Large Re-exports and Illicit Trade

Trade statistics have long been unavailable from the Afghan authorities since 1992-93. According to an external ad-hoc survey, Afghanistan’s total trade in 2000 was $2.5 billion, comprising about $1.2 billion in imports and about $1.3 billion in exports. Pakistan has been the top trading partner, followed by Iran and other neighboring countries. According to a statement made by the Pakistani foreign minister in July 2004, the official trade between Afghanistan and Pakistan could reach $1 billion in 2004. However, about 90 percent of the estimated total exports could comprise re-exports, implying that indigenous exports falling significantly short of financing imports. Customs data are believed to cover only two-thirds of total imports and only a fraction of exports because of smuggling. The official figures do not include an estimate of opium exports, which was estimated to be in the order of $2.5 billion in 2002/03. When compared with Afghanistan’s own non-opium exports, opium exports are the overwhelming source of export revenues generated with domestic resources. According to the statement made by UNODC in June 2004, Afghanistan was responsible for threequarters of the world's illegal opium supply and for a 5 percent increase in the world supply and its production is expected to increase toward 2005.

Non-opium exports consist primarily of carpets, dried fruits, nuts, sheepskins and precious stones while its imports, excluding those for reexport, consist mainly of food items, fuel, transport and agricultural equipment. The re-exports consist of electronics, cosmetics, toiletries, crockery, auto parts, etc. Most of the re-exported goods find their way to Pakistan. It is likely that the opening up of the economy will cause imports to increase more rapidly in the short run.

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