Pakistan Defends Afghan Trade Suspension as Exports Fall by $1 Billion

Pakistan has defended its decision to suspend bilateral and transit trade with Afghanistan, with the Commerce Ministry arguing that national security concerns take priority over the economic cost of keeping the routes closed. Appearing before the National Assembly Standing Committee on Commerce on Wednesday, Commerce Secretary Jawad Paul said the suspension was necessary to prevent further loss of human lives. The ministry, however, acknowledged that the move has reduced exports by roughly $1 billion and disrupted access to Central Asian markets.

The committee, chaired by Javed Hanif Khan, pressed officials on the economic rationale behind the decision, particularly its effect on exports and regional connectivity. The session came as Pakistan's trade figures showed both resilience and strain, with the government maintaining that security considerations must come first in dealings with its western neighbour.

Paul told lawmakers that Pakistan's total exports, including services, reached $40 billion in FY2025-26, while merchandise exports stood at about $32 billion. He expressed confidence that merchandise exports would rise to $35 billion in FY2026-27, noting that average monthly exports are currently around $2.9 billion. He also said remittances are expected to reach $55 billion following discussions with the State Bank of Pakistan.

Beyond the Afghan closure, Pakistan incurred a trade loss of $387 million between July and October due to regional conflicts and disruptions, including the Iran-US war and restrictions affecting trade with Afghanistan and Iran. The secretary said trade with Gulf countries has also been affected, although conditions are gradually improving. Disruptions to shipping and higher port charges have raised costs for exporters, especially those shipping meat and other commodities, and the government has arranged cargo vessels to support supplies to Gulf markets.

The secretary noted that international sanctions on Iran have complicated bilateral trade, as banks remain reluctant to process transactions for fear of violating restrictions. The government also closed the Gabd-Rimdan border crossing over sanctions-related concerns, though limited trade with Iran continues. Some LPG consignments have arrived from Iran, but the possibility of supply disruptions remains a concern, and LPG imports increased during the July-October period.

To support exports to Central Asian countries through Iran, the government introduced an electronic form facility for Pakistani exporters, following a similar relaxation last year for orange and potato shipments through Iran aimed at protecting companies from sanctions-related risks. Meanwhile, exports of oranges and potatoes have also suffered from disruptions to Afghan trade routes.