The present study examines the role of WTO in enhancing trade and IPP protection
in Afghanistan. The TRIPS agreement ensures free trade, equal treatment, and
resolving disputes. Accession to the WTO provides Afghanistan a forum to resolve
its transit-related problems via this organization. The assessment of the impact
of the WTO agreement can result in a dynamic capability that shall enable the
country to respond to uncertain and changing business environments and to
sustain its trade activities globally.
The outcome and addressed gaps can lead
Afghanistan to work efficiently to enhance export, reduce imports and protect IPR regimes.The study reveals that there is a lack of available and rea liable
research concerning trade and IPR protection in Afghanistan and it makes it
difficult to integrate information and draw an interpretation about the impact
of WTO on trade and IPR and time constraint is also one of the main limitations of
the research. Better results can be obtained if sufficient time is invested in
conducting the research.
The objectives of the study are to review the WTO
agreement of trade and IPR with Afghanistan and analyze the future scope of the
WTO agreement on the economy of Afghanistan. the present study is employed
doctrinal and non-doctrinal methods with quantitative and qualitative approaches
to examine the impact of the WTO and TRIPS agreement in Afghanistan. The data
and information for the study shall be based upon secondary methods of data
Secondary data will be obtained from research papers, journals,
magazines, websites, and annual publications of the UN, WTO, and TRIPS Council.
Rules and procedures enacted to understand the trade under the WTO will be
studied. The impact of WTO on trade shall be assessed considering the GDP,
imports, and exports in Afghanistan. The increase in IPR shall contribute to
understanding the impact of WTO on IPR in Afghanistan.
Afghanistan's objective to become a member was in the conviction that
Afghanistan would grow financially and would benefit from trade-related
opportunities and privileges. It was likewise believed that its trade- and
transit-related problems would collapse which would pave a path for foreign
investment. To get enrollment in the WTO, Afghanistan brought in some internal
reforms related to trade, economy, and investment.
Making these changes in the
country paves a path for trade activities. Assessing the impact of WTO,the
agreement on the trade-in Afghanistan would provide evidence that the main
purpose of WTO which is resolving disputes, equal treatment, free trade, and
transit dispute settlement is fulfilled. Also, the study will identify the
loopholes that hinder the progress of trade and the protection of IPR in
Afghanistan after completing the accession formalities has become the 36th Least
Developed Country (LDC) member of WTO. Afghanistan is a landlocked country
but strategically located at the heart of Silk Road which even today can
serve as the "trade and transit hub" of Central Asia and South Asia. It is
believed that sustainable economic growth through attracting significant trade
and investment cannot be achieved without broader integration into the world
Afghanistan National Development Strategy (ANDS) explicitly recognizes
the role of trade for economic development and highlights Afghanistan's
integration into the world economy as one of the key development goals for which
membership to WTO is an essential step (ANDS, 2008). Economic Growth and Poverty
Reduction are the core objectives of ANDS which place greater emphasis on a free
market and private sector-led economy.
With the belief that WTO will foster economic growth through increased exports
and attraction of Foreign Direct Investment (FDI), Afghanistan applied for WTO
membership. Almost all trading partners of Afghanistan at SAARC, Central Asia,
and West Asia are WTO are either WTO members or are in the process of accession,
therefore WTO membership gives Afghanistan a broader chance for fair trade
through dispute settlement mechanism at WTO (MoCI, 2012). However, WTO accession
requires extensive reforms to adjust to its rules and regulations to be
compatible with multilateral trade regimes under the WTO. These compliance
requirements themselves pose a real challenge to a Least Developed Country like
In Afghanistan, the terms and conditions for the WTO Accession are intended to
accomplish its development needs. These incorporate working with domestic
reforms for change to profitable investments, free markets, employment, and
improving the welfare of Afghans. The obligations of WTO are to be abided by all
WTO Members, on a Most Favorable Nation (MFN) basis as for both trade and
Intellectual Property Rights (IPR).
Article 7 of the Afghanistan Constitution endeavors the provisions of
international law, international organizations, and fostering respect for
international obligation concerning treaties. Afghanistan ratified the
Convention concerning the Protection of the World Cultural and Natural Heritage
(Paris, 16 November 1972) in 2005. The WIPO treaty was consented to on 13
September 2005 andwas implemented at the end of the year. The framework of
copyright is governed by the law which aims to support the right of composers,
authors, researchers, and artists.
The Berne Convention under the International
Union for the Protection of Literary and Artistic Works ("Berne Union") is in
effect in Afghanistan since 2 June 2018 (Berne Convention No. 279). However, in
Afghanistan, Trademarks and service marks are registered for ten-year terms and
are renewable through the Ministry of Foreign Affairs. and Article 47 of the
Afghanistan Constitution states that the country shall protect Intellectual
International Trade will enable Afghanistan to specialize and export products
promoting economic well-being and increasing national income and consumption. As
Afghanistan is an LDC, it can specialize in the production of a single commodity
without significantly affecting its prices in the international market where the
country can benefit from international trade. The products can be provided at a
comparatively cheaper price attracting more business.
As international trade is
an engine for growth for any country, the movement of capital and dissemination
of technical knowledge helps divide labor based on specialization and
efficiency. Free international trade is encouraged in Afghanistan but the
country also faces problems of dumping where dominating industrial countries
like China dump the goods cheaply.
The domestic market is getting affected
because of dumping and hence strategic protection measures for anti-dumping are
an urgent need in Afghanistan. Stabilization and equilibrium in the balance of
payments should be ensured in Afghanistan through accession to WTO. Domestic
legislation for international trade must be strengthened to act following
international law as there should not be any conflict between the two.
agreement also encompasses agreements related to intellectual property rights
which ensure optimum protection of rights of owners of intellectual property.
Countries like India achieve maximum protection of intellectual property through
the principles of national treatment, minimum standards protection, and
constituting procedures and national laws which that infringement and
enforcement of rights that can be legitimate. The same can be applied to
As a component of the negotiations of accession, Afghanistan fulfilled9
bilateral market access agreements on goods and 7 bilateral market access
agreements on services. These necessities of compliance themselves represent a
challenge to an LDC like Afghanistan. Alongside this, Afghanistan faces
difficulties in sustaining ongoing advancement gains despite mounting political
vulnerabilities, declining international grant support, and insecurity.
choices are limited by the weak implementation capacity of government agencies,
reflecting administration imperatives, and constrained macroeconomic policy
alternatives with regards to narrowing fiscal space and weak money-related
transmission mechanisms. Hence, this study is conducted to assess the impact of
the WTO agreement on the trade and IPR in Afghanistan.
Afghanistan received membership to the World Trade Organization (WTO) at the
10th WTO Ministerial Conference in Nairobi, Kenya, on December 17,
2015. Afghanistan is 164th in the world and 36th among the less-developed
countries that have received WTO membership.
Acceding to the WTO membership is a long process; Afghanistan was admitted after
11 years of negotiations. Afghanistan is among the least developed countries in
the WTO and there are some expectations that their accession might impact newly
emerged industries in the country.
After World War II, the original intention was to create a third institution to
handle the trade side of international economic cooperation, joining the two
"Bretton Woods" institutions: the World Bank and the International Monetary
Fund. Over 50 countries participated in negotiations to create an International
Trade Organization (ITO) as a specialized agency of the United Nations. However,
these negotiations failed as the draft ITO Charter extended beyond world trade
Meanwhile, 15 countries had begun talks in December 1945 to reduce and
bind customs tariffs. With the Second World War having only recently ended, they
wanted to give an early boost to trade liberalization and begin to correct the
legacy of protectionist measures which remained in place from the early 1930s.
As a result of these negotiations, the new General Agreement on Tariffs and
Trade (GATT) was born, with 23 founding members (officially "contracting
parties"), in Geneva in 1947.
For almost half a century (until 1994), the GATT's basic legal principles
remained much as they were in 1948, and several other meetings were held on
further decreasing tariffs, among other relevant issues.
Kennedy Round in the mid-sixties brought about a GATT Anti-Dumping Agreement.
The Tokyo Round during the seventies was the first major attempt to tackle trade
barriers that do not take the form of tariffs and to improve the system. The
eighth meeting, the Uruguay Round of 1986-94, was the last and most extensive.
It led to the creation of the WTO and a new set of agreements.
Essentially, the WTO is a mediator among member states facing trade problems
with other member states. The GATT focuses on trade in goods, while the WTO
deals with trade in services and intellectual property.
The WTO was established in 1994, during which time Afghanistan was involved in
a civil war and did not have a strong central government capable of joining the
organization. With the emergence of the Taliban, Afghanistan's Mujahedeen government
was not recognized and its representatives to the UN were not accepted.
Additionally, economic sanctions were placed on Afghanistan at that time. Due to
these circumstances, Afghanistan was not eligible for WTO membership. However,
after the new regime was established under the leadership of Hamid Karzai,
Afghanistan officially asked for membership to the WTO on November 21, 2004.
Following the official request from Afghanistan, WTO established a working
party, consisting of 28 countries and led by the Netherlands, on December 13,
2004. These countries
included China, Pakistan, Tajikistan, India, Japan, Russia, Saudi Arabia, and
the European Union, among others; most had trade ties with Afghanistan.
Afghanistan presented its Trade Policy Memorandum on March 31, 2009, and the
questions and replies were sent on July 26, 2010. The working party held five
meetings which took place on the following dates: 31 January 2011; 18 June 2012;
7 December 2012; 25 July 2013; and 11 November 2015. Eventually, the Working
Party presented its finalized report to WTO on 13 November 2015. Afghanistan
received membership after Afghan First Deputy Chief Executive Mohammad Khan
signed the protocol at the 10th WTO Ministerial Conference in Nairobi, Kenya on
December 17, 2015.
A Policy of Afghanistan towards the WTO
Generally, Afghanistan's goal to become a member rested in the belief that
Afghanistan would develop economically and would benefit from trade-related
freedoms and privileges. It was also believed that its trade- and
transit-related problems would dissolve and it would be able to attract foreign
Afghanistan, to receive membership in the WTO, brought about some internal
reforms around trade, its economy, and investments. It signed 9 bilateral
agreements related to goods and 7 others related to services.
The main aim of the WTO is to open borders for trade and reduce tariffs.
Accordingly, Afghanistan has put an average of a 13.5% tariff on products, 33.6%
on agricultural products, and 10.3% on non-agricultural products.
Afghanistan joined the Information Technology Agreement (ITA) upon accession
into WTO. This agreement asks all participants to eliminate duties on IT
products covered by the ITA. Afghanistan's export tariffs will also be bound for
243 tariff lines. Of these, 29.6% are bound at 10%, 24.2% are bound at 2.5%. On
services, Afghanistan has made specific commitments in 11 services sectors,
including 104 subsectors.
Impact of Afghanistan's Membership in WTOResolving Disputes:
one of the aims behind establishing the WTO was to help
member nations resolve their trade-related disputes.
Joining the WTO gives Afghan exports access to all WTO member
markets on a Most Favored Nation (MFN) basis. This means that Afghan exports
will be eligible for the best treatment that the country provides to the goods
of other WTO members.
For example, if the European Union grants the United States a low tariff on its
potatoes, then Afghan exports must be given the same low tariff on exports of Bamiyan potatoes
to the European Union.
The WTO aims to increase free trade in the world and remove obstacles toward it.
Therefore, Afghanistan not only has access to the markets of 146 countries, but
its exports would not face high tariffs in other countries.
Transit Dispute Settlement
Afghanistan is a landlocked country that has caused difficulties in the area of
trade. Joining the WTO provides Afghanistan with a forum to resolve its
transit-related problems via this organization. WTO rules will not force
Pakistan to revise the Afghanistan-Pakistan Transit Trade Agreement to allow
Afghanistan access to Indian markets.
Threat to Newly Emerged Industries
Governments in some countries that have recently started to become
industrialized try to increase tariffs on imported goods for the domestic
industries to survive in rivalry with foreign industries; however, Afghanistan,
due to getting WTO membership, would not be able to increase tariffs on imported
goods. Thus, newly emerged domestic industries could suffer in competition with
foreign industries and could be defeated by imported goods. Some believe that
this may lead to increased unemployment in the country.
The WTO emphasizes eliminating agricultural and industrial subsidies, which
could have a deep impact on Afghanistan's agricultural and industrial exports.
Reduction in Revenue
Afghanistan will not be able to put high tariffs on imports.
Trade and Economic Profile of Afghanistan
Afghanistan is a landlocked, war-torn, and aid-dependent economy. 652864 square
kilometers is the total area of the country and 30 million is the populace of
the country out of which 78% are living in the rural territories and it is an
agrarian economy (75% of populace; World Bank). Afghanistan's economy is molded
by fragility and aid dependence.
The private sector is narrow; with employment
moved in low-profitability agriculture (44% of the labor force works in
agribusiness and 60 percent of families earn from farming). Development of
private areas and diversification is compelled by political vulnerabilities,
declining international grant support, and insecurity.
Policy choices are
limited by the weak implementation capacity of government agencies, reflecting
administration imperatives, corruption, and business environment (Afghanistan
was positioned 173rd of 190 nations in 2020, Doing Business Survey).
Establishments and property rights that are weak restrict monetary inclusion and
access to finance in Afghanistan, where the private sector has a share of three
percent of GDP. The country has a structural trade deficit dependent on grant
inflows. 75% of public spending is dependent on grants and security expenditures
(national security and police) are 28% of GDP in 2019 and the public expenditure
was 57% of GDP. A significant portion of production, exports, and employment,
and includes opium production, smuggling, and illicit mining accounts for the
The industry in Afghanistan is at a primal stage. The industrial production of
the nation incorporates textiles, furniture, soap, carpet, fertilizers, shoes,
leather, non-alcoholic drinks, natural gas, and cement. The industrial products
of the nation are predominantly implied for domestic consumption. Afghanistan,
as indicated by the UN classification of nations is perhaps the poorest country
on the planet and is categorized both as a Least Developed Country (LDC) and a
Land-Locked Developing Country (LLDC).
Measures like Human Development Index (HDI)
places Afghanistan at a low degree of human advancement when measured by
education, health, and living standards. The HDI in 2020 positioned Afghanistan
169thout of 187 nations and the Gender Development Index (GDI) places
Afghanistan in group five, which is the lowest group of nations in terms of
gender equality (Human Development Index Report, 2020). These measures mirror
the consequences of many years of contention which has obliterated a large part
of the agricultural and industrial capacity of the country.
Exports and Imports
In 2019, the estimation of merchandise exports from Afghanistan amounted to $870
million. Commodity exports from Afghanistan diminished by 1.58% compared to
2018. Merchandise exports diminished by $ 14 million (the estimation of
merchandise trades from Afghanistan added up to $884 million in 2018). The
estimation of merchandise imports to Afghanistan added up to $ 8.56 billion in
2019. Merchandise imports to Afghanistan expanded by 15.6% contrasted with 2018.
Imports of goods grew up by $ 1.16 billion in 2019 (the estimation of
merchandise imports to Afghanistan was equivalent to $7.4 billion in 2018).
The larger portion of exports of the country consists of dried fruits, fresh
fruits, saffron, rags, leather, and precious stones to the target markets such
as India, Pakistan, Kazakhstan, United Arab Emirates, Uzbekistan, etc. The
nation's imports incorporate nearly everything from food to mechanical products,
heavy machines, automobiles, and energy.
The Afghan Government has perceived the
significance of trade with its neighbors and has attempted to incorporate with
them through membership in territorial associations like the South Asian
Association for Regional Cooperation (SAARC) to which Afghanistan became a
member in the year 2007, and Afghanistan is an observer from 2012 in Shanghai
Cooperation Organization (SCO).
The nation conceded to minimum tariffs, but, it has not had the option to catch
an important share in the markets for its exports. The South Asian Free Trade
Area (SAFTA) was signed by SAARC member states as indicated by which the
Non-Least Developed Contracting States (NLDCS), namely, Pakistan, India, and Sri
Lanka and the other five Least Developed Contracting States (LDCs) including
Afghanistan would reduce tariffs to 20% and 30%. Notwithstanding this
Afghanistan has consented to Preferential Trade Arrangement (PTA) with India, as
per which it has consented to decrease its tariffs for some fundamental goods
like tea, sugar, medicines, cement imported from India.
Intellectual Property in Afghanistan
In the early times, there were some provisions related to IPR under the
Commercial Law of Afghanistan which protected very few IPRs. However, the
"Trademarks Regulation" was constituted in 1960 which was not effective. There
were no regulations related to Patents, Copyrights Design and Geographical
Indication. For a very long time the Ministry of Commerce, Ministry of
Information and Culture, and commercial courts dealt with IPR in an unorganized
manner. Because of the unorganized way of dealing, there was a lack of awareness
about the importance of IP among the citizens, organizations, and industries in
After the Government understood the significance of the implementation of IPR
regulation in Afghanistan, the Ministry of Commerce and Industry (MoCI) proposed
to the Economic Committee of the Council of Ministers in 2006. The proposal was
made based on copyright laws existing in various countries such as the United
States, European countries such as Germany and France.
As Islamic traditions
prevail strongly in Afghanistan, the copyright legislation of Arabic countries
such as Egypt, UAE, and Qatar were studied (The Clean State, 2003). The main aim
of this legal foundation was to encourage and register patents, trademarks,
industrial designs, and geographical indications and to have access to IPRs
globally. In 2009, the MoCI proposal was approved by the council of ministers to
institute a department of IP.
The IPR regime focuses on the following:
- To strengthen the capacity of Afghanistan by formulating IP regulations
- To build the capability of the IP Department within MoCI
- To develop and build up IPRs and raise public awareness
The country needs technical assistance and capacity building through receiving
equipment and support from WIPO along with participation in workshops and
meetings through WIPO. Receiving training through international organizations in
the field of IPR can boost the strengthening of IPR. Implementation of IPR poses
major challenges and problems such as a weak IP department with limited
resources, a weak judicial system, lack of public awareness and financial
resources to boost the IPR system in the country.
Article 47 of the Afghanistan
Constitution states that the country shall formulate effective programs for
fostering knowledge, culture, literature, and arts. A guarantee of copyrights of
inventors, authors, and discoverers shall be given by the country which shall
protect and encourage scientific research in all fields (Article 47 of
Constitution of Afghanistan, 2004).
Since Afghanistan acceded to the WTO, it
becomes evident that the country can act per the international treaties related
to trade and intellectual property. But the role and progress of international
developments are limited in Afghanistan as their implementation has been
restricted due to a lack of constitutional and authoritative legislature.
Unconstitutional amendments and actions are not monitored by authorities and
courts. Afghanistan has not had any legislation on patents and copyrights in the
past and trademark legislation has not been administered appropriately and
effectively to date.
However, after many efforts, full implementation of the TRIPS Agreement was
startedon 1 January 2019. Articles 3, 4, and 5 of the TRIPS Agreement applied
from the date of accession to the WTO and WIPO. After the accession to WTO, it
was one of the main commitments of Afghanistan to reform its existing trademarks
framework. Any country needs to amend and update its IPR laws to act by the
Though the trademarks regulation existed in Afghanistan, its
accordance with TRIPS was challenging as the country did not confirm licensing
trademarks and trademark validity (Seddiqi, Hafizullah, 2020).This subsequently
results in loopholes for increasing corruption and decreasing foreign
investments. Hence, these deficiencies have to be fixed by Afghanistan to ensure
legal and administrative protection of IPR.
For IPR, Article 10 of the Constitution of the Islamic Republic of Afghanistan
mentions that the state shall:
Encourage and protect the safety of capital
investment and private enterprises following the provisions of the law and
Also, Article 11 states that:
Matters concerningforeign and
domestic trader governed by law concerning the economic requirements of public
interest and the country.
Accession to WTO and TRIPS leads to the organization of laws and regulations in
the state which also strengthens the constitution of the country concerning
provisions of IPR and international trade. It is therefore important to
implement an IPR regime with effectiveness. It will boost and strengthen the IPR
department of Afghanistan and inclusion of subjects on IPR in the education
system can help students in schools, universities, and research centers gain
awareness of the framework.
Publishing articles and news through media can
increase public awareness making the individuals, companies, and organizations
function within the framework of IPR and international trade. Criteria must be
developed for the identification and approval of claimed intellectual
innovations. A comprehensive training program must be provided to judges,
advocates, and authorities of IPR (Seddiqi, Hafizullah, 2020). A sound IPR
framework can boost economic growth and its implementation is significant for
Since 2008 copyright in Afghanistan has been governed by the law on the support
the right of authors, composers, artists, and researchers (Copyright Law).In
1958, Afghanistan ratified the Agreement on the Importation of Educational,
Scientific, and Cultural Materials, with Annexes A to E and Protocol annexed
(Florence, 17 June 1950). In 1979, it accepted the Convention on the Means of
Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership
of Cultural Property (Paris, 14 November 1970) and in 2005 it ratified
the Convention concerning the Protection of the World Cultural and Natural
Heritage (Paris, 16 November 1972). It acceded to the WIPO treaty on 13
September 2005, which came into action at the end of the year.,
In November 2003, the Copyright World Journal reported that a group, the
Intellectual Property Working Group of the Afghanistan Transitional Commercial
Law Project, had been working on setting up the first patent or copyright system
for the country and updating its trademark laws. It is a joint project of the
Center for International Management Education (CIME) and the American Bar
Association's "Asia Law Initiative" (ABA-Asia).Since 2 June 2018, the Berne
Convention is in effect in Afghanistan.
As of 2005, Afghanistan has no official copyright relations with the United
States, resulting in works published in Afghanistan not being copyrighted in
the United States, and vice versa.In October 2007, the US Department of Commerce
and the Afghanistan Ministry of Commerce and Industry signed a joint agreement
to establish a forum for commercial cooperation including establishing
intellectual property rights protection and enforcement.
In 2005, Deputy-Minister of Information and Culture Sayed Aqa Husain
Sancharaki stated that copyright law was forthcoming, which prompted the
National Independent Commission for Radio and Television Broadcasting to
circulate a statement requesting that media outlets either pay royalties or
cease distributing material that had been created by Radio Television
Afghanistan as the outlet began transforming to a public broadcaster. It was
later pointed out that RTA had no right to make such an autonomous
The move was criticized by the heads of Ayna TV and Tolo TV, who argued that the
cost of royalties meant that potential independent media outlets could not
afford to broadcast, and the lack of independent media in the country meant
broadcasters relied on RTA footage to play "a significant cultural
role...filling this void". The act contradicted the ministry's edict to "promote
national culture and traditions" by outlawing the broadcast of the majority of
the country's traditional films, music, and programming.
In recent years, the Islamic Republic of Afghanistan increasingly has attracted
foreign business, including companies from the post-Soviet countries. An
important moment when doing business in Afghanistan is obtaining rights to
trademarks. It is possible to obtain them only by registering a trademark in
Since Afghanistan is not a party to the Madrid Agreement or the Protocol
thereto, as well as to other international and regional organizations, it is
only possible to register a trademark followingnational procedure. In such
countries, the national registration procedure is the only possibility to obtain
protection for the trademark.
As a rule, it includes a range of mandatory
- Filing application with the national patent office
- Examination of the application;
- Making decisions upon the results of the conducted examinations;
- Publication in the official bulletin;
- Issuance of the title of protection (trademark certificate).
It is essential to indicate all goods and services for which the trademark is
intended to be used in Afghanistan, as well as the classes of the ICGS
corresponding to them. In the application for registration of the trademark,
exclusive right can only apply to goods and services specified in the
certificate of registration.
If the application is recognized as meeting all the requirements and the entire
consideration process is successful, then the Department decides to register the
trademark. The applicant pays the registration fee, and upon applying to the
Department he receives a certificate of registration of the trademark.
restrictions on the registration of trademarks in Afghanistan as in most Islamic
countries. Following Islamic traditions, registration of trademarks, which are
associated with alcohol, pork, as well as services of various drinking
establishments and nightclubs, is not allowed.
Patent law is not in force in Afghanistan so far, and it is expected to come
into force in near future. Unfortunately, at present, there is a legal vacuum in
this field. Hence, it is not possible to file patent applications in Afghanistan
at present. It is often a practice that a Cautionary Notice must be published in
the local newspaper stating that such and such invention is related to a
particular matter/field which belongs to such and such inventors/company.
Although the publications of cautionary notices are not registered in any
official registers, and it is only an advertisement but it could be a base for
claiming priority right in the future when the patent law comes into force in
the country. Therefore, the publication should be in detail, and not in a short
form. If it is published in short form, it may not serve the priority purposes.
The application of Afghanistan to join the WTO obliges it to have a proper
working intellectual property system. Afghanistan lacks manufacturing facilities
and basic infrastructure. In theory, patents promote innovation and recognize
unsung inventors. However, in reality, they mostly help large corporations to
protect their business assets. The application process can be expensive and
time-consuming due to the technical subject matter, and local governments cannot
afford that. However, to join the WTO, Afghanistan must establish IP protection
to facilitate trade and provide ground rules for international disputes.
Officially, the WTO - via the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPs) - sets out minimum requirements for its members on
copyright, geographical indications, industrial designs, integrated circuit
layout designs, patents, plant varietals, and trademarks, trade dress, and trade
secrets. Afghanistan has never formally had a patent system and historically
lacks a rule of law, particularly concerning trade and commercial law.
Afghanistan needs to provide a mechanism to register and record inventions.
Accession Process to WTO of AfghanistanThe accession in 2004 to WTO was applied by Afghanistan with the following
- Protect steady and non-discriminatory access to exports of Afghanistan
- Protect non-discriminatory transit for Afghan exports
- Exercise control over unfair treatment of Afghan goods and services in
- Economy modernization
- Develop and grow economy
- Growth in fiscal revenue
- Augmentation of the transparency and rule of law in the system along
with good governance
Working Party was set up in 2004, however, the process of accession was moderate
and sluggish. Afghanistan has gained huge progress starting from 2009 through
multilateral and bilateral tracks. On March 31, 2009,intending to start
conversations within the structure of the working party, Afghanistan presented
the 'Memorandum on the Foreign Trade Regime' (MFTR) portraying its present laws
and policies identified with trade in goods, services, intellectual property,
and government procurement (WTO, 2009).
Negotiation of accession sped up since
the working party meeting which was held in 2010. Afghanistan effectively
occupied with the negotiation while explaining the scope of questions
acknowledged from Canada, EU, and the US and in regards to their investment and
trade structure September 2012.
Afghanistan dispatched service negotiations in June 2011 and submitted the
products offer during the first week of October 2012 to begin respective
bilateral negotiations on merchandise toward the end of 2012 (WTO, 2013). On 25
July 2013, which was the fourth gathering of the Working Party, WTO members
praised Afghanistan for its strong responsibility coordinated by its specialized
contributions to propel its WTO accession negotiations to closure (WTO, Dec
At the agribusiness plurilateral negotiations, led by the WTO Secretariat
on 25 July, members encouraged the obligation of Afghanistan to tie export
endowments at zero and welcomed the way that its domestic support was amassed in
the "Green Box" (i.e., domestic aid for farming that is permitted without limits
as it does not mutilate trade, or at most causes insignificant distortion) (WTO,
Afghanistan's accession was approved in the year 2016. For goods, Afghanistan
has undertaken tariff commitments and concessions that bind tariff rates for all
products on average at 13.5 percent. The average is 33.6 percent for
agricultural products and the average is 10.3 percent for non-agricultural
products. Afghanistan has made explicit commitments in 11 services sectors, with
Full execution of the TRIPS Agreement started from January 2019
for which from the date of accession, articles 3, 4, and 5 of the TRIPS
Agreement were applicable. Any progressions made in-laws, guidelines, and
practices of Afghanistan in the momentary period would not bring about a lesser
level of consistency with the provisions of the TRIPS Agreement that existed on
the date of accession. Afghanistan looked for technical help to guarantee that
its ability to uphold its TRIPS- a consistent legal regime, upon the lapse of
the transition period.
The economy of Afghanistan has steadily improved in the last decade due to the
return of a large number of wealthy ex-pats, the modernization of the nation's
agriculture sector, and the establishment of more trade routes with neighboring
and regional countries. The billions of dollars in international assistance
that came from ex-pats and outside investors saw this increase when there was
more political reliability after NATO became involved in Afghanistan's
The nation's GDP (PPP) stands these days at about $70 billion with an exchange
rate of $20 billion (2017), and the GDP per capita (PPP) is about $2,000. It
imports over $6 billion worth of goods but exports about $1 billion worth of
legal products, mainly fruits, and nuts.
Despite holding over $1 trillion in proven untapped mineral deposits,
Afghanistan remains one of the least developed countries in the world. Its
unemployment rate is over 23% (Central Intelligence Agency, 2018) and about half
of its population lives below the poverty line, Many of the unemployed men
join the foreign-funded militant groups or the world of crime, particularly
Afghanistan economic conundrum
In the latest ECF agreement signed between IMF and Da Afghanistan Bank (DAB),
Reserve Money (RM) and Net International Reserves (NIR) are set as quantitative
targets. DAB applies the quantitative theory of money to determine the level of
reserve money (RM) to maintain domestic price stability, which indeed is one of
the key responsibilities of the central bank.
Ceilings for RM and CiC are based on projected economic growth and projected
inflation for the period under consideration. For the fiscal year 1399 (2020),
the ceilings for reserve money and currency in circulation are set as 12.2% and
14.7% respectively (Da Afghanistan Bank, 2021).
Figure 4.18: Reserve Money and currency in circulation during FY 1399 (2020)
Source: Monetary Policy Department/DAB depository corporations and demand deposits, while broad money
(M2) includes narrow money components and other less liquid assets or quasi
money. The narrow money (M1) grew by 12% at the end of the fiscal year 1399
(2020) as compared to 6% of the last year.
Currency outside depository corporations, which accounts for 49% of M2, grew by
13.29%, slightly lower than the 13.7% growth of the same period in the previous
year, showing the difference of Afs 33,205.64 million. Demand deposits, which
are other components of M1, experienced 9.69% growth at the end of FY 1399
(2020), while it had negative growth of 1.6% in the same period of the previous
The main reason for high demand deposits isend-year outstanding salary
payments by the Ministry of Finance (MoF) and projects implementation due to
Covid-19 during FY 1399 (2020). Demand deposit in comparison with the previous
year in the same period shows a difference of Afs 22,286.14 million.
Net International Reserve (NIR):
Da Afghanistan Bank holds international reserves, which consist of monetary
gold, reserve position, and holdings of Special Drawing Rights (SDR) with the
IMF, as well as major foreign exchange such as US dollars, Euro, Great British
Pound, and other currencies. The Net International Reserves (NIR) of
Afghanistan, which is expressed in terms of the US dollar, is defined as reserve
assets minus reserve liabilities. NIR increased by 5.06% and had an accumulation
of USD 404.74 million at the end of FY 1399 (2020). NIR floor was set at USD
7,819.00 million, while in actual case, NIR in program exchange rate compiled
weekly, reached to USD 8,399.20 million at the end of the period under review
(Da Afghanistan Bank, 2021).
Figure 4.19: Actual and target NIR (Net International Reserve) during the FY
Source: Monetary Sector, Monetary Policy Department
Foreign Exchange Market:
Foreign Exchange Rates:
Da Afghanistan Bank's (DAB) primary objective is to maintain price stability. To
achieve and maintain this objective, DAB puts its focus on utilizing its
monetary instruments via open market operations.
During the FY 1399 (2020), Afghani relatively depreciated against the Euro,
Swiss Frank, Great British Pound, and Chinese Yuan, but appreciated against SD,
Indian rupee, Pakistani Rupee, Iranian Toman, United Arab Emirates dirham, and
Saudi Riyal (Da Afghanistan Bank, 2021).
Daily exchange rates of Afghani against USD and other key currencies for the FY
1399 (2020) are graphically presented as below:
Figure 4.20: Daily average ex- rate of Afghani against USD during FY 1399 (2020)
Source: Monetary Sector, Monetary Policy Department
Inflation TrendAnnual GDP
2020 posed economic challenges of enormous proportions to the struggling Afghan
economy. COVID19 outbreak and the subsequent restriction measures pushed the
economy of Afghanistan deep into recession. The economic activities began to
slowdown in early 2020 and were exacerbated further when the Afghan government
imposed a nationwide lockdown in March in an attempt to contain the outbreak.
Moreover, the existing political turmoil and security uncertainties amplified
the negative economic effects of the Corona outbreak and quarantine.
declining trend of economic activities in Afghanistan which started in early
2020 remained persistent throughout the second quarter with the worst impact on
the livelihoods of the vulnerable and poor population of the country, resulting
in unprecedented increases in unemployment and poverty. The security unrest
picked up in 2020, coupled with the outbreak of COVID19 acted as a catalyst for
worsening the overall economic conditions (Da Afghanistan Bank, 2021).
Figure 4.21: GDP growth from 2017-2020 (1396-1399)
Source: NSIA/Monetary Policy Department, DAB staff calculation
Afghanistan GDP growth showed a downward trend at the end of 2020 and economic
growth was lower as compared to 2019. A downward trend in the agriculture sector
and also a weak performance by services and industry sectors caused the economic
growth to turn down to -1.9% in 2020 which shows a significant decrease from
3.9% in 2019.
The contribution of GDP sectors shares reached to, Agriculture 27.01%, Industry
12.47%, and Services 56.07%. Overall, negative growth was largely the result of
the frightening decline in the agriculture sector. of which the growth rate
decreased to 5.31% compared to 17.46%. Growth in the industry sector decreased
to -4.22% compared to 4.85%. The impacts of the services sector on the overall
economic growth were also negative as the sector's growth rate decreased further
to -4.76% in 2020 from - 1.39% observed in 2019 (Da Afghanistan Bank, 2021).
Overall inflation in the non-food category increased to an average of 2.65% from
-0.13% in the fourth quarter of 2020 compared to the same quarter of the
previous year. This increase was due to higher prices of tobacco, clothing,
housing, furnishing, and household goods, health, communication and information
and culture increased over the one year. In the mentioned category, the highest
increase was noted in the price index of tobacco and communication, which
increased to 4.07% and - 0.30% on average from -1.90% and -5.48% respectively.
Core inflation also shows an upward slope in the fourth quarter of 2020 compared
to the fourth quarter of 2019. Trimmed mean which is the most common measure of
core inflation, jumped to 5.18% from 2.55%. In addition, the CPI inflation
excluding bread and cereals, oil and fats, and transportation, increased to
5.33% in the fourth quarter of 2020 from 2.31% in the same period of the
previous year (Da Afghanistan Bank, 2021).
Figure 4.22: Average National Inflation (Y-o-Y changes) for FY 2020
Source: NSIA/Monetary Policy Department, DAB staff calculation
External Sector Developments
Afghanistan's external sector continued to recover concerning many aspects
during FY 1399, mainly supported by an improved trade deficit and a notable
increment in grants inflows to the government sector as well as a moderate
improvement in services account-related receipts. The trade deficit improved on
a year-on-year basis, with a reduction in merchandise imports due to following
the slowdown in domestic economic activities as a result of the COVID19
pandemic, despite earnings from merchandise exports recording a year-on-year
decline during FY 1399 (Da Afghanistan Bank, 2021).
Meanwhile, compensation of employees together with investment income inflows and
workers' remittances depicted a substantial reduction during the year under
review. While net official transfers (Operating and development) had upward
trends mainly due to higher official cash receipts from both multilateral and
bilateral donors during the FY 1399. However, in the financial account, a
substantial increase was observed in foreign direct investment (FDI) outflow,
and FDI inflows continue to worsen further in the year under review. With the
increased inflows to the government sector in the form of grants (current
transfer) and increased inflows in the form of foreign investments, the Central
Bank of Afghanistan was able to build up gross official reserves during FY 1399
(Da Afghanistan Bank, 2021).
Balance of Payments
The current account deficit (including official transfers) narrowed by 17% and
reached a value ofUSD 3,136.12 million in the FY 1399 from a value of USD
3,791.94 million recorded in the preceding year, reflecting the improvement of
official transfers and accelerating in services account related receipts.
Base on year-on-year comparison the deficit of trade balance on BoP bases
narrowed by 6% and stood at a value of USD 5,506.86 million in the FY 1399
compared with a value of USD 5,855.03 million recorded in the FY 1398. In the
period under review export of goods and services dropped by 3% and reached a
value of USD 1,476.31 million in FY 1399 from a value of USD 1,515.76 million
recorded in the last year.
While, import of goods and services declined by 5%
and stood at a value of USD 6,983.16 million in FY 1399 compared with a value of
USD 7,370.79 million recorded in the last year (Da Afghanistan Bank, 2021).
Figure 4.23: Current account balance for the FY 2020 (1399)
Source: NSIA/Monetary Policy Department, DAB staff calculation
Inflows to the capital account decreased by 37% and reached a value of USD
752.35 million in the FY 1399 from a value of USD 1,193.49 million recorded in
the FY 1398, as a result of lower inward of capital transfers to the government
sector (Da Afghanistan Bank, 2021).
Under the financial account of the Balance of Payments (BOPs), foreign
investment is an important component that consists of foreign direct investment
(FDI), foreign portfolio investment (FPI), and Other Investments (Da Afghanistan
Figure 4.24: Capital and Financial Account for the FY 2020 (1399)
Source: Monetary Policy Department, DAB staff calculation
Considering the statistics, FDI inflow stood at a value of USD 12.97 million in
FY 1399 from a value of USD 23.40 million recorded in FY 1398. While FDI outflow
reached a value of USD 37.23 million in FY 1399 in comparison with a value of
USD 26.32 million recorded in the last year. In the meantime, portfolio
investment exhibits USD 63.24 million which reflects insertion of Afghanistan
investment in foreign countries during the FY 1399 from the value of USD - 14.62
million recorded in the FY 1398.
Afghanistan's other aggregated financial assets abroad dropped to a value of USD
34.89 million in FY 1399 from a value ofUSD 37.21 million recorded in FY 1398.
Other aggregated financial liabilities, followed an upward trend and stood at a
value of USD 299.27 million in the FY 1399 from a value of USD -8.18 million
recorded in the previous year. The financial account balance as a total stood at
USD 583.57 million in FY 1399 which was well above the value of USD 59.92
million recorded in FY 1398 (Da Afghanistan Bank, 2021).
Figure 4.25: FDI inflows for the FY 2020 (1399)
Source: Monetary Policy Department, DAB staff calculation
Developments in Merchandise TradeTrade-in Goods
The trade-in goods accounts registered a deficit of USD 5,760.92 million in FY
1399, 3% lower than a deficit of USD 5,912.29 million recorded in the previous
year as a result of a higher contraction in exports of goods of 10% compared to
that of goods imports of 5%.
Table 4.2: Direction of External Trade for the FY 2020(in Million USD)
Table 4.3: Direction of External Trade for 2019 (in Million USD)
Exports of Goods
Total exports of goods dropped at a value of USD 776.73 million in FY 1399
compared with a value of USD 863.83 million recorded in FY 1398. This decline in
total exports of goods originated mainly from the lower export of fresh fruits,
medical seeds, carpet, and rugs products during the period underreview. Exports
of fresh fruits significantly declined by 54% and stood at a value of USD 55.05
million in FY 1399, from a value of USD 119.86 million recorded in FY 1398.
Exports of medical seeds and others dropped by 11% and stood at a value of USD
356.56 million in FY 1399 from a value of USD 399.24 million recorded in FY
1398. Exports of handmade carpet and rugs products declined by 33% and reached a
value of USD 16.65 million in FY 1399 from a value of USD 24.9 million recorded
in the last year. Export of wool and animal hair, karakul skin, and oilseeds
products also contributed to the overall decline in total exports of goods (Da
Afghanistan Bank, 2021).
Meanwhile, the expansions recorded in exports of leather and wool products
helped ease the decrease in total exports of goods. Exports of leather and wool
products continued to rise fairly by almost 1% and reached a value of USD 43.48
million in FY 1399 from a value of USD 43.16 million recorded FY 1398 (Da
Afghanistan Bank, 2021).
Imports of Goods
Import of goods declined to a value of USD 6,537.64 million in FY 1399 from a
value of USD 6,776.12 million in the last year. All major commodity groups
recorded a downturn following the slowdown in domestic economic activities as a
result of the COVID19 pandemic even as the government has started to gradually
open the domestic economy in selected areas of the country (Da Afghanistan Bank,
Considering the data, imports of goods registered an almost 4% decline in the
year under review. In particular, imports of industrial supplies decreased by
32% and stood at a value of USD 553.52 millionin the FY 1399 from 815.90 million
recorded in FY 1398, largely on account of the decreases in metal production
(39%), cement (28%) and fertilizer (23%)
Imports of fuel and lubricants dropped by 3% and stood at a value of USD
1,049.92 million in FY 1399 from a value of USD 1,078.01 million in FY 1398
mainly due to lower demand for petroleum oil by the restriction in international
flights and land transportation during the FY 1399.
Imports of consumer goods also decreased by 3% and stood at a value of USD
2,407.35 million in the FY 1399 from a value of USD 2,489.80 million recorded in
the FY1398, largely due to decreased demand for imports of tea 34%, vegetable
oils 31% and fabrics 16% during the period under review. Vice versa, imports of
capital goods grew by 6% and reached a value of USD 2,526.85 million in FY 1399
compared to a value of USD 2,392.40 million recorded in FY 1398 (Da Afghanistan
Table 4.4: Merchandise Trade in Million USD for the FY 2020
Figure 4.26: Trade performance and Trade balance for the FY 2020
Source: NSIA /DAB staff calculation
Afghanistan's external debt stood at a value of USD 2,273.59 million at the end
of FY 1399, recorded an increase of USD 316.96 million over its level at the end
of FY 1398, mainly on account of a rise in official borrowings.The World Bank
and Asian Development Bank as a major multilateral creditor to Afghanistan made
USD 1.67 million debt release on principles as well as USD 0.13 million as
services charges during the year under review (Da Afghanistan Bank, 2021).
Figure 4.28: External Debt Comparison for the FY 2019 (1398) & FY 2020 (1399)
Source: NSIA/DAB staff calculation
Net International Reserves
The foreign International reserves include four items; monetary gold, reserve
position in the fund, SDRs (special drawing rights of the IMF), and foreign
currency assets accumulated by Afghanistan and controlled by the Central Bank of
Afghanistan (Da Afghanistan Bank).
The Net International Reserve (NIR) is measured as Gross International Reserves
(GIR) minus reserve-related liabilities. At the end of FY 1399, the level of
Afghanistan's GIR has steadily increased by 11.48% and stood at a value of USD
9,478.49 million from the amount of USD 8,502.15 million registered in the
Table 4.6: Net International Reserves for the FY 2020 (in million USD)
Source: DAB staff calculation
Afghanistan's GIR jumped by a record of USD 976.35 million during the year under
review. The NIR has also followed an upward trend and surged to the value of USD
8,399.20 million in the FY 1399 from a value of USD 7,846.07 million recorded in
the FY 1398, it showed for about USD 553.13 million increments in the country's
NIR (Da Afghanistan Bank, 2021).
The Use of Fund Resource significantly increased to a value of USD 385.65
million in FY 1399 from a value of USD 55.62 million recorded in the previous
year. The reserve liability of non-resident deposits in foreign currency almost
remained unchanged in FY 1399. The current position of Afghanistan Net
International Reserves (NIR) is the best cushion for conducting a sound and
appropriate monetary policy in the country.
Figure 4.29: Gross and Net International Reserves during the past periods
Source: DAB staff calculations
Fiscal Sector Development
The financial sector of the monetary policy directorate is responsible to keep
coordination between fiscal and monetary policy implementation units of the
Ministry of Finance (MOF) and Da Afghanistan Bank (DAB). The key objective in
the fiscal area is to achieve a sustainable increase in revenue collection and
to permit the gradual takeover of externally financed operating & development
spending and ensure an expenditure allocation consistent with Afghanistan
National Peace and Development Framework (PDF). The other goals are included
improvement in public expenditure management, fiscal policy formulation,
efficiency in public enterprises, taxes, and customs administration. While
monetary policy is responsible to maintain price stability by smoothing Afghani
(Afs) exchange rate volatility.
Resembling the other emerging and under developing economies around the world,
Afghanistan continuously faces a budget deficit, and this time it is severe due
to the effect of the COVID-19 pandemic on both expenditure and mostly revenue
generation. The total core expenditure increased about Afs 22 billion at the end
of FY- 1399, and there is a notable decrease of Afs 7.4 billion in total revenue
collection. Total revenue at the end of the fiscal year 1399 decreased to Afs
393.3 billion from Afs 401 billion in 1398 by including other revenue and grants
Afs 40.5 billion budget deficit is being observed. However, as a result of the
reallocation of the budget due to the COVID-19 pandemic, the estimated budget
for the fiscal year 1399 was 453.8 billion Afs.
Table 4.7: Budget and expenditure of the FY 1399, and 1398, amounts in the table
are in Billions of Af and rounded off
Donor contributions are used to finance both operating and development
expenditure, the main donor contributors to the government are ARTF, LOTFA, and
CSTC-A. The total grants allocated to operating and development expenditure
represents an increase of Afs 27 billion.
Figure 4.30: Comparison of Total Revenue including grants, Total Expenditure,
Total Grants between FY 2019 (1398) & FY 2020 (1399)
Source: MoF Financial Statement/MPD Staff Calculation
Budget Execution Rate
During the period of FY 1399, the government spent 86% of the total Afs 453.8
billion of the allocated budget, while comparing to 89% of the total Afs445.8
billion of allocated budget in FY 1398 representing nearly increase of 9.5% in
overall budget execution rate relatively.
Figure 4.31: Comparison of Operation & Development Budget Execution Rates for FY
1398 & 1399
Source: MoF Financial Statement/MPD Staff Calculation
This increase is attributed to several factors particularly due to an increase
in overall budget reallocation, processing of expenses by the National
Procurement Authority, security condition in provinces, and good performances by
the budgetary units. The operating budget execution rate indicates a 2.4%
increase from Afs 269 billion at the end of FY 1398 to Afs 276 at the end of FY
1399, however, the allocated budget was Afs 446 billion in FY 1398 while it was
about Afs 453.8 billion at the end of FY-1399. The development budget execution
rate represents an increase of 24% comparing both Afs 129 billion of FY 1398 and
Afs 161 billion of FY 1399 (Da Afghanistan Bank, 2021).
Core Budget (Deficit & Surplus)
The total core budget represents approved development and operating budget, it
was calculated Afs 428 billion at the beginning of the fiscal year 1399 but due
to the COVID-19 pandemic it was revised and after mid-year review, it is
reallocated to Afs 453.8 billion that showed about6% increase from Afs 428
billion which was at the beginning of the FY-1399, while in FY-1398 it was Afs
This major change in the budget is a result of high budget approval and
reallocation for FY 1399 due to the COVID-19 pandemic. The overall budget
beforethe donor's contribution had a deficit of Afs 260 billion in FY 1399
compared to Afs 204 billion deficit at FY 1398. Meanwhile, donor contributions
funding and grants increased from Afs 192 billion in FY 1398 to Afs 220 billion
for FY 1399 (Da Afghanistan Bank, 2021).
Figure 4.32: Comparison of total revenue, expenditure, and Fiscal deficit
between FY 1398 & FY 1399
Source: MoF Financial Statement/MPD Staff Calculation
The total annual external source funding amount in FY 1399 represents
significant raise from Afs 203 billion of FY 1398 to Afs 225 billion in FY 1399,
indicating an 11% increment in annual planned external sources and it is as a
result of; IMF Extended Credit Facilities, other funding for COVID-19 pandemic
as a grant, and donor's contribution on annual basis. Including grants, there is
Afs 40.5 billion of budget deficit in FY-1399 compared to Afs 11 billion deficit
During FY 1399 total revenue including grants decreased considerably to Afs 393
billion, where it was reached Afs 401 billion in FY 1398, this change indicates
a notable decrease of Afs 7.4 billion or 2% in FY 1399 compared to the previous
year. Annual collection of planed domestic sources indicates Afs 35 billion
drop, down from Afs 208 billion in FY 1398 to Afs 174 billion in FY 1399,
leading to a 17% decrease comparatively.
To meet FY 1399 budget deficit, the total domestic revenue, grants, and donor
contribution plays a vital role and similarly, revenue collection steers to the
annual budget surplus. Moreover, the negative trend in total revenue collection
of FY 1399 was as a result of the COVID-19 pandemic affecting mostly
administrative fees, fixed taxes, income taxes, custom revenue, revenue
collected from sources under claims, and retirement contributions, however,
there had been an increment in the sale of goods and services, income from
capital property, miscellaneous revenue, and extractive industries during the FY
1399 (Da Afghanistan Bank, 2021).
Figure 4.33: Components of Total Revenue for the FY -1399
Source: MoF Financial Statement/MPD Staff Calculation
Furthermore, total core expenditure represents a 15% increase from Afs 412
billion of FY 1398 to Afs 434 billion in FY 1399 indicating Afs 22 billion rises
in the overall development and operating expenditure compare with the previous
year, this is mostly as a result of an increase in supplier expenditures and
capital expenditures. In addition, operating expenditures indicate a mild
increase of 0.24% from Afs 272.9 billion of FY 1398 to Afs 273.5 billion in FY
1399, Meanwhile, development expenditures show 15% raise from Afs 139 billion of
FY 1398 to Afs 160 billion in FY 1399 indicating Afs 21 billion which is a
notable change in development expenditure compare to the same period of last
The core expenditures are classified into development and operating expenditures
which are allocated in eight different sectors such as; security, governance,
education, health, agriculture, social protection, infrastructure, and economic
governance, moreover, the sector-wise expenditure is provided for both operating
and development budget, while increased expenditure on economic development,
defense, public services, governance (public order and safety), health and
education sectors are in line with the ANPDF priority (Da Afghanistan Bank,
Figure 4.34: Comparison of Total Expenditures for FY 1398 & FY 1399
Source: MoF Financial Statement/MPD staff calculation
The Afghanistan Government has joined the WTO and as a member of the WTO, and a
least developed country (LDC), Afghanistan must meet certain international legal
standards. After Afghanistan has become a signatory to the Berne Convention or
Agreement on Trade-Related Aspects of Intellectual Property (the TRIPs
Agreement), it is subjected to these international instruments through its
membership in the WTO.
When Afghanistan joined the WTO, it accepted all of the WTO agreements in a
single undertaking, including TRIPs. Under the TRIPs Agreement, WTO member
states must comply with the substantive obligations of the main conventions of
WIPO, namely the Paris Convention on industrial property, and the Berne
Convention on copyright in their most recent versions. As an LDC though, the WTO
agreement allows countries different periods to delay the application of its
provisions. For example, LDCs are granted a longer transition period than
developed countries, with a delay until 1 January 2006 and the possibility of an
extension of this date.
As there are no patent or copyright system in the past, global intellectual
property law harmonization needs to take place. Another important consideration
in drafting the new law is compatibility with the legal principles already in
place. The Islamic Foundation of law in Afghanistan is referred to as the
"Islamic Sharia." Protection of folklore has been a controversial area of
copyright law. For a country like Afghanistan, with over 1,000 years of
folklore, such protection was attractive. Our research unearthed no good model
to follow. If anything, folklore in the future may be a subject of sui generis
legislation. However, keeping in mind Afghanistan's current position, we
proposed a simple folklore provision for inclusion into the copyright law.
This provision provides a non-exclusive list of folklore items such as oral
expressions, including tales, popular poetry and riddles, architectural forms,
and tangible expressions, including items such as jewelry, carpets, and
textiles. The provision also dictates that the Transitional Islamic State of
Afghanistan is the "Author" of these works, and charges it with protecting such
works by all legal means. We are still debating the inclusion of a provision
that would provide an automatic license enabling the Afghan people to exercise
an author's rights in these folkloric works.
As the Afghanistan Government continues to reinstall government operations in
the wake of the Taliban leadership, the opportunity for corruption is palpable.
The abuse of a newly-established law is especially possible. There are two
interrelated copyright issues unique to Afghanistan as an LDC: fair use and
anti-circumvention provisions. Although LDCs certainly produce copyrighted
works, they tend to import more works than they produce. Accordingly, while
Afghanistan's copyright law must provide sufficient protection for owners of
copyrights, it is essential that laws not be so restrictive to limit the ability
of the local populace to use copyrighted works.
In 2002, the UK Government think tank, the Commission on Intellectual Property
Rights, which focuses on IPR policy and developing countries, published a report
entitled Integrating Intellectual Property Rights and Development Policy. This
sparked a healthy debate on the appropriate strength of IPRs in developing
countries, including copyright protection and the level of fair use allowed.
Afghanistan is still considering whether they want to create individualized
offices for copyright, trademark, and patent governance, or whether they want to
create one clearinghouse governing all areas of IP.
Since Afghanistan is one of the LDCs currently, the accession to WTO gives
responsibilities and commitment to abide by the terms and conditions such as
domestic reforms for transformation to a productive market economy, attracting
investments and creating jobs, and improving the welfare of Afghans. Afghanistan
should abide by the WTO obligations considering the MFN principle concerning
both trade and IPR. The major focus of the study will hence be to analyze and
ascertain the impact of the WTO agreements on trade and IPR in Afghanistan.
Strong legislation under the purview of WTO and WIPO should be passed to bring
IP legislation to Afghanistan. when the Intellectual Property Working Group
members have completed their modification of the copyright laws to suit
Government officials, they will disengage, and the Government officials will be
left to formalize the processes and procedures of forming functional, central,
and regional copyright offices, whether independent or part of a centralized
intellectual property office. Project team members will, however, continue to be
available to consult with Government officials as needed.
With clear and concise regulations, the administrative and judicial personnel
will have to be properly trained to implement and enforce the copyright laws
daily. By providing a large group of administrative personnel, managers, and
judicial authorities with comprehensive initial training, local Afghans will be
then equipped to train future generations.
Because the actual implementation of the laws and regulations is probably more
important than the laws and regulations themselves, training the Afghans who
will be working in the central and/or regional copyright offices and judicial
bodies will be critical to the success of establishing international trade and
IP system in Afghanistan.
Equally as critical is educating the Afghan people on their new rights. There is
a rich tradition of music, poetry, and textile arts in Afghanistan. There are
also contemporary filmmakers, photographers, writers, etc who will benefit from
copyright law. It remains to be seen whether an author's autonomy in his work,
which we in the developed world may take for granted, will be intuitive to the
Afghan people or not.
While Afghanistan continues to face significant challenges, a steady influx of
foreign direct investment is likely to be of substantial assistance to the
country's future. Also, Afghanistan faces different uncertainties and
difficulties. A heavy burden is imposed by COVID-19 which has brought about a
decline in the economy, public finances, and investments. Revenues have been
significantly lost because of lockdown measures which prompted the closing of
trade avenues within the country and the borders.
The crisis brought about by the pandemic prompted a decline in overall Economic
Growth in Afghanistan. Rebuilding of confidence has been hampered,
notwithstanding, by testing security and political conditions, and
vulnerabilities in regards to future international support. Economic
recuperation will rely upon a partnership between the public authority and its
international accomplices. To assist with re-establishing confidence in the
private sector and gain international support, the government needs to show
significant advancement in income, private sector reforms, and anti-corruption.
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Sayed Qudrat Hashimy
- There are 44 countries recognized as LDC by the UN, of which 34 countries
are members of WTO. Eight LDCs including Afghanistan, Bhutan, Comoros,
Equatorial Guinea, Ethiopia, Liberia, Sao Tome & Principe and Sudan are
currently negotiating for WTO membership. Yemen is the recent LDC member of
- The Silk Road was a network of trade routes that linked cities, trading
posts, hostels and caravan-watering places. It was most active from about
300 BC to 200 AD and extended between the Eastern Roman frontier in the
Middle East to the Chinese frontier, with other paths going north through
Afghanistan from the Indian Ocean to the Siberian Steppe.
- Afghanistan representative presentation to WTO, 2012
- Article 7 of the Afghanistan Constitution, 2004 directs that the state
shall observe the United Nations Charter, interstate agreements, as well as
international treaties to which Afghanistan has joined, and the Universal
Declaration of Human Rights. The state shall prevent all kinds of terrorist
activities, cultivation and smuggling of narcotics, and production and use
- Article 7 of the Afghanistan Constitution, 2004 directs that the state
shall devise effective programs for fostering knowledge, culture, literature
and arts. The state shall guarantee the copyrights of authors, inventors and
discoverers, and, shall encourage and protect scientific research in all
fields, publicizing their results for effective use in accordance with the
provisions of the law.
- Afghanistan Accession. World Trade Organization.
- In economics, "dumping" is a kind of predatory pricing, especially in
the context of international trade. It occurs when manufacturers export a
product to another country at a price either below the price charged in its
home market or below its cost of production. The purpose of this act is
sometimes to increase market share in a foreign market or to drive out
- Afghanistan Accession, Available at https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm
- BBC, Afghanistan became a full member of the World Trade Organization,
Available at https://www.bbc.com/pashto/afghanistan/2015/12/151217_wto_afghaan_membership_iy
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2021-03-16, Available at
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and Researchers (Copyright Law)". Wipo.int. Retrieved 25 May 2021
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- The Agreement was established in 1891 for the purpose of providing a
mechanism that would allow for a single and inexpensive international
trademark registration and to eliminate the need for filing, prosecuting or
maintaining separate registrations in multiple countries. Registration of a
mark under the Agreement provides for the legal equivalent of registration
in member countries designated by the mark owner. If the trademark office of
the designated country does not communicate a refusal of registration to WIPO within 12 months
(extended to 18 months under the Protocol) the mark will have the same
protection as registered national marks in that country. The Agreement also
provides for a simplified renewal system since registration to renew and chances
to the original registration affecting all the countries included in the
registration can be made through a single filing with WIPO.
- The Protocol was adopted in 1989 to correct the perceived deficiencies
in the Agreement. However, the Protocol maintains the initial intention of
the Agreement, to create a system of simple and inexpensive international
trademark registration. Therefore, while only 57 countries are presently
part of the agreement, a total of 74 countries including the U.S. are party
to either both the Agreement and the Protocol or to the Protocol by itself.
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Turkey through Lapis Lazuli route", Pajhwok Afghan News.
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Available at https://www.cia.gov/the-world-factbook/countries/afghanistan/
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Available at https://tolonews.com/business-170752
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chart", Available at https://www.theglobaleconomy.com/Afghanistan/Unemployment_rate/
, Student of LLM (International Law) Department of
studies in law, the University of Mysore
E-mail: [email protected]