COMMERCIAL HORTICULTURE AND AGRICULTURAL MARKETING PROGRAM (CHAMP)

Tajikistan Trade Corridor Report

November 2018 This publication was produced for review by the United States Agency for International Development. It was prepared by Roots of Peace.

COMMERCIAL HORTICULTURE AND AGRICULTURAL MARKETING PROGRAM (CHAMP)

Tajikistan Trade Corridor Report

Cooperative Agreement Award: No. 306-A-00-10-00512-00 Cooperative Agreement Recipient: Roots of Peace Period of Cooperative Agreement: February 1, 2010 - December 31, 2019 Amount of Cooperative Agreement: $71,292,850 Agreement Officer Representative: Hameedullah H. Safi

CHAMP CONTACT INFORMATION

Bagie Sherchand CHAMP Chief of Party [email protected]

Gary Kuhn President, Roots of Peace [email protected]

Heidi Kuhn Founder and Chief Executive Officer, Roots of Peace [email protected]

Produced to meet the requirements of the CHAMP Cooperative Agreement, this report is intended to provide USAID with a report analyzing the trade corridor between and Tajikistan.

DISCLAIMER:

The views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development (USAID) or the United States Government. Table of Contents

Abbreviations ...... 2 Executive Summary ...... 3 1. Country Profile and External Trade ...... 4 Country Profile ...... 4 Bilateral Trade with Afghanistan ...... 4 Import and Export ...... 4 2. End Market Analysis ...... 10 Market Channels ...... 10 General Business Environment ...... 12 Import Requirement and Documentation ...... 13 3. Transport Routes ...... 14 Tajikistan's Geography ...... 14 Transit Options ...... 16 Conclusion ...... 21

1 CHAMP Tajikistan Trade Corridor Report Abbreviations

ADB Asian Development Bank AFG Afghanistan BCP Border Crossing Point CAGR Compound Annual Growth Rate CHAMP Commercial Horticulture and Agricultural Marketing Program EAEU Eurasian Economic Union EBRD European Bank for Reconstruction and Development GIRoA Government of Islamic Republic of Afghanistan IFC International Financial Center KAZ KGZ Kph Kilometers per hour MAIL Ministry of Agriculture, Irrigation and Livestock MoCI Ministry of Commerce and Industries PAK PRC People Republic of SPS Sanitation and Phyto-Sanitary TAJ Tajikistan TEU Twenty Foot Equivalent TIR International Transport Routiers TKM Turkmenistan USAID United States Agency for International Aid USD United States Dollar UZB Uzbekistan XUAR Uygur Autonomous Region

2 CHAMP Tajikistan Trade Corridor Report Executive Summary

Bilateral trade between Afghanistan and Tajikistan in 2017 amounted to $113 million, of which Afghanistan imported $111.57 million from Tajikistan and exported $1.43 million in return. Aluminum and cotton comprise the main Tajik exports. The country exported $27 million in agricultural products in 2017, including onions ($8.52 million), shelled walnuts ($7.41 million), dried apricots ($4.19 million), fresh grapes ($3.98 million), fresh apricots ($1.52 million) and fresh plums ($1.18 million). Kazakhstan and Russia are the top markets for Tajik agricultural exports, accounting for $5.52 million in 2017. Exports to Russia have increased in recent years, though Tajik exports experienced an overall downward trend from 2014 to 2017 as Kazakhstan diversified its food supply sources. Tajik consumers commonly visit open-air bazaars to buy food items. Modern retail outlets with cold-chain facilities began to develop in 2016 when the first Auchan hypermarket opened in the capital of . Other national retail chains such as Tajero also started to modernize their existing stores and adopted new food safety standards. Interestingly, international financial intermediaries were involved in financing these efforts, which demonstrated the importance for financial support in times of transition. Such modernization efforts also compelled local suppliers to raise their performance standards to meet the increasing requirements set by the retail sector. Although Afghans and Tajiks shared some similarity in terms of language and culture, there are significant challenges in cross-border trade between the two countries. Tajikistan only has a population of 8.84 million and a GDP per capita of $809. It relies heavily on remittances from the 1 million citizens working in the Russian Federation, which accounts for 30% to 40% of GDP. Furthermore, trade procedures are cumbersome and the paperwork time consuming. Also, the two countries grow similar agricultural items, so demand is not readily present, apart from imported tropical fruits from Pakistan via Afghanistan. On the other hand, Tajikistan is an important transit country to Kazakhstan and China. The Afghanistan- Tajikistan-China route holds promising opportunities for Afghan exports. Products are consolidated 300 km from the China-Tajik border at , a large commercial hub and a key node in the ancient silk road. Tajik drivers transport consumer and industrial goods there to the Shirkhan Bandar border. Trucks return empty as there is no trilateral transit trade agreement between the three countries. If such an agreement is established, Afghan exports can be loaded onto empty return trucks, which can reduce the cost of transportation (a one-way trip with 20 tons of goods costs $9,326). Prospective items such as pine nuts from Afghanistan have strong market potential and can be shipped in this way. Other routes permit goods from Kabul to reach Dushanbe and Almaty. A 40-foot refrigerated container truck costs $1,479 one-way from Kabul to Dushanbe. The same payload would cost $5,400 one-way to Almaty. To access Almaty, the alternative transit route via Uzbekistan is more competitive, as Uzbekistan has a direct border with Kazakhstan while Tajikistan does not. The Tajikistan trade corridor is also hampered by the disintegrated railway network in Tajikistan. In summary, Tajikistan is most viable as a transit country to China rather than an ultimate destination for Afghan agricultural exports. In terms of reaching Kazakhstan and Russia, Uzbekistan offers a more competitive choice as a transit country.

3 CHAMP Tajikistan Trade Corridor Report 1. Country Profile and External Trade Country Profile Table 1 - Tajikistan Country Profile (2017)

Indicator Values Population 8.84 million Gross Domestic Product (Nominal GDP, USD) $7.15 billion GDP per capita $809 USD Unemployment Rate 2.3% Foreign Trade $3.262 billion Imports $2.389 billion Exports $873 million

Source: Tajikistan National Bank and Asian Development Bank.

Bilateral Trade with Afghanistan Bilateral trade with Afghanistan, as noted on the table below, is unbalanced. In 2017, Afghanistan imported nearly 80 times more from Tajikistan than it exported. Table 2 - Bilateral Trade between Afghanistan and Tajikistan (2017)

Indicator Values Total Bilateral Trade, 2017 $113,010,581 Tajikistan imports from Afghanistan $1,433,204 Tajikistan exports to Afghanistan $111,577,377 Source: Afghanistan Chamber of Commerce and Industries (ACCI) Import and Export Tajikistan’s trade structure is concentrated on minerals and cotton. Minerals dominate the list of exports, accounting for eight of the top 10 items. In 2017, aluminum was the number one export, contributing $159 million (16.01%), followed by gold, zinc and lead. Cotton is the ranked 5th, while frozen fish fillets are ranked 8th. Agriculture exports are fresh and chilled onions ($8.52 million, 0.86%), shelled walnuts ($7.41 million, 0.74%) and dried apricots ($4.19 million, 0.42%). The top imports in 2017 featured a variety of consumer and industrial products. The top import item was wheat ($165 million, 4.99%). Industrial materials such as plastic and oils dominated the top five items. No other agriculture products were imported, which demonstrated the country's self-sufficiency in fruits and vegetables. Tajikistan does export a variety of fresh and dried fruits, amounting to $27 million in 2017. The top export items are similar to top agriculture exports from Afghanistan. Walnuts topped the list in 2017 ($7.41 million, 27.27%), followed by dried apricots ($4.19 million, 15.44%), fresh grapes (3.98 million, 14.65%), fresh apricots ($1.52 million, 5.6%) and fresh plums ($1.18 million, 4.37%).

4 CHAMP Tajikistan Trade Corridor Report Table 3: Top 20 Export Items of Tajikistan (in thousands USD)

No. Code Product label 2014 2015 2016 2017 % 1 '760110 Aluminum, not alloyed, unwrought 234,177 216,242 207,526 159,443 16.01% Gold, incl. gold plated with platinum, unwrought, 2 '710812 0 0 0 156,900 15.75% for non-monetary purposes (excluding gold ... 3 '260800 Zinc ores and concentrates 65,220 57,991 94,334 152,344 15.29%

4 '260700 Lead ores and concentrates 79,937 68,519 101,712 118,089 11.85%

5 '520100 Cotton, neither carded nor combed 129,556 144,172 120,931 75,428 7.57%

6 '261710 Antimony ores and concentrates 18,235 14,764 26,225 44,902 4.51%

7 '260300 Copper ores and concentrates 12,163 11,130 16,253 28,012 2.81%

8 '030489 Frozen fish fillets, n.e.s. 0 0 0 25,969 2.61%

9 '760120 Unwrought aluminum alloys 830 810 91 25,790 2.59%

Structures and parts of structures, of iron or steel, 10 '730890 39 17 72 23,500 2.36% n.e.s. (excluding bridges and bridge-sections, ... Men's or boys' trousers, bib and brace overalls, 11 '620342 16,874 11,169 13,122 16,962 1.70% breeches and shorts, of cotton (excluding ...

12 '811010 Unwrought antimony; antimony powders 0 0 0 16,831 1.69%

Single cotton yarn, of uncombed fibres, 13 '520512 containing >= 85% cotton by weight and with a 4,609 3,418 4,950 13,761 1.38% linear ... Single cotton yarn, of combed fibres, containing 14 '520524 0 227 190 11,240 1.13% >= 85% cotton by weight and with a linear ...

15 '070310 Fresh or chilled onions and shallots 7,730 10,199 7,164 8,526 0.86%

16 '410411 Hides and skins 2,703 2,919 2,349 7,425 0.75%

17 '080231 Fresh or dried walnuts, in shell 282 189 38 7,412 0.74% Single cotton yarn, of combed fibres, containing 18 '520523 2,549 471 158 6,859 0.69% >= 85% cotton by weight and with a linear ... Motor vehicles for the transport of goods, with 19 '870421 compression-ignition internal combustion piston 25 44 22 6,362 0.64% ...

20 '081310 Dried apricots 11,842 4,617 4,626 4,197 0.42%

Source: Trade Map, International Trade Centre

5 CHAMP Tajikistan Trade Corridor Report Table 4: Top 20 Import Items of Tajikistan (units in thousands USD)

No. Code Product label 2014 2015 2016 2017 % Wheat and meslin (excluding seed for sowing, and 1 '100199 0 0 0 165,881 4.99% durum wheat) Polyvinyl chloride, in primary forms, not mixed with any 2 '390410 2,992 2,136 3,596 118,593 3.57% other substances Medium oils and preparations, of petroleum or 3 '271019 315,622 222,251 163,858 108,433 3.26% bituminous minerals, not containing biodiesel, ...

4 '271112 Propane, liquefied 142,959 119,698 140,860 95,459 2.87%

Light oils and preparations, of petroleum or bituminous 5 '271012 0 0 0 79,723 2.40% minerals which >= 90% by volume "incl. ...

6 '281820 Aluminum oxide (excluding artificial corundum) 131,143 133,788 135,347 54,350 1.63%

Footwear with outer soles and uppers of rubber or 7 '640299 3,467 1,787 2,178 44,885 1.35% plastics (excluding covering the ankle or ... Sunflower-seed or safflower oil and their fractions, 8 '151219 24,436 24,725 22,177 39,528 1.19% whether or not refined, but not chemically ... Cane or beet sugar and chemically pure sucrose, in solid 9 '170199 65,624 73,483 50,779 39,164 1.18% form (excluding cane and beet sugar ... Medicaments consisting of mixed or unmixed products 10 '300490 61,952 25,615 22,689 38,069 1.14% for therapeutic or prophylactic purposes, ... Petroleum oils and oils obtained from bituminous 11 '270900 32 0 58 36,824 1.11% minerals, crude

12 '960321 Tooth brushes, incl. dental-plate brushes 182 159 138 34,844 1.05%

Footwear with uppers of leather or composition leather 13 '640510 889 1,174 644 32,748 0.98% (excluding with outer soles of rubber, ... Bars and rods, of iron or non-alloy steel, with 14 '721420 49,987 59,125 32,656 32,639 0.98% indentations, ribs, groves or other deformations ...

15 '940540 Electric lamps and lighting fittings, n.e.s. 2,445 989 2,584 31,288 0.94%

Boards, cabinets and similar combinations of apparatus 16 '853720 6,370 27,639 9,714 28,022 0.84% for electric control or the distribution ... Motor cars and other motor vehicles principally 17 '870324 38,227 19,143 7,063 27,980 0.84% designed for the transport of persons, incl. ... Flat products of iron or non-alloy steel, of a width of >= 18 '721070 10,077 9,721 5,041 23,936 0.72% 600 mm, hot-rolled or cold-rolled ... Aeroplanes and other powered aircraft of an of an 19 '880240 4,908 0 0 23,600 0.71% unladen weight > 15000 kg (excluding helicopters ... Pine "Pinus spp." sawn or chipped lengthwise, sliced or 20 '440711 0 0 0 23,080 0.69% peeled, whether or not planed, sanded ... Source: Trade Map, International Trade Centre

6 CHAMP Tajikistan Trade Corridor Report Table 5 - Top 20 Export Items of Tajikistan – Fruits and Nuts1 (in thousands USD)

No. Code Product label 2014 2015 2016 2017 CAGR % Cum % 1 '080231 Fresh or dried walnuts, in shell 282 189 38 7,412 126.42% 27.27% 27.27% 2 '081310 Dried apricots 11,842 4,617 4,626 4,197 -22.84% 15.44% 42.71% 3 '080610 Fresh grapes 1,205 4,227 2,225 3,983 34.84% 14.65% 57.36% 4 '081350 Mixtures of nuts or dried fruits 7,088 4,804 2,151 2,509 -22.87% 9.23% 66.59% 5 '080910 Fresh apricots 693 62 873 1,521 21.72% 5.60% 72.18% 6 '080940 Fresh plums and sloes 64 371 476 1,187 107.52% 4.37% 76.55% Dried peaches, pears, papaws 7 '081340 "papayas", tamarinds and other 734 878 592 1,045 9.23% 3.84% 80.40% edible fruits (excluding nuts, ... 8 '081070 Fresh persimmons 0 0 0 1,017 3.74% 84.14% 9 '080212 Fresh or dried almonds, shelled 5 59 70 732 247.84% 2.69% 86.83% 10 '080232 Fresh or dried walnuts, shelled 1,502 935 225 705 -17.23% 2.59% 89.42% Fresh cherries (excluding sour 11 '080929 0 0 0 667 2.45% 91.88% cherries)

12 '081320 Dried prunes 1,285 680 490 552 -19.04% 2.03% 93.91%

13 '080252 Fresh or dried pistachios, shelled 0 0 0 524 1.93% 95.84% 14 '081330 Dried apples 382 305 81 326 -3.89% 1.20% 97.03%

15 '080620 Dried grapes 220 221 204 159 -7.80% 0.58% 97.62%

16 '080430 Fresh or dried pineapples 0 0 0 123 0.45% 98.07%

17 '080251 Fresh or dried pistachios, in shell 0 0 0 115 0.42% 98.50%

18 '080111 Desiccated coconuts 0 0 0 76 0.28% 98.77% Fresh or dried lemons "Citrus 19 '080550 limon, Citrus limonum" and limes 28 146 50 57 19.45% 0.21% 98.98% "Citrus aurantifolia, Citrus ... Fresh or dried mandarins incl. 20 '080521 tangerines and satsumas (excl. 0 0 0 56 0.21% 99.19% clementines) Source: Trade Map, International Trade Centre

1 Products are based on HS Code 08.

7 CHAMP Tajikistan Trade Corridor Report Table 6 - Top 20 Import Items of Tajikistan – Fruits and Nuts (units in thousands USD)

No. Code Product label 2014 2015 2016 2017 CAGR % Cum %

1 '080251 Fresh or dried pistachios, in shell 0 0 0 856 30.60% 30.60% 2 '080390 Fresh or dried bananas (excluding plantains) 0 0 0 646 23.10% 53.70% 3 '080231 Fresh or dried walnuts, in shell 6 121 0 611 217.67% 21.84% 75.55% 4 '080410 Fresh or dried dates 713 1,194 426 145 -32.85% 5.18% 80.73%

5 '080810 Fresh apples 2,404 791 274 142 -50.70% 5.08% 85.81%

6 '080510 Fresh or dried oranges 839 533 278 104 -40.66% 3.72% 89.52% 7 '080529 Fresh or dried wilkings and similar citrus hybrids 0 0 0 86 3.07% 92.60% Fresh tamarinds, cashew apples, jackfruit, 8 '081090 lychees, sapodillo plums, passion fruit, 482 857 507 51 -42.97% 1.82% 94.42% carambola, ... 9 '081050 Fresh kiwifruit 1,338 950 865 50 -56.03% 1.79% 96.21% 10 '080830 Fresh pears 0 0 0 37 1.32% 97.53% Fresh or dried guavas, mangoes and 11 '080450 7 0 0 22 33.15% 0.79% 98.32% mangosteens Fresh or dried mandarins incl. tangerines and 12 '080521 0 0 0 15 0.54% 98.86% satsumas (excl. clementines)

13 '080430 Fresh or dried pineapples 73 52 11 9 -40.74% 0.32% 99.18%

14 '080711 Fresh watermelons 57 65 71 7 -40.80% 0.25% 99.43% 15 '080540 Fresh or dried grapefruit 37 34 24 4 -42.66% 0.14% 99.57% Dried peaches, pears, papaws "papayas", 16 '081340 tamarinds and other edible fruits (excluding 24 11 1 4 -36.11% 0.14% 99.71% nuts, ... Frozen fruit and nuts, uncooked or cooked by 17 '081190 steaming or boiling in water, whether or not 1 1 9 3 31.61% 0.11% 99.82% sweetened ... 18 '081350 Mixtures of nuts or dried fruits 1 15 46 1 0.00% 0.04% 99.86%

19 '080610 Fresh grapes 20 16 4 1 -52.71% 0.04% 99.89%

Frozen strawberries, uncooked or cooked by 20 '081110 steaming or boiling in water, whether or not 2 1 1 1 -15.91% 0.04% 99.93% sweetened Source: Trade Map, International Trade Centre

8 CHAMP Tajikistan Trade Corridor Report Table 7 - Top Destinations for Tajikistan Fruit and Nut Exports (in thousands USD)

No. Exporters 2014 2015 2016 2017 1 Kazakhstan 20,037 10,973 5,486 3,599 2 Kyrgyzstan 151 2,006 3,078 3,038 3 Russian Federation 994 1,379 1,357 1,827 4 Belarus 1,473 1,140 783 528 5 Iraq 826 65 621 1,079 6 Pakistan 632 2,509 573 1,148 7 Turkey 715 478 541 1,517 8 Ukraine 584 212 257 153 9 Afghanistan 103 447 238 308 10 China 635 204 148 117

Source: Trade Map, International Trade Centre and Association of International Automobile Transport of Tajikistan (AIATT)

Kazakhstan is the biggest buyer of Tajikistan’s fruits and nuts, though the export value has halved each year. Kyrgyzstan is ranked number 2, though Tajikistan and Kyrgyzstan grow similar products, so there is little bilateral trade for agriculture items, as observed in 2014. In the following year, Kyrgyzstan acceded to the Eurasian Economic Union (EAEU) and Tajik traders began moving products via Kyrgyzstan to Kazakhstan, explaining the rise in trade exports from Tajikistan to Kyrgyzstan after 2014. The Russian Federation has remained a large market for Tajikistan, accounting for 10% of the latter’s exports. In summary, Afghanistan and Tajikistan compete for same markets due to overlapping agricultural products. To expand the market for Afghanistan exports, Tajikistan functions better as a transit country to provide access to Kazakhstan. Since Tajikistan has a border with China, there is also a road corridor that can facilitate Afghan exports to China, accessing Kashgar as a gateway for possible penetration to further Chinese markets. This will be discussed in the transit routes section.

9 CHAMP Tajikistan Trade Corridor Report 2. End Market Analysis Market Channels Illus. 1 - Market Channels in Tajikistan

Tajik producers primarily supply to serve local demand, although markets may import to cover deficits during the off season. There are three types of local producers. The first is the peasant ("dekhan") farm. This is an innovation similar to Uzbekistan which combines traditional small-household plots into mid- sized farms. Household farms are traditional farms that operate on a subsistence basis, providing enough to feed the household. Plot size is typically very small. Larger enterprises were popular during Soviet times, but many have fallen away due to the lack of funds for re-investment. In general, farming productivity in Tajikistan is comparatively low compared to neighboring competitors such as Uzbekistan. As mentioned earlier, importers may source fruits and vegetables from other countries during the off season when there is not enough supply to meet domestic demand. Even then, Tajik importers source mainly from Uzbekistan or Kyrgyzstan, and rarely from Afghanistan. The four main markets for agricultural products are (1) bazaars, (2) grocery stores, (3) supermarkets and (4) hotels and restaurants. In general, bazaars are the most common markets for individual consumers and businesses owing to convenience and price. There is only a limited number of national grocery chains in Tajikistan. Selection is limited, and the square footage is relatively small. Supermarkets are a relatively new channel and will be elaborated below. Supermarkets The modern retail supermarket/hypermarket is absent in Tajikistan before 2016. In June 2016, the first hypermarket, Auchan, opened in the capital of Dushanbe, with Tajik President Emomali Rahmon personally inaugurating the opening. Initially, Auchan planned to import the majority of its food items from Russia, where it already has a strong presence. So far, the hypermarket has concluded deals with 200 domestic agribusinesses. The European Bank for Reconstruction and Development (EBRD) invested €5 million in the form of long-term loans and equity investment.

10 CHAMP Tajikistan Trade Corridor Report Illus. 2 - The Auchan Hypermarket in Dushanbe

Illus. 3 - A New Tajero Store in Dushanbe

Following the success of Auchan, the Tajero retail chain opened in Dushanbe. Unlike Auchan, Tajero does not plan to create a hypermarket format, but aims at low and middle-income consumers using a smaller retail footprint. Tajero plans to use the $2 million startup investment it received from the International Financial Center (IFC) to modernize its supply chain and raise food safety standards.

11 CHAMP Tajikistan Trade Corridor Report General Business Environment Based on data from the World Bank, Tajikistan poses a challenging business environment, with both natural and political limiting factors. Advantages • Proximity — Kabul and Dushanbe are 682 km apart, which is comparatively short compared to the distances between Kabul and other capital cities in Central Asia. • Accessibility — Access roads are available and both countries have an international border crossing at Shirkhan Bandar (Afghanistan) and Nizhni Panj (Tajikistan). • Bilateral Relations — Both countries enjoy a cordial bilateral relationship. Tajikistan was a transit country when International Security Forces (ISAF) were stationed in Afghanistan and maintained a supply line from Kyrgyzstan to Afghanistan. Afghanistan, Tajikistan and Turkmenistan are also in discussions to create a trilateral railway project. At the social level, Afghans and Tajiks share a close cultural heritage and history, being influenced by Persian culture to a greater extent than other Central Asian republics. Both nationalities can communicate easily, with their local language derived from Farsi. Challenges • Market Demand — With a domestic population of 8.84 million and a GDP per capita of $809, the country is not an attractive market in terms of spending power. The country also produces similar fruits and vegetables found in Afghanistan. o Apples, apricots, cherries, figs, pears, pomegranates and plums are cultivated in the north. o Wheat and barley are grown in the rain-fed areas in the south. o Melons, potatoes and vegetables are grown throughout the country. • Restrictions on Truck Entry — Afghan trucks are not permitted to cross Tajikistan except by special arrangement (a road pass and TIR Carnet2). • Difficult Market Research — Market intelligence and information is not easily accessible. Tajikistan’s statistics website (http://www.stat.gov.tj/) is not operational. • Rent-Seeking Fees — The act of asking additional fees on top of official rates is very widespread, especially at border crossings. Such ‘tea money’ is given to expedite border crossing formalities. Customs Fees and Import Duties Customs duties on imports range from 0% to 15%. Goods imported from the Eurasian Economic Union, for instance, can be imported at 0% (Tajikistan is not a member yet although it is under discussion in the parliament). Table 9 – Fees and Taxes on Imports

Applicable Activities Amount (USD) Customs Clearance Fees (depending on value of imported 10-900 goods) $1 per 50 Bonded Storage kg/day Customs Escort for Transit $2 per 10 km

2 TIR Carnet is a document under the UNECE TIR Convention 1975 that permits transit goods to move without burdensome inspection in transit countries.

12 CHAMP Tajikistan Trade Corridor Report Value Added Tax (VAT) 18% Source: https://www.export.gov/article?id=Tajikistan-Import-Tariffs Import Requirements and Documentation The import procedure is relatively cumbersome and time-consuming. Multiple agencies are involved and, despite a decade-long initiative to implement a single electronic format, paper-based transactions are still common. Information is not integrated and shared between ministries or agencies. The importer must prepare a file containing the following documents: • Taxpayer’s Identification Number • Import Certification of Registration The importer must use a customs broker to produce the Customs Declaration which contains: • Power of Attorney to authorize the Customs Broker to conduct the customs clearance • Sales Contract • Bill of Lading, Packing List and Commercial Invoice • Certificate of Origin • Bank Letter confirming the full payment of imported goods For agriculture imports, additional documents are required: Table 10 – List of Additional Documents for Agriculture Imports into Tajikistan

Documents Required By Certificate of Import of Agricultural Products including seeds Ministry of Agriculture Quarantine Certificate State Quarantine Agency Certificate of Quality Tajik Standard Agency Veterinary Certificate Office of Veterinary Control If the item is classified as ‘pharmaceutical goods’ then Ministry of Health Certificate for Pharmaceutical Items is needed

13 CHAMP Tajikistan Trade Corridor Report 3. Transport Routes Tajikistan’s Geography Tajikistan has a total land area of 143,100 km2. The country has a highly mountainous terrain, with 50% of the land having an elevation of more than 3,000m above sea level. Only 28% of the land is suitable for agriculture (approximately 4.1 million hectares), consisting of 76% pastures and hay meadows, 21% arable land and 3% perennial crops. As a land-locked country, Tajikistan can only access Pakistani or Iranian seaports in the south via transit across Afghanistan. This presents an interesting bilateral transit trade cooperation because Afghanistan can facilitate Tajikistan access to seaports, while Tajikistan is an option for Afghanistan to access Kazakhstan and China. Both countries have a border length of 1,357 km. There are five official border crossing points, but only Shirkhan Bandar-Nizhni Panj, located at the southern tip of Tajikistan, serves international traffic. Illus. 4 - Map of Tajikistan

Source: Association of International Road Carriers of the Republic of Tajikistan (ABBAT) To facilitate cross-border movement, the US Army Corps of Engineers provided $40 million to complete the bridge at the Shirkhan Bandar-Nizhni Panj border. This bridge has two lanes, is 672 m long and 11.6 m wide. The bridge became operational on August 26, 2007. It remains a key point for access to Central Asia. In terms of transport infrastructure, shippers can use road, railway or air. The country has about 14,000 km of road, and while accounting for 96% of domestic freight, it only contributes 3.5% for international freight. Road transport is also challenging, especially in winter. The combination of mountainous terrain and adverse weather can result in traffic accidents. Railways carry 3.4% of domestic traffic but 95.9% of international traffic. This is the inverse of road transport due to the use of trains to ship primarily cotton and aluminum. It is difficult to ship goods to

14 CHAMP Tajikistan Trade Corridor Report domestic locations within Tajikistan because the railway network is not unified in the country. This is because the railways network was built during Soviet times, and so the rail tracks crisscross the present territories of Kyrgyzstan, Tajikistan and Uzbekistan, and orientate towards Europe and Russia. Illus. 6 - Rail Network

Air transport carries about 0.6% of international cargo and virtually no domestic freight. Tajikistan has four international airports (Dushanbe, Khujand, Kuylab and Kurgan Tyube). Dushanbe is the capital’s airport and has been recently modernized, being the main gateway for international passengers bound for Moscow, Istanbul, Dubai as well as other Central Asian Republics. The country does not have a national air corridor program. Tajikistan offers some attractiveness as a transit corridor. For goods bound to Kazakhstan, the Uzbek route is more efficient, allowing Afghan shippers to cross via one country, Uzbekistan, rather than two, Tajikistan and Kyrgyzstan. On the other hand, Tajikistan has a direct border with China. This enables Afghan shippers to reach Kashgar in the Xinjiang Uygur Autonomous Region in China. Transit Options

Route 1: Kabul-Dushanbe As Afghanistan trucks are not allowed to enter Tajikistan, Afghanistan does not export many goods directly to Dushanbe. However, transit shipments from Pakistan utilize this route to ship tropical fruits and vegetables to Dushanbe via Afghanistan. Due to the absence of a trilateral agreement between Afghanistan, Pakistan and Tajikistan, trucks must be changed at Jalalabad and Shirkhan Bandar due to the restriction on foreign trucks carrying goods within the country. This requires Afghan shipper to offload goods onto Tajik trucks at the border, resulting in higher costs and longer shipment time.

15 CHAMP Tajikistan Trade Corridor Report Illus. 7 - Kabul to Dushanbe by Truck

Table 10 – Kabul to Dushanbe by Road

Estimated Time Route Estimated Cost (USD) (Days) Kabul-Shirkhan Bandar-Nizhni Panj- $1,480 2-3 days Dushanbe

Table 11 - Estimated Cost and Time for Route 1

Indicator Value Distance 682 km Shipment Time Origin-Destination 2-3 days Estimated Cost – 20-foot refrigerated container $1,142 Estimated Cost – 40-foot refrigerated container $1,479 Source: Afghanistan Freight Forwarders Association (AAFFCO), September 2018

Advantages • Shortest and most direct route to Dushanbe. • From border to Dushanbe, the driving time is only 3-4 hours by road. Challenges • Must offload onto Tajik trucks. • Added offloading cost of $145 on average per container (regardless of 20-foot or 40-foot) which

16 CHAMP Tajikistan Trade Corridor Report can take 4-5 hours to complete. • Unofficial payments (corruption) are ubiquitous, according to reports from drivers. • From Kabul to Shirkhan Bandar, the truck crosses Kunduz, a major city in the north of Afghanistan. This city is frequently insecure and can pose a risk to Afghan drivers and shipments.

Route 2: Kabul-Dushanbe-Bishkek-Almaty

In the past, military supplies and equipment moved from Manas Airport (in Kyrgyzstan) to Afghanistan. Since 2013, when ISAF withdrew, the traffic volume has reduced significantly. This route was used instead of Uzbekistan as the country had a very restrictive transit and customs regime. With the new administration in Uzbekistan, the border crossing and transit regimes are simplified. Uzbekistan also has better transport infrastructure and a flatter terrain compared to this route, so traffic is likely to be diverted to Uzbekistan. In addition, this route serves vehicles and has no railway service, as the tracks in Tajikistan are oriented in an east-west direction only. Illus. 8 - Kabul-Dushanbe-Bishkek-Almaty by Truck

Advantages • Tajikistan has the highest similarity to Afghanistan’s culture and language. Afghan shippers/drivers will find it easier to communicate in Tajikistan compared to other Central Asian republics which use Russian for business. Challenges • This route requires crossing two transit countries (Tajikistan and Kyrgyzstan). • Beyond Shirkhan Bandar, the shipment must be offloaded onto Tajik trucks. Even if the truck has the necessary permit, it will require a TIR Carnet for transit to Almaty to avoid physical inspection in transit.

17 CHAMP Tajikistan Trade Corridor Report • The route only serves automobile traffic. No train service operates on this route. • The actual shipment time can be lengthy due to the uncertain border crossing times in Central Asia and the high likelihood of paying bribes to border agencies in exchange for faster release of trucks and shipments.

Table 12 - Cost and Time Estimates

Indicator Value Distance 1,875 km Shipment Time Origin-Destination 7-10 days Estimated Cost – 20-foot dry container $4,200 Estimated Cost – 20-foot refrigerated container $5,100 Estimated Cost – 40-foot dry container $4,500 Estimated Cost – 40-foot refrigerated container $5,400 Source: Afghanistan Freight Forwarders Association (AAFFCO), June 2018

Route 3: Kabul-Kulma Pass-Kashgar

This route links Kabul to Kashgar (locals call it “Kashi”), a key hub on the ancient silk road. Kashgar is the second largest city after Urumqi in the Xinjiang Uygur Autonomous Region (XUAR) in China. The city is regarded as the regional commercial center in the southern part of Xinjiang and is a gateway for trade between Central Asia and China. Located about 300 km from the China-Tajik border, Kashgar is also a Special Economic Zone (SEZ). Illus. 9 - Kabul-Kulma Pass-Kashgar by Truck

Currently, Chinese exporters use this route to send industrial equipment and construction materials, as well as some consumer goods, to Afghanistan. The Chinese deliver to Kashgar, where logistics

18 CHAMP Tajikistan Trade Corridor Report companies consolidate the shipment and move them to the border. Tajik drivers collect the goods and ship via the Gorno-Badakhshan region in Tajikistan, a circuitous journey over mountainous terrain. The goods come to Shirkhan Bandar, where Afghan drivers collect the goods and move them to other Afghan cities. The trucks return empty. If a trilateral transit trade agreement between Afghanistan-Tajikistan-China can be concluded, there is potential to facilitate Afghan exports to China. Afghan pine nuts, for example, enjoy good demand in China. Advantages • This is the shortest route to reach China. Although Afghanistan has a direct border with China, the Wakhan Corridor, it is remote and mountainous, lacking paved roads and customs offices. • Many trucks carrying goods from China return empty. The ability to load Afghan exports on the return will reduce empty backhaul, thus lowering the cost of both imports and exports. Challenges • The region is mountainous and difficult to navigate. During winter, this route may not be passable due to heavy snow and narrow roads. • No transit trade agreement is in place, so Afghan shippers cannot load goods on the return container. • A one-way journey requires 5-11 days for transit. • The route is expensive. A one-way journey costs close to $9,000 for a 25-ton shipment. Most trucks that carry Chinese goods from Kashgar to Kabul use non-containerized box trucks which can accommodate a higher capacity.

Table 12 - Cost and Time Estimates Indicator Value Distance 1,808 km Shipment Time Origin-Destination 5-11 days Estimated Cost – 20 tons goods, non-containerized $9,3263 Source: Association of International Automobile Transport of Tajikistan (AIATT)

3 This estimate was given by AIATT for the Kashgar to Kabul route. There is no shipment in the reverse direction at present.

19 CHAMP Tajikistan Trade Corridor Report Conclusion

Tajikistan is a net exporter of agricultural products, exporting $27 million in 2017. The bilateral trade between Afghanistan and Tajikistan was $113 million, an amount that was relatively small compared to other Central Asia republics. The country is beginning to modernize its organized sector, with the first hypermarket beginning operations in 2016. The most popular method of buying fresh and processed food remains at open-air bazaars and small grocery stores. In the past few years, both countries have expressed a commitment to enhance cooperation. But owing to a lack of transit trade agreements and other factors, trade between the two countries only accounted for 0.2% of their total trade despite the close proximity, according to the World Bank. Tajikistan is not an attractive market for Afghan agriculture products. Tajikistan is most viable as a transit country to China rather than an ultimate destination for Afghan agricultural exports. In terms of reaching Kazakhstan and Russia, Uzbekistan offers a more competitive choice as a transit country.

20 CHAMP Tajikistan Trade Corridor Report