Afghanistan Trade Relations with the EU

Subchapters:

  • Business Relationships
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The trade balance between the EU and Afghanistan has been significantly active for the EU in the long term, primarily due to the underdeveloped Afghan economy, which, without the necessary reforms, is on the one hand not competitive compared to European economies and on the other hand is not significantly pro-export oriented, as the majority of the volume of Afghan exports is directed to the geographically closest markets in within the region (Iran, Pakistan, India, China, and the states of Central Asia).

  • Allcountrylist: Overview of major industries in Afghanistan, including mining, construction, transportation, tourism, and foreign trade.

Trade exchange with the EU (million EUR)

2018 2019 2020 2021 2022
Export from the EU 274.1 273.5 302.0 ON ON
Import into the EU 24.8 51.1 29.8 ON ON
Balance with the EU -249.3 -222.3 -272.2 ON ON

Source: European Commission

Trade relations with the Czech Republic

The trade balance between the Czech Republic and Afghanistan follows the trend of EU-Afghanistan trade relations and is therefore significantly active in favor of the Czech Republic. The Czech market is very far away for small-scale Afghan exports, and in addition, due to the factors limiting the potential of Afghan exports (see above), a change in the current trend in the foreseeable future seems rather unlikely.

Trade exchange with the Czech Republic (billion CZK)

2018 2019 2020 2021 2022
Export from the Czech Republic 0.4 0.7 0.349428 ON ON
Import to the Czech Republic 0.0 0.0 0.001914 ON ON
Balance with the Czech Republic -0.4 -0.7 -0.344 ON ON

Source: CZSO

FTAs and treaties

Treaties with the EU

  • A free trade agreement (FTA) has not yet been concluded between the European Union and the Islamic Republic of Afghanistan.
  • Since 1 December 2017, the Agreement on cooperation in the field of partnership and development between the European Union and its member states on the one hand and the Islamic Republic of Afghanistan on the other has been provisionally implemented (Brussels, 13 February 2017; the ratification process is still ongoing – the Czech Republic ratified on 2 October 2017)

Contracts with the Czech Republic

  • Agreement on Air Transport Services between the Czechoslovak Republic and the Kingdom of Afghanistan (Prague, 28 May 1960)
  • Agreement between the Government of the Czechoslovak Socialist Republic and the Government of the Democratic Republic of Afghanistan on scientific and technical cooperation (Prague, 31 March 1980)
  • Protocol to the Agreement between the Government of the Czechoslovak Socialist Republic and the Government of the Democratic Republic of Afghanistan on Scientific and Technical Cooperation (Prague, 31 March 1980)
  • Consular Convention between the Czechoslovak Socialist Republic and the Democratic Republic of Afghanistan (Prague, 22 April 1981)
  • Agreement between the Czechoslovak Socialist Republic and the Democratic Republic of Afghanistan on legal assistance in civil and criminal matters (Prague, 24 June 1981)
  • Agreement on cultural and scientific cooperation between the government of the Czechoslovak Socialist Republic and the government of the Democratic Republic of Afghanistan (Kabul, 19 December 1981)
  • Agreement between the government of the Czechoslovak Socialist Republic and the government of the Democratic Republic of Afghanistan on cooperation in the field of healthcare and medical sciences (Kabul, 29/04/1987) note: Article 9 of the Agreement has lapsed in relations between the Czech Republic and the Islamic Republic of Afghanistan

Most of the mentioned bilateral agreements no longer correspond to either the reality of Czech-Afghan relations or the Afghan internal political situation.

Developmental cooperation

Afghanistan has long been a net recipient of development aid. The Czech Republic participates in its development through foreign development cooperation (FDC). From the point of view of the approved concept of the ZRS, Afghanistan is classified among the so-called specific countries without a specific allocation of funds. All information on ZRS projects implemented by the Embassy of the Czech Republic in Kabul can be found on the embassy’s website.

Development cooperation between the Czech Republic and Afghanistan is carried out both directly, through contributions to funds (ARTF, administered by the World Bank; LOTFA, administered by the United Nations Development Program, ANATF, administered by NATO), and through the Embassy of the Czech Republic in Kabul, as part of a program of small local projects and projects transformational cooperation. A separate part of the cooperation is humanitarian aid to the most needy, implemented by the International Organization for Migration, the Office of the United Nations High Commissioner for Refugees, and the Czech non-governmental non-profit organization People in Need, ops

Small local projects help to improve the quality of everyday life of the people of Afghanistan, to present the Czech Republic as a state that supports the development of communities in need, as well as to cultivate mutual contacts. Transformational cooperation projects contribute to the enlightenment and education of the Afghan population in the area of ​​democracy and human rights and to the long-term improvement of the social status of vulnerable minorities, especially Afghan girls and women.

Prospective fields of study (MOP)

Modern transport and infrastructure

Due to its central location in the region, Afghanistan attaches due importance to the completion of the railway and highway network, therefore there is a significant demand in the transport sector for partners with relevant know-how and technological capacities. Due to the inaccessible terrain in a large part of the country, air transport is also gaining importance, for the efficient operation of which the government plans to carry out the reconstruction of airports and the modernization of their technological equipment, including the training of qualified air traffic controllers. This segment is important for the state not only because of the non-negligible income resulting from the number of air connections handled, but also because of the reduction in the ability to control the airspace, until now primarily provided by members of the alliance mission Decisive Support.

The Afghan government is considering connecting the internal rail network by connecting individual provincial networks to the backbone network, as well as extending the rail network connecting Afghanistan to Iran to Herat. The potential opportunity for Czech suppliers lies in the supply of rails, locomotives and material for the construction and operation of railway lines.

The Office of the Mayor of Kabul and the Capital Region Development Agency (CRIDA) are showing interest in supplying Czech means of public transport to Kabul, where Czechoslovak-made trolleybuses were successfully operated until the 1990s. In recent years, studies on the restoration of trolleybus traffic have been handed over to Afghanistan, but the order has not yet been implemented. CRIDA also plans to transform the capital region into a modern metropolitan agglomeration in the next five years, including the construction of four logistics-industrial centers (BAEZ – Barikab, SEZ – Sarob, MSEZ – Maidan Shahr, MAEZ – Muhammad Agha), interconnected by highway networks and located in the vicinity of the capital. The total value of the projects in the mentioned period is USD 160 million.

Energy and waste management

Afghanistan is energy insecure and imports most of its electricity, placing significant demands on the transmission system, which is subject to frequent sabotage and is unable to supply electricity to all the country’s settlements, resulting in planned outages to cities and their neighborhoods to other cities could be supplied. Completing the transmission system and achieving energy self-sufficiency represent a long-term challenge for the Afghan government.

Considerable expectations are placed on renewable sources: hydro and solar power. Gas power plants are also a sought-after alternative to outdated heat sources or cross-border transport of electricity from neighboring states. The construction of a gas power plant using natural gas supplied by the TAPI gas pipeline is planned in the city of Herat. A gas power plant with a capacity of 200 MW is planned to be built in Mazár-e Sharif, which is to be supplied with gas from its own sources. A 10MW solar power plant is planned to be built in Kandahar province.

A significant business opportunity is represented by “green” technologies for the processing and recycling of municipal waste and its energy use. In Kabul and larger cities, air pollution with emissions from local heating plants, where municipal waste is burned, reaches unbearable limits, especially in the winter. Waste is not landfilled in a controlled manner and there is no centralized collection system. The local administration is aware of this problem and is trying to find a systemic solution to the bleak situation and to introduce a long-term sustainable and ecological way of processing and recycling waste, which is still lacking in Afghanistan.

The know-how and financial assistance of non-governmental non-profit organizations, such as People in Need, ops, successfully contribute to the improvement of the situation in the given sector through the construction of plastic purchase and processing facilities, which are then handed over to Afghan operators.

Mining and quarrying industry

Exploitation of Afghanistan’s diverse mineral wealth is currently limited by a number of factors: underdeveloped infrastructure, insufficient mining technology and state regulation. However, the gradual relaxation of mining limits will bring a sharp increase in the recoverable volume of raw materials, which will place high demands on the supply of quality components for the service and replacement of mining technological units and on the transport and further industrial processing of the mined material.

In Afghanistan, there are significant deposits of high-quality talc, a rock with versatile uses: including in construction, healthcare and modern technologies. The main market for exports is China, but the capacities of mining companies can meet a much larger demand. Talc can be exported both in its raw state (boulders) and partially processed (ground). The high quality of Afghan talc was confirmed in 2020 by an expert analysis of the Institute of Geonics of the Academy of Sciences of the Czech Republic.

Defense and security industry

With the end of the international military presence on September 11, 2021, and with the gradual change in the financing system of the armed forces of Afghanistan, there will be a greater need for the acquisition of weapon systems, ammunition, small arms, equipment supplies and means of logistical security. In Afghanistan, there is a long-term demand for the maintenance and overhaul of air force assets, especially Soviet Mi-17 and Mi-24/35 helicopters, and for the professional training of their crews and ground personnel.

The Afghan government is also considering the purchase of Mi-24/35 attack helicopters. In connection with the takeover of airports, until now operated by members of the alliance’s Decisive Support mission, into Afghan hands, there is a need for supplies of instrument and radar technology, security systems, professional training for air traffic controllers, etc. In a world comparison, the Czech Republic is one of the few countries with industrial capacities and know-how, enabling to deliver comprehensive solutions to Afghan partners.

Agriculture, breeding and food industry

The agricultural sector, as well as the food industry, are not sufficiently developed. Agriculture is heavily subsidized from abroad, employs up to 44% of the population and contributes 22% to GDP. Afghanistan is food insecure, primarily due to inefficient agriculture and an inhospitable climate accompanied by natural disasters (drought, floods, earthquakes). Agricultural production is thus highly dependent on hard-to-predict factors (amount of snow, volume of spring rains) and therefore one of the government’s priorities is the reconstruction and construction of new irrigation canals.

The production of fruit and dried fruits, potatoes, almonds and saffron is significant. There is no central registry of farm animals and their gene pool is greatly eroded. The methods and methods of cultivating agricultural land are outdated. The potential opportunity for Czech suppliers lies in the supply of agricultural machinery, the building of storage and processing capacities and the introduction of modern farming methods, the establishment of a register of farm animals, the implementation of training and the supply of live cattle.

Afghanistan Trade Relations with the EU