undertak- ƒƒ A check will be made on the responsiveness of trade sup- en at the beginning of 2019. This will comprise the following port institutions and bodies such as the Tariff Council to steps, in addition to a review of the performance of the vari- any complaints or suggestions they have received. ous ANTP policy areas and actions against defined targets : ƒƒ A check will be made on the Islamic Republic of ƒƒ Producers and traders will be consulted to assess wheth- Afghanistan’s situation with respect to the implementa- er sufficient improvements in trade facilitation are being tion of requirements arising from trade and transit agree- made, to get their views on the effectiveness of the export ments and WTO membership. support services and their proposals for how the services could be further improved. The monitoring mechanism is a way of determining how ƒƒ The checklist of all rule changes will be examined to en- better to proceed, and will be carried out with maximum sure that the announced changes, as set out in this pol- consultation. It will provide a platform that can be used in icy, have taken place. the further evolution of the ANTP post-2022.

4.7. DONOR SUPPORT The Islamic Republic of Afghanistan’s trade policies and Building on the trade-related support from which the Islamic the responsible institutions have benefitted from a variety Republic of Afghanistan has already benefitted, the govern- of donor support. Nevertheless, the government’s resource ment will require comprehensive financial and technical as- constraints, both in terms of financial and human resources, sistance from donors and specialized international agencies the magnitude of the challenges being addressed and the in the implementation of the ANTP. The details of assistance complex and technical nature of many of the policy actions requirements will be described as one of the first actions to be undertaken as part of the ANTP mean that continued after the adoption of the ANTP. As a general rule, sector further assistance is needed. budget support will allow the government to flexibly apply resources where they are most needed to further develop the Islamic Republic of Afghanistan’s trade competitiveness and its integration into the global economy. [ IMPLEMENTATION ARRANGEMENTS ] (cc)@flickr / saffron 35

ANNEX I THE ANTP RESULTS FRAMEWORK Overall objective of the ANTP Progress indicator( s ) Baseline Target To expand Afghan exports and domestic production by facilitating trade and promoting Goods trade balance 33.7% deficit 25 % deficit ( 2023 ) export opportunities and market access, developing competitive businesses and industrial ( 2018; Source: World Development sectors catering for the domestic market, building the capacity of the MoIC and trade Indicators) support institutions, and strengthening the trade-enabling business environment. Specific objectives Progress indicator( s ) Baseline Target SO1 : To increase the export competitiveness of Afghan products Value of goods exports $ 875 million ( 2018; Source: $ 3.0 billion (2023) World Development Indicators) Constraints Proposed response to address constraints Agents Time- Result indicator Baseline Target of change frame* C1.1 : Inadequate • Prioritize investments that have potential pos- MoF MT 1. The Islamic Republic of 160 ( Logistics 130 (2023) transport itive spillover effects on the national trade MoT MT Afghanistan’s rank in ‘trade Performance Index 2018 ) infrastructure performance infrastructure’ under the increases cost of MAIL Logistics Performance Index • Other measures to be developed by responsi- production ble institutions AfRA MUDL NPA MoIC C1.2 : Lack of • Consider institutional separation of stand- ANSA MT 1. Progress towards 1. ANSA combines 1. Separate standard appropriate quality ard setting ( ANSA ) from product testing and MoIC LT separating standard setting standard setting and setting and certification infrastructure certification and certification bodies in testing bodies in place prevents exports of • Create accredited institution under ANSA to is- MoPH MT place 2. One internationally 2. Three internationally Afghan agricultural sue quality certificates MAIL MT 2. Progress towards accredited certification accredited certification and industrial • Establishing additional laboratories for product NEPA establishing internationally body in the Islamic bodies in place goods certification and testing accredited certification body Republic of Afghanistan 3. Three new laboratories • Develop and implement public awareness cam- 3. Number of new 3 and 4. Not applicable established paign on SMQT laboratories established 4. Awareness-raising 4. Level of awareness campaign rolled out for quality issues among businesses C1.3 : Weak • Promote FDI and domestic investments in ex- MoIC MT 1. Number of new FDI in 1. Not applicable 2. Fifteen projects business port-oriented activities, simplify investor re- ACBR-IP and MT export-oriented activities Licensing regime : Licensing regime : environment and quirements, and streamline and enhance trans- IFD Licensing regime : investment climate ST 1. ACBR-IP framework 1. ACBR-IP framework parency of the investment approval process MoF 1. Level of decentralization rolled out to some rolled out to all provinces ( e.g. cumbersome • Reform granting of visas for skilled foreign staff MT licensing and ACDR of licensing provinces 2. Licences reflect cost • Develop targeted support and investment in- MT dispute resolution MoMP 2. Cost of licensing 2. Flat rate fee of services centives for investors ST regimes ) Commercial dispute Commercial dispute Commercial dispute • Strengthen the Trade Policies and Trade MoEW MT Services Departments, commercial attaches, resolution : resolution : resolution : ACBR-IP and IFD’s role on investment promo- MT 1. Duration of adjudication 1. More than three years 1. Less than one year tion and investment support MT of trade and related disputes • Roll out ACBR-IP framework for licence issu- 2. Share of disputes settled ing to provinces through the Afghanistan • Review the fees for business license renewal Centre for Dispute Resolution • Reduce the number of procedures to obtain ( ACDR ) a licence • Further develop the alternate dispute resolu- tion mechanism • Provide information about the ACDR to busi- nesses when they register * Short-term (one year); medium-term (by the end of the ANTP); longer-term (extending beyond the ANTP period). [ ANNEXES ] 36 Constraints Proposed response to address constraints Agents Time- Result indicator Baseline Target of change frame* C1.4 : Low level • Create specific legislation, policies and proce- MoIC MT 1. Progress towards 1. SEZ regulatory 1. SEZ regulatory of export-oriented dures for regulating and managing SEZs MUDL MT establishing SEZ regulatory framework not in place framework in place investments • Create coordination and joint participatory framework in place 2. No SEZ incentive 2. SEZ incentive regime DAB MT mechanisms for managing and regulating the 2. Progress towards creating regime in place zones MT SEZ incentive regime 3. None 3. Two • Develop a WTO-compliant incentive regime 3. Number of SEZs for the SEZs operational • Establish one or more SEZs C1.5 : Limited • Identify new export markets for Afghan products MoIC MT 1. Number of market entry 1. None 1. Plan for 16 countries support services and market entry action plans EPD MT action plans 2. None developed available for • Expand service portfolio of EPD and General 2. Number of new exporters 2. Fifty ( cumulatively ) ( potential ) MAIL MT Directorate for Trade Services supported exporters • Strengthen export promotion role of commer- ANSA MT cial attachés Donors MT • Provide information and advice to exporters on how to take advantage of trade agreements • Seek donor support for the development and potential implementation of a matching grants programme to support greater export promotion C1.6 : Lack of • Develop strategy to increase access to trade MoIC MT 1. Availability of trade credit 1. No export credit 1. Export credit available to trade-financing finance and insurance DAB ST 2. Availability of export available to Afghan Afghan exporters instruments • Interim: develop export finance scheme for car- insurance exporters 2. Export insurance MoF MT pet producers 2. No export insurance available to Afghan • Develop a system to provide insured bonds to available to Afghan exporters cover the Customs duties on goods in transit exporters C1.7 : Priority • Develop strategies, using a value chain ap- MoIC MT 1. Strategies developed 1. No strategies existing 1. Five sector strategies export sectors proach, for a number of sectors EPD 2. Share of value-added 2. Negligible 2. 5 % need kick-off exports in total exports ( infant industry ) Line ministries support Specific objectives Progress indicator( s ) Baseline Target SO2 : To promote domestic production and trade • Share of goods imports in GDP 38.2 % ( 2018; Source: World Development Indicators ) 35 % ( 2023 ) Constraints Proposed response to address constraints Agents of Time- Result indicator Baseline Target change frame C2.1 : High level of imports • Undertake value chain analyses for sectors that have MoIC MT 1. Progress towards 1. No specific 1. Five sector strategies in sectors with existing or tentatively been identified to be potentially competitive Line MT development and strategy developed and support potential domestic production domestically, and develop sector action plans ministries implementation of or support mechanism operational • Provide sector-specific support sector strategies and mechanisms in 2. Fifty firms support mechanism place 2. Number of firms 2. Not applicable supported C2.2 : Limited number of • Identify and qualify local suppliers of needed goods MoIC MT 1. Number of domestic 1. None 1. Procurement literature in scalable domestic firms and services NPA MT firms on procurement 2. None place and populated ; 500 and lack of encouragement • Promote preferential procurement policy among pro- lists domestic firms registered for businesses to translate MT curing entities 2. Number of SMEs 2. Support strategy potential into actual production • Develop policies and strategies to assist small and me- with export potential developed ; 20 SMEs dium-sized enterprises to increase competitiveness in supported with innovation potential domestic ( and potentially foreign ) markets supported on pilot basis C2.3 : Intellectual property • Undertake a study for strengthening in IPR regime MoIC MT 1. Progress towards Not applicable 1. Study developed rights ( IPR ) are not well • Develop and implement training programme on IPR ACBR-IP MT strengthened IPR and recommendations protected in the Islamic issues regime implemented Republic of Afghanistan 2. Number of persons 2. One hundred trained C2.4 : Lack of mechanism to • Draft and enact anti-dumping and anti-subsidy laws in MoIC MT 1. Progress towards 1. No anti- 1. Legislation enacted protect domestic producers line with WTO rules LT completion of trade dumping or 2. Trade defence institution against unfair, substandard • Establish new unit within the MoIC’s General Directorate defence legislation countervailing operational or illicit imports, or against for Trade Policies to be responsible for contingent 2. Progress towards duties legislation sudden import surges protection enforcing trade exists defence regime 2. No trade defence institution exists [ ANNEXES ] 37 Specific objectives Progress indicator( s ) Baseline Target SO3 : To rationalize the tariff policy Number and usage incidence of tariff Significant number of Number and scope of exemptions exemptions exemptions to tariffs in place limited to duly justified cases Constraints Proposed response to address constraints Agents of Time- Result indicator Baseline Target change frame C3.1 : The tariff regime is non- • Rationalize review and approval of tariff rates and tar- MoF ST 1. Justified proposals 1. High number of 1. Exemptions transparent due to significant number iff exemptions MoIC MT for tariff changes tariff exemptions, are justified of exemptions, and no clear tariff • Increase the MoIC’s capacity to evaluate trade poli- incorporating economic including those economically policy objectives exist MoEC considerations without justification or socially cies, including its capacity to analyse tariffs from an economic standpoint • Rationalize the mechanism for setting tariffs Specific objectives Progress indicator( s ) Baseline Target SO4 : To reduce the time and cost of trading across borders Score in Doing Business Trading Across 30.6 ( DB 2020 ) 50 ( 2023 ) Borders sub-index Constraints Proposed response to address Agents of Time- Result indicator Baseline Target constraints change frame C4.1 : A number of measures • Eliminate all unnecessary export authoriza- MoIC MT 1. Time and cost of 228 hours, $ 344 100 hours, currently in place restrict tion requirements, such as quality certificate, MAIL, MoIC, documentary compliance ( DB 2020 ) $ 200 ( 2023 ) exports from the Islamic quarantine form, insurance certificate and MoMP for export ( Doing Business Republic of Afghanistan bill of order, etc. methodology ) C4.2 : The cost and time • Harmonize the roles of different agencies in- MoIC MT 1.Progress towards 1. Traders 1. Single window for required to export and import volved in trade Other LT operationalization of single required to obtain trade operational goods are high • Consider establishment of single window ministries, window for trade documentation from 2. Manual for traders MT various agencies or OSS for trade departments 2. Availability of border on border procedures • Review all trade and transit fees and charges and agencies ST requirements, procedures, and 2. Traders lack up- and charges • Document border requirements and proce- MT fees and charges to the public to-date information published and dures and make them readily available to all MT 3. Progress towards TIR on border procedures available online interested parties system being implemented 3. TIR system not 3. TIR system • Fully implement the TIR system and operational fully operational operational • Support the development of private sector transit services C4.3 : Customs procedures • Specific measures to be defined by MoF MoF MT To be defined by MoF/ To be defined by To be defined by remain cumbersome despite and Customs Customs Customs MoF/Customs MoF/Customs recent reforms • Expand the single-window office beyond MoIC Kabul Customs and Kabul International Airport Customs Other • Synchronize the operational hours of the bor- ministries, departments der Customs office and agencies • Mandate the export one-stop shop at the Kabul airport be linked up with ASYCUDA [ ANNEXES ] 38 Specific objectives Progress indicator( s ) Baseline Target SO5 : To promote market access for Afghan goods and services both regionally and • Number of countries to which the Islamic Republic of 20 ( 2016 ) 30 ( 2022 ) globally Afghanistan exports goods worth at least $1 million Constraints Proposed response to address constraints Agents of Time- Result indicator Baseline Target change frame24 C5.1 : Despite • Review progress towards implementation, remaining barriers to trade MoIC ST 1. Progress 1. Trade 1. Negotiation strategy and trade and transit and investment, and economic performance of all existing and pro- MoFA MT towards adopting negotiations action plan in place and agreements, spective trade agreements, and develop detailed agenda for policy- negotiation strategy not guided by guiding negotiations regional trade MoF LT and action plan negotiation makers and negotiators 2. Trade facilitation and is still affected • Develop long-term, comprehensive strategy for the Islamic Republic MT 2. Level of strategies transit agreements with by numerous of Afghanistan’s engagement in trade agreements implementation of 2. Not applicable Turkmenistan, Uzbekistan, barriers • For any proposed new trade agreements, analyse economic impacts trade and transit Kazakhstan and trilateral in advance of commencing negotiations agreements trade transit agreement • Expedite implementation of all bilateral, regional and multilateral between Afghanistan, transit agreements Uzbekistan, Kazakhstan • To ensure the openness of regional markets for Afghan exports, en- and Afghanistan, Iran gage in high-level bilateral policy dialogue, make use of existing and Turkey is under implementation mechanisms for dispute settlement, and facilitate bilateral dialogue of business communities C5.2 :Afghan • For rules of origin, review the usage by traders, and economic im- MoIC ST 1. Value of exports 1. Negligible 1. $50 million businesses pacts on the Islamic Republic of Afghanistan MT under preferential fail to take full • Engage with governments of countries providing preference schemes trade agreements advantage of MT ( PTAs ) and to simplify the administrative requirements for exporting under pref- preferential erence schemes preference schemes schemes • Provide information about preference schemes to Afghan producers and exporters and assist them in complying C5.3 : Benefits • Actively participate in WTO working groups MoIC ST 1. Implementation 1. Post-Accession 1. Post-Accession from WTO • Implement the WTO Post-Accession Implementation Strategy MT progress of strategy Implementation Implementation Strategy membership are Strategy in place fully implemented not automatic Specific objectives Progress indicator( s ) Baseline Target SO6 : To increase the effectiveness of trade-enhancing institutions, including Existence of suitably staffed Serious capacity constraints Proven increase in capacity of trade policy the MoIC and qualified trade policy and exist institutions and existence of effective trade promotion bodies promotion function Constraints Proposed response to address constraints Agents of Time- Result indicator Baseline Target change frame C6.1 : Trade policy • Strengthen the MoIC’s capacity for trade policy analysis MoIC MT 1. Level of capacity 1. Limited 1. Analyses and institutions in the • Build skills for negotiation of trade and transit agreements Other MT within the MoIC capacity to policies are formulated Islamic Republic of • Speed up decisions affecting international trade conditions and ministries, 2. Progress towards analyse and in-house Afghanistan are weak MT formulate policy performance departments enhanced PPD 2. Study on potential • Study potential for more extensive PPD and agencies ST 2. Limited PPD for enhanced PPD Donors takes place completed C6.2 : Trade support • Expand the General Directorate of Trade Services and EPD’s MoIC ST 1. Service portfolio 1. Limited 1. Comprehensive institutions in the role in export promotion ; develop more comprehensive ser- EPD ST of the EPD and services portfolio portfolio of trade Islamic Republic of vices portfolio other trade support support services Afghanistan are weak • Capacity building of the MoIC’s directorates and commercial ANSA MT institutions provided attachés MT • Establishment of trade and investment institute • Strengthening role of private sector in quality management and meeting international standards • Strengthen role of ANSA • Develop and implement public awareness campaigns [ ANNEXES ] 39

ANNEX II THE ANTP’S ROLE IN THE CONTEXT OF THE AFGHANISTAN NATIONAL PEACE AND DEVELOPMENT FRAMEWORK ( ANPDF ) The following table provides an extract of those goals and activities in the ANPDF commitments matrix that are relevant to the ANTP, and shows how the ANTP contributes to each of the identified ANPDF goals and activities. ANPDF goals and activities ANTP relevance and area Goal 8. Creating jobs, increasing yields and opening markets for farmers: Activity c. Improving livestock management, applying phytosanitary Policy area 2.4 : Protecting domestic producers against unfair competition entry criteria and WTO-allowed tariffs to prevent subsidized imports from competing with our smallholders Goal 9. Creating Jobs by developing our private sector Activity a. Assisting Afghan firms to comply with International Organization for Policy area 1.2 : Improving quality infrastructure Standardization ( ISO ) standards Activity b. Making trade support services relevant and accessible Policy area 1 : Promoting Afghan products’ export competitiveness by addressing supply-side constraints Policy area 6.2 : Strengthening the capacity of trade support institutions, including export promotion Activity c. Advancing Customs-to-Customs agreements with neighbouring Policy area 5.1 : Regional trade agreements and integration countries Activity d. Strengthening commercial attachés in Afghan embassies Policy area 1.5 : Export promotion Activity e. Advancing bilateral and multilateral trade agreements Policy area 5 : Promoting market access for Afghan goods and services Activity f. Strengthening the transport and logistics sector, including the Policy area 4 : Increasing the efficiency of import and export administration, implementation of the Customs Convention on International Transport of Customs and border-control measures Goods Under Cover of TIR Carnets ( TIR Convention ) Activity g. Promoting local procurement and enhancing production capacities Policy area 2 : Promoting domestic production and trade Activity i. Supporting and building industrial parks and special economic Policy area 1.4 : Development of special economic zones ( SEZs ) zones Activity j. Reviewing licensing requirements with the goal of eliminating Policy area 4.1 : Removing export restrictions unnecessary ones Activity k. Providing tax incentives and legal protections of investments and Policy area 1.3 : Enhancing the business environment and investment climate assets to investors Activity f. Establishing one-stop shops offering streamlined electronic Policy area 4.2 : Facilitating exports, imports and transit trade business administration services ( registration, licensing and Customs Policy area 1.3 : Enhancing the business environment and investment climate payments ) in Kabul and seven hubs Goal 11. Strengthening the extractives sector for a better economy Activity e. Building new freight rail links to regional networks in Turkmenistan Policy area 1.1 : Improving and enhancing trade infrastructure and services and the Islamic Republic of Iran Policy area 1.7 : Providing sector-specific support – adding value to exports Goal 12. Developing infrastructure and energy Policy area 1.1: Improving and enhancing trade infrastructure and services Goal 13. Growth and security through regional cooperation Activity a. Join regional projects such as One Belt One Road ( OBOR ) Policy area 5 : Promoting market access for Afghan goods and services Activity e. Strengthen Afghan embassies and trade missions Policy area 1.5 : Export promotion Goal 14. Growing human capital to drive economic growth Policy area 6: Making trade-enhancing institutions more effective [ ANNEXES ] 40

ANNEX III MATCHING ANTP POLICY AREAS AND ACTIVITIES WITH THE MOIC STRATEGIC PLAN ACTIVITIES The following table shows the correspondence between activities as foreseen in the MoIC Strategic Plan 2016–2020 and the ANTP policy areas and activities. MoIC Strategic Plan activities Corresponding ANTP policy areas and activities 1. Strengthening the legal framework Policy area 1.3 : Enhancing the business environment and investment climate 2. Facilitating trade and transit Policy area 4 : Increasing the efficiency of import and export administrations, Customs and border-control measures Specifically : Policy area 4.2 : Facilitating exports, imports and transit trade 3. Expanding regional and bilateral trade and transit agreements Policy area 5.1 : Regional trade agreements and integration 4. Integrating into global trade and economy Policy area 4 : Increasing the efficiency of import and export administration, Customs and border-control measures Policy area 5 : Promoting market access for Afghan goods and services 5. Supporting investment Policy area 1.3 : Enhancing the business environment and investment climate 6. Rationalizing business registration and licensing Policy area 1.3 : Enhancing the business environment and investment climate 7. Protecting consumer rights Not addressed by the ANTP 8. Improving access to finance Partly addressed in Policy area 1.6 : Ensuring access to export insurance and trade finance, and under Policy area 2 : Promoting domestic production and trade 9. Promoting public–private partnerships Not specifically addressed by the ANTP ( but partly addressed under Policy area 1 : Promoting Afghan products’ export competitiveness by addressing supply-side constraints ) 10. Supporting key sectors of the Afghan economy Policy area 1.7 : Providing sector-specific support – adding value to exports Policy area 2.1 : Supporting sectors with potential for domestic competitiveness 11. Increase business integration into the formal economy Not specifically addressed by the ANTP ( but partly addressed under Policy area 2 : Promoting domestic production and trade ) 12. Partnering with key stakeholders Addressed under Policy area 6 : Making trade-enhancing institutions more effective 13. Strengthening the MoIC’s capacity Policy area 6.1 : Strengthening the capacity of the MoIC and policy-setting institutions [ ANNEXES ] 41

ANNEX IV COHERENCE BETWEEN THE ANTP AND THE NPP PSD The following table provides a summary of the areas of po- policy should take responsibility for them. It is recommend- tential overlap between the ANTP and NPP PSD and as- ed that this be discussed and decided in the early stages sesses the degree of alignment and complementarity. As of implementation. As a general rule, actions related to the can be seen, no conflicts between the two documents and business environment and investment promotion should be the proposed actions in them could be identified. There are led by the NPP PSD, whereas actions specifically related to a number of actions, however, which appear in both docu- international trade and exports should be led by the ANTP ments and, while being aligned, it should be clarified which ( respectively NES ). Corresponding NPP PSD strategic ANTP policy area Comment priorities (SP) Policy area 1: Promoting Afghan products’ export competitiveness by addressing supply-side constraints Policy area 1.1 : Improving and enhancing trade SP 4.3 Improving Customs operations NPP SP 4.3 Actions related to border infrastructure and services SP 4.4 Sustainable air cargo infrastructure are in line with the ANTP NPP PSD SP 4.4 Provides for focus on air cargo – complementary to the ANTP ; further aspects addressed in NPP on National Infrastructure Policy area 1.2 : Improving quality infrastructure SP 1.3 Addressing constraints in priority value Actions in NPP PSD to develop roadmap for chains to meet domestic demands and boost modernization of quality infrastructure are in line exports with the ANTP Policy area 1.3 : Enhancing the business environment SP 1.2 Implementing an investment climate ANTP actions in this area are subsidiary and and investment climate reform roadmap are focused on trade-related issues ( e.g. trade SP 3.1 Investment promotion disputes ) and aligned to NPP PSD SP 1.2. Actions in NPP PSD SP 3.1 are in line with the ANTP Policy area 1.4 : Development of special economic SP 2.2 Supply of serviced industrial land NPP PSD and ANTP actions focus on different zones areas, but are not contradictory. As part of the coordination and joint participatory mechanisms foreseen under both the ANTP and the NPP PSD consolidation of the actions should be undertaken Policy area 1.5 : Export promotion SP 1.3 Addressing constraints in priority value NPP PSD addresses export promotion implicitly, chains to meet domestic demands and boost as part of the actions to implement the NES exports Policy area 1.6 : Ensuring access to export insurance SP 2.1 Increasing access to finance NPP PSD actions related to trade finance in SP and trade finance SP 4.1 Coordinating implementation of key 2.1 and SP 4.1 are in line with the ANTP policies and strategies for trade development Policy area 1.7 : Providing sector-specific support – SP 1.3 Addressing constraints in priority value Actions in NPP PSD to develop value chains are adding value to exports chains to meet domestic demands and boost in line with the ANTP exports Policy area 2: Promoting domestic production and trade Policy area 2.1 : Supporting sectors with potential for SP 1.3 Addressing constraints in priority value Actions in NPP PSD to develop value chains are domestic competitiveness chains to meet domestic demands and boost in line with the ANTP exports Policy area 2.2 : Supporting producers and traders SP 3.1 Investment promotion NPP PSD SP 3.1 action to develop an SME serving the domestic market strategy is in line with the ANTP. Public procurement issues are not addressed in NPP PSD Policy area 2.3 : Protecting and strengthening – IP issues not addressed in NPP PSD intellectual property rights Policy area 2.4 : Protecting domestic producers against – Unfair competition issues not addressed in NPP unfair competition PSD [ ANNEXES ] 42 Corresponding NPP PSD strategic ANTP policy area Comment priorities (SP) Policy area 3: Enhancing the tariff regime – Tariff issues not addressed in NPP PSD Policy area 4: Increasing the efficiency of import and export administration, Customs and border-control measures Policy area 4.1 : Removing export restrictions SP 4.3 Improving Customs operations NPP PSD SP 4.3 addresses this very generally ( expedite approval of the export procedure reform ) – in line with the ANTP Policy area 4.2 : Facilitating exports, imports and transit SP 4.3 Improving Customs’ operations NPP PSD actions are in line with the ANTP ( some trade ( SP 4.1 Coordinating implementation of key actions, like those related to certificates of origin policies and strategies for trade development ) or ATA carnet, are listed in SP 4.1 rather than Policy area 4.3 : Improving Customs procedures and SP 4.3 ) border control Policy area 5: Promoting market access for Afghan – Foreign market access issues not addressed in goods and services NPP PSD Policy area 6: Making trade-enhancing institutions SP 3.1 Investment promotion NPP PSD actions to facilitate PPD and more effective strengthen institutions are in line with the ANTP, SP 4.1 Coordinating implementation of key but do not particularly focus on trade policy and policies and strategies for trade development trade support institutions [ AFGHANISTAN NATIONAL TRADE POLICY / 2019-2023 ] cover pictures: © ITC / David Fox This project is funded by the European Union ADVANCING AFGHAN TRADE EU-Trade-Related Assistance