Attachment_J.1a_SOO_Annex_1_ATAR_Final_Report.pdf

AFGHANISTAN TRADE AND

REVENUE PROJECT

FINAL REPORT

February 28, 2018

This publication was produced for review by the United States Agency for International

Development. It was prepared by Chemonics International Inc.

DISCLAIMER

The authors’ views expressed in this publication do not necessarily reflect the views of the United States

Agency for International Development or the United States government.

AFGHANISTAN TRADE AND

REVENUE PROJECT

FINAL REPORT

Contract No. AID-OAA-I-12-00035, Task Order No. AID-306-TO-13-00009

Cover photo: Pictured left to right, Minister of Commerce and Industry of Indian Suresh

Prabhu, Chief Executive of Afghanistan H. E. Dr. Abdullah Abdullah, Special Chargé d’Affaires of the U.S. Embassy in Kabul, Afghanistan H.E. Ambassador Hugo Llorens, and Chargé d’Affaires of the U.S. Embassy in New Delhi, India MaryKay Carlson cut a ribbon to mark the opening of the

Passage to Prosperity: India-Afghanistan Trade and Investment Show in New Delhi, September

27- 30, 2017. (Credit: Ian Carver, ATAR)

AFGHANISTAN TRADE AND REVENUE PROJECT | i

CONTENTS

Acronyms ................................................................................................................ ii

Executive Summary

Key Highlights and Achievements by Component

Component 1: Support Trade Policy Liberalization

Component 2: Facilitate Enhanced Access to Regional Markets

Component 3: Improved Customs Administration

COMPONENT 1: TRADE POLICY LIBERALIZATION

1. Afghanistan’s WTO Accession Process

2. Supporting Legislative Reforms for accession

3. Supporting Implementation of WTO Laws and Commitments

3.3.A. The WTO Unit

COMPONENT 2: FACILITATE ENHANCED ACCESS TO REGIONAL

MARKETS

1. Cross-cutting activities to enhance regional trade

2. Country-Specific Initiatives to Enhance Regional Trade

2.1 Afghanistan

2.2. Kyrgyz Republic

2.3. Tajikistan

2.3.A. Customs Support

2.4. Turkmenistan

2.5. Uzbekistan

COMPONENT 3: IMPROVED CUSTOMS ADMINISTRATION

1. Afghan National Customs Academy

2. Modernization and Simplification of Procedures

3. Modernization of Border Management AND SIMPLIFICATION of Customs

Procedures

4. Improved Customs Administration

4.2 increasing ties to the wco through diagnostic assessments

Collaboration ii AFGHANISTAN TRADE AND REVENUE PROJECT

Links with Relevant Afghan Government Ministries

Links with Other Donor Agencies

Links with Other USAID Projects

Challenges and Lessons Learned

Component 1: Support Trade Policy Liberalization

Component 2: Facilitate Enhanced Access to Regional Markets

Component 3: IMPROVED CUSTOMS ADMINISTRATION

Annex A. Afghanistan Trade And Revenue Financial Report

Annex B. SUMMARY PERFORMANCE INDICATOR TRACKING TABLE . 87

Annex C. Snapshots

Afghan Carpets Reach Dubai By Air

Afghanistan Signs Arusha Declaration

Afghan Exports Reach Southeast Asia

Businessman Finds Buyers in Dubai

Businesswoman Strikes Deals in Dubai

Merger Makes Doing Business Easier

Annex D. Press Releases

Annex E. Index of Key Afghanistan Trade and Revenue Project Reports

AFGHANISTAN TRADE AND REVENUE PROJECT | ii

ACRONYMS

ABADE Assistance in Building Afghanistan by Developing Enterprises

ABBAT Association of International Transport Operators of Tajikistan

ABP Afghan Border Police

ACAA Afghanistan Civil Aviation Authority

ACBR-IP Afghanistan Central Business Registry-Intellectual Property

ACCI Afghanistan Chamber of Commerce and Industry

ACD Afghan Customs Department

ACE Agricultural Credit Enhancement II project

ADBL Association for Development of Business Logistics

AEC Afghanistan Exporters Club

AEO Authorized Economic Operator

AHD Animal Health Directorate

AISA Afghanistan Investment Support Agency

ANCA Afghanistan National Customs Academy

ANSA Afghanistan National Standards Authority

APTTA Afghanistan Pakistan Transit Trade Agreement

APTTCA Afghanistan-Pakistan-Tajikistan Transit Trade Coordination

Authority

ARD Afghanistan Revenue Department

ASYCUDA Automated System for Customs Data

ATAR Afghanistan Trade and Revenue Project

AWBF Afghanistan Women’s Business Federation

BCCI Balkh Chamber of Commerce and Industries

BCP border crossing point

BMM Border Management Model

BMTF Border Management Task Forces

CAREC Central Asia Regional Economic Cooperation program

CATF Central Asia Trade Forum

CBTA Cross-Border Transport Agreement

CCC Customs Consultative Council

AFGHANISTAN TRADE AND REVENUE PROJECT | iii

CCTF Committee for Trade Facilitation

CHAMP Commercial Horticulture and Agricultural Marketing Program

CITS Comprehensive Integrated Tariff System

CLDP Commercial Law Development Program

CSO Central Statistics Organization

CTA Customs and Tax Academy

CVA Customs Valuation Agreement

DAB Da Afghanistan Bank

EPAA Export Promotion Agency of Afghanistan

E-Pay electronic payment

EU-BOMNAF European Union EU Border Management Northern

Afghanistan

EPZ export processing zone

FAIDA Financial Access for Investing in the Development of

Afghanistan

FAO Food and Agriculture Organization

FICCI Federation of Indian Chamber of Commerce and Industries

FLO FICCI Ladies Organization

FTWZ Free Trade Warehousing Zone

GAIN Global Alliance for Improved Nutrition

GATT General Agreement on Tariffs and Trade

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit

GPA Government Procurement Agreement

HACCP Hazard Analysis Critical Control Point

HKIA Hamid Karzai International Airport

ICD inland clearance depot

IPPC International Plant Protection Convention

IRU International Road Transport Union

ITA Information Technology Agreement

ITC International Trade Centre

MAA Mutual Assistance Agreement

MAIL Ministry of Agriculture, Irrigation, and Livestock

MEDT Ministry of Economic Development and Trade

AFGHANISTAN TRADE AND REVENUE PROJECT | iv

MOCI Ministry of Commerce and Industries

MOFA Ministry of Foreign Affairs

MOIC Ministry of Information and Culture

MOPH Ministry of Public Health

MOTCA Ministry of Transportation and Civil Aviation

NEAC National Education Agricultural College

NEPA National Environmental Protection Agency

NTFC National Trade Facilitation Committee

OIE World Organisation for Animal Health

OSS one-stop shop

PATTTA Pakistan-Afghanistan-Tajikistan Transit and Trade Agreement

PCA Post Clearance Audit

PCTD Prevention of Customs Transgression Department

PNC-ICC Pakistan National Committee of the International Chamber of

Commerce

PPQD Protection and Quarantine Department

PRA Pest Risk Assessment

RADP-N Regional Agricultural Development Program-North

RADP-S Regional Agricultural Development Program-South

RADP-W Regional Agricultural Development Program-West

REC Regional Economic Cooperation project

RKC Revised Kyoto Convention

SAFTA South Asian Free Trade Area

SAARC South Asian Association for Regional Cooperation

SEZ Special Economic Zone

SPS Sanitary Phytosanitary Measures

TAFA Trade Accession and Facilitation for Afghanistan

TAPI Turkmenistan-Afghanistan-Pakistan-India Pipeline

TBT Technical Barriers to Trade

TFA Trade Facilitation Agreement

TIFA Trade and Investment Framework Agreement

TIR Transports Internationaux Routiers

TPAU Trade Policy Analysis Unit

AFGHANISTAN TRADE AND REVENUE PROJECT | v

TRIPS Trade-Related Aspects of Intellectual Property Rights

UNCTAD United Nations Conference on Trade and Development

UNDP United National Development Program

USPTO United States Patent and Trademark Office

WCO World Customs Organization

WIPO World Intellectual Property Organization

WTO World Trade Organization

AFGHANISTAN TRADE AND REVENUE PROJECT | 1

EXECUTIVE SUMMARY

The Afghanistan Trade and Revenue (ATAR) project started implementation during the so-called “Transformational Decade” in Afghanistan, when the international military presence in the country that had been there since 2001 began to decrease substantially, with a concomitant reduction in international aid. As a result, the Government of the

Islamic Republic of Afghanistan was challenged to spur economic growth, increase revenues, and improve the quality of services it provides. To this end, from November

2013 to February 2018, ATAR worked to strengthen the business climate of Afghanistan to enable private investment, enhanced trade, job creation, and fiscal sustainability.

With its partner Economic Integration Forum, Chemonics worked to support

Afghanistan’s continuing recovery from three decades of war and economic devastation through three primary activities: improving the Afghan government’s capacity to formulate and implement a liberal policy framework for trade and investment in accordance with international standards; enhancing integration in the regional and world economy through the promotion of trade and agreements, enhanced economic corridors governance, and private-sector linkages throughout South and Central Asia;

and strengthening revenue generation for fiscal sustainability and trade facilitation through reforms and anti-corruption measures in customs and taxation. In this way, the

ATAR project fostered Afghanistan’s economic growth and greater integration into the regional and global community.

In the face of political challenges and volatile security, ATAR supported the Afghan government and private sector to improve the country’s trade environment. Most significantly, as a result of USAID support under ATAR and the previous Trade

Accession and Facilitation I and II projects, Afghanistan became the 164th member of the

World Trade Organization (WTO) on July 29, 2016. Through its accession to the

WTO, Afghanistan sent a strong signal to investors that it had established a stable, predictable, and transparent environment with strong protection for investors’ rights, including intellectual property rights. With ATAR’s support, Afghanistan also ratified the

WTO’s Trade Facilitation Agreement and passed 25 complex trade-related laws that serve the foundation of any modern, vibrant trading regime.

To increase Afghanistan’s regional ties, ATAR maintained a presence in four Central

Asian countries, as shown in Exhibit 1. This in-country presence allowed ATAR to promote Afghanistan’s interests in the region and to strengthen trade and transit relationships with its South and Central Asian neighbors, thereby fostering regional integration. In addition, by maintaining a regional presence, ATAR supported Central

Asian countries’ progress toward ratification or accession to international agreements, such as the World Customs Organization (WCO) Revised Kyoto Convention (RKC) or the Transports Internationaux Routiers (TIR) Convention, as well as provide capacity building support to customs administrations, the private sector, and civil society organizations.

AFGHANISTAN TRADE AND REVENUE PROJECT | 2

ATAR’s regional approach also allowed it to promote trade and link businesses throughout Central and South Asia.

Afghan traders negotiated millions of dollars in business deals at 16 international trade events with ATAR support. The success of these events culminated in

September 2017 with the Passage to

Prosperity: India-Afghanistan Trade Show in New Delhi where Afghan and Indian buyers struck more than $240 million in confirmed and potential deals in the India. As part of its increased focus on facilitating exports, ATAR demonstrated the viability of air cargo, supporting traders in exporting $2.7 million worth of goods by air and coordinating with government and investors to upgrade Afghan airports air cargo capacity.

Finally, to speed the movement of goods across border, ATAR also supported the

Afghan government in implementing customs reforms and promote the principles of the

World Customs Organization Revised Kyoto Convention and Revised Arusha

Declaration. With ATAR’s training and policy support, the Afghanistan Customs

Department increased its ability to tackle corruption, generate customs revenue, and facilitate trade at borders with Afghanistan’s neighbors and countries farther abroad.

EXHIBIT 1: ATAR’S REGIONAL PRESENCE

AFGHANISTAN TRADE AND REVENUE PROJECT | 3

KEY HIGHLIGHTS

AND ACHIEVEMENTS

BY COMPONENT

COMPONENT 1: SUPPORT TRADE POLICY LIBERALIZATION

Component 1 promoted liberalization of Afghanistan’s trade regime by supporting its accession to the WTO. ATAR provided capacity building and technical assistance within implementing institutions to conduct negotiations, to draft legislation required for accession, and to institute required reforms following accession. In addition to conforming to WTO requirements, these policies, laws, and regulations will attract investment and enable the private sector to grow. ATAR’s achievements under

Component 1 include:

• After years of work in trade reforms and trade negotiations by the Afghan government, and with the support of ATAR and TAFA I and II, Afghanistan officially became the WTO’s 164th member on July 29, 2016. In the days leading to formal membership, Afghanistan passed 25 of 26 WTO-related pieces of trade legislation.

Following accession, ATAR assisted the Ministry of Commerce and Industries

(MOCI) with developing a post-accession strategy to maximize the benefits of WTO membership, educate ministries and state bodies on their WTO responsibilities, and create a structure for a comprehensive WTO Department to handle post-accession matters.

• On July 29, 2016, President Ashraf Ghani signed the WTO Trade Facilitation

Agreement (TFA), and Afghanistan became the 92nd WTO member to ratify and notify the TFA (ahead of 72 other members). This contributed to the required number of WTO member ratifications (108) needed for the TFA agreement to enter into force.

• ATAR assisted in the development of an automated registry for trademarks at

MOCI and an automated registry for border enforcement of intellectual property rights at Afghanistan Customs Department. This will help to strengthen the protection of intellectual property rights, a key component of WTO.

• In a major step toward attracting foreign investment, ATAR supported MOCI in merging the licensing department of the Afghanistan Investment Support Agency into

MOCI’s Afghanistan Central Business Registry-Intellectual Property. As a result, ACBR-IP issues a single business license instead of the multiple investment and trade licenses that had been required of companies.

AFGHANISTAN TRADE AND REVENUE PROJECT | 4

• ATAR assisted in preparing Afghanistan’s application for observer status in the

WTO Government Procurement Agreement, which will give Afghanistan, once it becomes a full member, access to government procurement activities with an annual market of $17 trillion.

COMPONENT 2: FACILITATE ENHANCED ACCESS TO REGIONAL MARKETS

Under Component 2, ATAR facilitated the development and implementation of regional trade agreements; assisted the government to support measures needed to implement regional trade agreements; and supported the implementation of transport corridors and trade facilitating measures by working with countries such as Uzbekistan, Tajikistan, Kyrgyzstan, and Turkmenistan. ATAR’s achievements under Component 2 include:

• ATAR supported the participation of hundreds of Afghan traders in 16 high-level international tradeshows where they signed agreements worth more than $60 million. These events included established, sector-specific shows such as Germany’s carpet show DOMOTEX and Dubai’s food tradeshow Gulfood, as well as ATAR-organized shows, such as Made in Afghanistan in July 2016 and Exhibition Afghanistan in December 2016, for a range of products. Together with USAID Afghanistan and

USAID India, ATAR organized the Passage to Prosperity: India-Afghanistan Trade and Investment Show from September 27-30 in New Delhi, India. More than 1,200

Indian businesses met with approximately 200 Afghan businesses from a variety of sectors, including fresh fruits and spices, energy, and finance. The event generated

$240 million in reported agreements, including $27 million in signed contracts for

Afghan exports and Indian investments. The event helped to reinvigorate Indian-

Afghan relations and demonstrated Afghanistan’s trade potential to other countries in the region and beyond.

• In January 2018, a one-stop shop (OSS) for customs clearance was inaugurated at

Hamid Karzai International Airport (HKIA) in Kabul. The OSS launch was the result of nearly a year of work with multiple stakeholders in both the public and private sector to facilitate exports by air. The establishment of the OSS is a major step forward in boosting Afghanistan’s exports, and was complemented by the establishment of a consolidation warehouse to store goods prior to clearance.

Thanks to the OSS, traders now can benefit from a simplified process for obtaining approvals and permits from different ministries, agencies, and associations in one centrally office, located within HKIA premises.

• In the Central Asian Republics, ATAR promoted Afghanistan’s economic interests and greater regional integration and participation in international trade and transit agreements. With ATAR support, the Kyrgyz Republic ratified the WTO TFA, and

Tajikistan moved closer to ratification. Due in part to ATAR’s efforts, Pakistan and

India became contracting parties to the TIR Convention in 2016 and 2017, respectively. All South and Central Asian countries are now contracting parties of the TIR Convention, thanks in part to ATAR’s support. In principle, this will permit more efficient movement of cargo by road.

AFGHANISTAN TRADE AND REVENUE PROJECT | 5

• In a significant development in U.S.-Uzbek cooperation, ATAR provided the first

USAID-funded support to the Uzbekistan Customs Committee in more than a decade, training 21 customs officers in May 2015. Additional training followed in 2016 and 2017.

• ATAR helped to reinvigorate the Kyrgyz Republic’s Customs Consultative Council, which provides a forum for discussion between customs and the trading community and customs brokers. As a result of ATAR’s efforts, Kyrgyz customs held the first

Customs Consultative Council in late 2014 and held additional meetings throughout the last three years with ATAR support.

• In 2016, ATAR helped to establish the Afghanistan Exporters Club as part of an effort to increase local capacity to organize Afghan traders’ participation in future international tradeshows and to promote air-cargo and other export initiatives. To date, AEC has recruited 35 members (three carpet businesses, three handicrafts businesses, four marble and gemstone businesses, 24 dried fruit exporters, and one organization).

• To facilitate exports by air, ATAR established a logistical system that includes a consolidation warehouse in Kabul and provides local freight brokerage services and a Free Trade Warehousing Zone in Dubai. In support of Afghanistan Civil Aviation

Authority (ACAA), ATAR developed plans to convert the current Haj Terminal at

HKIA to a modern air cargo terminal and to facilitate the establishment of export processing zones (EPZs) in Kabul, Kandahar, Herat, and Mazar-e-Sharif. Since being launched in early 2017, ATAR’s air cargo incentive program helped Afghan exporters airlift about $2.7 million worth of goods to markets in North America, Europe, and the Middle East.

• In mid-2017, ATAR began working with ACAA to develop air corridors between

Afghanistan and its strategic trade partners. As part of HKIA’s Air Cargo Zone, ATAR developed plans to establish an EPZ, which will be a step towards the development of a special economic zone (SEZ) in Afghanistan. The EPZ will be expected to attract investors for sectors with high export potential, including gem cutting and polishing facilities and carpet finishing facilities.

COMPONENT 3: IMPROVED CUSTOMS ADMINISTRATION

Component 3 was designed to enhance the Afghan government’s capacity, in particular the Afghanistan Customs Department (ACD), to generate revenue by improving customs procedures to increase transparency, efficiency, and uniformity in the collection of revenue, performance of core functions, and facilitation of trade. ATAR’s achievements under Component 3 include:

• On December 5, 2016, the minister of finance inaugurated the Customs and Tax

Academy (CTA), a modification of the former customs academy that incorporates the Afghanistan Revenue Department (ARD) training unit. ATAR provided significant

AFGHANISTAN TRADE AND REVENUE PROJECT | 6

assistance to the academy, including preparation of the academy library and a search and examination bay for practical training. Following the launch, ATAR finalized the new academy curriculum, covering basic, intermediate, and advanced training courses.

• On July 16, 2017, Minister of Finance Eklil Hakimi signed a notification of intent to adopt the WCO Revised Arusha Declaration, marking a commitment to combat corruption in customs administration. This is the result of significant ATAR support to anti-corruption efforts within ACD, including the development of an anti-corruption strategy and code of conduct. With ATAR support, ACD also finalized an Arusha Declaration implementation plan, which covers strategic and operational objectives to be completed between 2017 and 2020.

• To modernize and improve how customs-related duties are collected and to bring more efficiency and transparency in revenue collections made from customs duties, ATAR continued the work started under the TAFA II project to introduce an e-payment system for customs. In December 2015, ACD officially launched E-Pay in

Mazar-e-Sharif. With ATAR support, e-payment became operational across

Afghanistan by the end of 2016. This includes all of Afghanistan’s inland customs depots and customs border crossing points except for customs sites in Khost and

Paktia (due to security concerns).

• In July 2017, ACD completed implementation of one of the WTO TFA requirements: advance ruling function. ACD posted all advance ruling materials on its website, together with application templates. By the end of July, ACD received three applications asking for a binding decision on the tariff classification and customs valuation. ATAR developed brochures on advance ruling that were used as part of its traders awareness-raising activities.

AFGHANISTAN TRADE AND REVENUE PROJECT | 7

COMPONENT 1: TRADE POLICY

LIBERALIZATION

On July 29, 2016, Afghanistan became the WTO’s 164th member, signaling to the world that the country was transforming its trade environment to comply with the international rules governing global commerce. This accomplishment was the result of renewed commitment by President Ashraf Ghani’s government to foster Afghanistan’s growth through integration into the global economy. It also was the result of years of sustained USAID support to the Afghan government’s accession process through the

ATAR project and its two predecessor programs, the Trade Accession and Facilitation for Afghanistan (TAFA) I and II projects. ATAR provided extensive support during the pre-accession phase, helping to reignite the process following the transition to the

Ghani government, and in the post-accession phase to help Afghanistan fulfill its commitments under the WTO.

1. AFGHANISTAN’S WTO ACCESSION PROCESS

Afghanistan’s WTO accession process started in 2004, although it was largely dormant until 2009. From 2010 through mid-2014, Afghanistan made remarkable progress toward accession. The capacity of ministries and private-sector actors was built to navigate the complex process of becoming a WTO member. Five successful WTO Working Party meetings were held. The evolution of the draft Working Party Report from Elements of the Factual Summary last a little more than one year; this process has taken four to five years for other countries. Agricultural plurilateral negotiations concluded in one round versus four to five rounds on average.

See Exhibit 2 for the steps in the path to

WTO accession.

BI-LATERAL MARKET ACCESS

AGREEMENTS

The Government of the Islamic Republic of

Afghanistan signed bilateral agreements on market access for goods and services with nine WTO members:

1. United States, January 2014

2. Turkey, February 2014

3. Chinese Taipei, February 2014

4. Korea, February 2014

5. European Union, February 2014

6. Norway, December 2013

7. Thailand, December 2013

8. Canada, July 2013*

9. Japan, July 2013*

*Afghanistan signed these during the

TAFA project.

AFGHANISTAN TRADE AND REVENUE PROJECT | 8

EXHIBIT 2. COMPLETING THE PATH TO WTO ACCESSION

During ATAR’s first year, Afghanistan took a major step toward WTO accession by finalizing bilateral negotiations on market access for goods and services (see box on previous page) in February 2014.1 Market access refers to the extent to which an imported good or service can compete in Afghanistan with domestic goods or services.

Bilateral market access negotiations represent about 60 percent of the WTO accession process and are the most challenging part of the process. Afghanistan launched its bilateral market access negotiations on services in June 2012 with the support of TAFA and completed them in January 2014 with the support of ATAR (about 18 months).

Bilateral market access negotiations on goods were launched with TAFA’s support in

December 2012 and concluded in February 2014 with ATAR’s support (slightly more than one year). It is worth noting that other countries achieve these milestones in an average of six years. The WTO and its Working Party Members hailed the record-breaking progress.

Afghanistan was in the final stages of WTO accession at the end of 2014, when the country’s government underwent a transition following the resolution to the disputed and protracted presidential elections. With a change in the country’s decision-makers, the Afghan government put the country’s WTO accession on hold, as President Ghani directed his government to focus on security. By mid-2015, government officials began to turn their attention back to accession, in part due to ATAR’s advocacy with

President Ghani, support to MOCI to promote the accession agenda, and awareness-building activities targeting Afghan officials and the public.

1 A country acceding to the WTO enters into bilateral negotiations with individual WTO members. They are bilateral because different countries have different trading interests. The negotiations cover tariffs, specific market access commitments, and other policies in goods and services.

AFGHANISTAN TRADE AND REVENUE PROJECT | 9

ATAR and MOCI met several times with members of President Ghani’s economic policy and strategy team. To prepare for these meetings, ATAR assisted MOCI in preparing and providing 15 awareness papers, formal WTO documents, talking points, and notes on WTO accession. In early October 2015, MOCI and ATAR met with President Ghani and his advisors to discuss WTO commitments, benefits, and challenges. In particular, the ATAR team stressed the advantages to Afghanistan’s accession to the WTO as well as the mechanisms that would be open to Afghanistan as a WTO member to resolve disputes, such as longstanding transit challenges with Pakistan.

By October 2015, following intensive ATAR and MOCI preparation and awareness building, President Ghani expressed his support and agreed to move forward with concluding WTO accession negotiations.

ATAR then assisted MOCI and the WTO

Secretariat with finalizing Afghanistan’s draft

Working Party Report. The WTO

Secretariat disseminated the report to WTO

Working Party members in October 2015, along with three other documents of the accession package: the protocol of accession, the schedule of concessions and commitments on goods, and the schedule of specific commitments on services.

With ATAR support, Afghanistan continued to achieve major WTO milestones throughout late 2015 and early 2016. First, in November 2015, an Afghan delegation attended the country’s fifth and final Working Party meeting at WTO headquarters in

Geneva, Switzerland. At this meeting, WTO Working Party members approved

Afghanistan’s accession package. Next, in December 2015, an Afghan delegation attended the 10th WTO Ministerial Conference in Nairobi, Kenya. At the conference, the WTO Ministerial Council formally adopted Afghanistan’s accession package. ATAR further assisted the Afghanistan government with compiling lists of technical assistance needs, which were circulated at a donors’ roundtable at the Nairobi conference.

AFGHANISTAN’S WTO

MILESTONES

Afghanistan reached major milestones during the project’s third year, culminating in the country’s WTO accession:

• On November 11, 2015, an Afghan delegation attended the country’s fifth and final Working Party meeting in

Geneva, Switzerland. WTO Working

Party members approved Afghanistan accession package by consensus, ad referendum.

• On December 17, 2015, an Afghan delegation attended the WTO’s 10th

Ministerial Conference in Nairobi, Kenya. The WTO Ministerial Council formally adopted Afghanistan’s terms of accession.

• In January 2016, MOCI submitted the accession package to the Cabinet of

Ministers for approval.

• In February 2016, the cabinet approved Afghanistan’s accession package.

• On June 21, 2016, Afghanistan’s

Parliament ratified the WTO package.

• On June 22, 2016, President Ashraf

Ghani signed the instrument of acceptance of Afghanistan’s protocol of accession.

• On June 29, 2016, Afghanistan formally submitted the instrument of acceptance to the WTO.

• On July 29, 2016, Afghanistan became the WTO’s 164th member.

• On July 29, 2016, Afghanistan notified the WTO of its ratification of the

WTO Trade Facilitation Agreement.

AFGHANISTAN TRADE AND REVENUE PROJECT | 10

Following these meetings, ATAR supported MOCI in developing an action plan for instructing each ministry and state body to undertake priority WTO reforms that endorsed the plan and disseminated it to ministries. ATAR and MOCI followed up with the ministries to promote the implementation of action items and provide technical support.

In January 2016, MOCI submitted the package to the Cabinet of Ministers for approval.

MOCI also provided relevant ministries with a copy of the package for their review. The accession package was approved in February 2016. In the following months, ATAR arranged and participated in multiple roundtables with various ministries and government entities to prioritize and further WTO-related legislative actions.

Finally, on July 29, 2016, Afghanistan became the WTO’s 164th member. On the same day, in another significant step, the Afghan government ratified the WTO Trade

Facilitation Agreement (TFA) — which presents a framework for promoting regional reforms to facilitate trade, reduce corruption, improve transparency and private-sector participation, and strengthen transit rights — and submitted its instrument of acceptance for the TFA to WTO.

BUILDING AWARENESS AND SUPPORT FOR ACCESSION

ATAR’s WTO awareness-building activities targeted both Afghan government officials — including President

Ghani, the Cabinet, and Parliament — and the general public. For example, to increase support for completing

Afghanistan’s WTO negotiations in the new Afghan administration, ATAR drafted a one-year WTO accession campaign and public outreach program for MOCI. This included developing presentations on the impact of WTO accession on Afghanistan and recent new members; the impacts of accession on regional trade and economic relationships, including trade with Pakistan; and the responsibilities of individual ministries vis-à-vis WTO commitments. Finally, ATAR supported a series of awareness seminars targeting the Ministry of Justice, MAIL, MOPH, MOIC, MOF, the Ministry of Foreign Affairs, ACD, ANSA, the Export Promotion Agency of Afghanistan

(EPAA), and others to familiarize stakeholders with WTO agreements, principles, and rules. These seminars also covered Afghanistan’s status of accession and commitments and the benefits and implications of WTO membership for Afghanistan’s economic development and integration into the global trading system. Toward the end of 2016, ATAR partnered with MOCI to broaden the audience of the awareness campaign. ATAR presented

WTO information to 50 students and professors from Kabul University; 15 officials from the media and MOCI, ACD, and ANSA; and 10 representatives from the private sector. Finally, ATAR supported MOCI with preparing awareness briefs about the benefits of WTO membership, WTO dispute settlement, and WTO rules and commitments. This aspect of the project included supporting MOCI in developing comparative graphs that demonstrated the impact of WTO membership on economic growth and trade, foreign investment, and exports for 12 least developed countries that are WTO members.

To inform the general public of Afghanistan’s WTO accession, ATAR prepared a two-and-a-half minute video in

English, Dari, and Pashto that incorporated WTO footage taken during Afghanistan’s final Working Party meeting in Geneva and the WTO’s 10th Ministerial Conference in Nairobi. ATAR also created a 30-second television spot in Dari and Pashto that aired for several weeks on Tolo and Shamshad, two major Afghan television stations. In addition, ATAR placed a billboard on WTO accession on the road to Parliament in Kabul.

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2. SUPPORTING LEGISLATIVE REFORMS FOR ACCESSION

As part of the WTO accession process, the Afghan government was required to pass an array of legislation to conform to WTO rules. ATAR provided support on the drafting and passage of 26 key pieces of legislation, covering every aspect of a modern, vibrant trading regime — including customs reform, trade facilitation, intellectual property rights, food safety, veterinary (animal health), and standardization. This effort, led by relevant ministries at each stage, entailed significant capacity building by ATAR through on-the-job training, capacity building events, working group meetings, and roundtables and seminars to review trade-related legislation and to educate the public and private sectors. The lengthy, complex legislative process is presented in simplified form in

Exhibit 3.2 Throughout, ATAR worked with line ministries and the Ministry of Justice

(MOJ) to ensure officials’ thorough understanding of the laws and to incorporate revisions that aligned with WTO terms. For those laws that reached the level of Council

2 This chart is a greatly simplified illustration of the intricate and lengthy process of drafting and passing a law. At certain stages, relevant government bodies and private-sector representatives are invited multiple times to offer input on the draft law, or the draft law is circulated to various committees or departments within the sponsoring ministry or Ministry of Justice for review and changes.

Photo: USAID ATAR project

His Excellency Mohammad Khan, first deputy chief executive of the Government of the Islamic

Republic of Afghanistan, and WTO Director-General Roberto Azevêdo shake hands at the 10th

WTO Ministerial Conference in Nairobi, Kenya. At the conference, the WTO Ministerial Council formally adopted Afghanistan’s accession package.

AFGHANISTAN TRADE AND REVENUE PROJECT | 12

of Ministers, Cabinet, and Parliament, ATAR supported MOJ in providing explanations, clarifications, and feedback.

Due in part to

ATAR’s efforts, WTO trade-related legislation advanced rapidly ahead of

Afghanistan’s accession in July 2016.

By the end of July

2016, Afghanistan had passed 23 of the 26 pieces of legislation supported by ATAR.

Prior to accession, three legislative items remained pending: the

Procedure on

Customs Valuation, the Law on Consumer

Protection, and the

Income Tax Law.

Post-accession, ATAR continued to promote the adoption of these three items. The

Law on Consumer Protection and the Law on Income Tax were adopted on December

28, 2016 and March 18, 2017, respectively. The Procedure on Customs Valuation awaits the minister of finance’s signature. Exhibit 4 lists the reforms passed with ATAR’s support.

EXHIBIT 4. STATUS OF AFGHANISTAN’S WTO LEGISLATIVE ACTION PLAN

ATAR-SUPPORTED LEGISLATION

No. Legislation Status

Customs Valuation Agreement - Rules of Origin

1 Amendments to the 2005 Customs Law On October 25, 2016, the law was published in the official gazette.

Procedure on Customs Valuation (including interpretative notes and software and interest charge valuation)

The procedure is pending the signature of the minister of finance.

Procedure on Advance Ruling on Binding Decisions

(covering advance origin rulings)

In July 2015, the Ministry of Finance approved the procedure.

Technical Barriers to Trade

4 Law on Standards and Technical Regulations On September 20, 2016, the law was published in the official gazette.

Sanitary and Phytosanitary Measures

5 Law on Plant Protection and Quarantine On January 21, 2017, the law was published in the official gazette.

5. Presidential endorsement, or, upon president’s rejection, passage by two-thirds approval of Lower House of Parliament

4. Review and approval by Lower and Upper House of Parliament

3. Review and approval by Council of Ministers and Cabinet

2. Review and approval by Ministry of Justice

1. Draft initiated and approved by sponsoring ministry or government entity

EXHIBIT 3. AFGHANISTAN’S LEGISLATIVE PROCESS

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6 Law on Animal Health On October 11, 2016, the law was published in the official gazette.

7 Law on Food Safety On September 6, 2016, the law was published in the official gazette.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Procedure on Customs Control of Intellectual

Property Rights (Intellectual Property Border

Enforcement)

In April 2014, the minister of finance approved this procedure.

Amendments to the Law on Supporting the Rights of Inventors and Discoverers of 31 April 2009

(Patents Law)

On September 28, 2016, the law was published in the official gazette.

Amendments to the Law on Trademarks of

1 September 2009

On March 16, 2015, the law was published in the official gazette.

Amendments to the Law on Supporting the Right of

Authors, Composers, Artists, and Researchers of

26 July 2008 (Copyrights Law)

On October 15, 2016, the law was published in the official gazette.

12 Law on Geographical Indications On August 17, 2015, the law was published in the official gazette.

13 Law on Industrial Designs On August 27, 2016, the law was published in the official gazette.

Draft Amendments to the Commercial Procedure

Code

On September 6, 2016, the law was published in the official gazette.

Law on Protection of Trade and Industry Secrets

(undisclosed information)

On October 22, 2016, the law was published in the official gazette.

16 Law on Topography of Integrated Circuits On October 22, 2016, the law was published in the official gazette.

Law on Consumer Protection (provisions on Unfair

Competition)

On December 28, 2016, the law was published in the official gazette.

18 Law on Plant Variety Protection On October 11, 2016, the law was published in the official gazette.

Transparency

Amendments to the Law on Publication and

Enforcement of Legislation of 1998

On February 28, 2017, the law was published in the official gazette.

Amendments to the Regulation on Drafting

Procedure and Processing of Legal Acts

In April 13, 2016, the regulation was published in the official gazette.

Quantitative Import Restrictions, including Prohibitions, Quotas and Licensing Systems

21 Law on Foreign Trade in Goods On October 22, 2016, the law was published in the official gazette.

22 Procedure on Import and Export Licensing In July 2016, MOCI adopted the procedure.

23 Procedure on Customs Storage Fees In February 2016, Afghanistan Customs Department

(ACD) adopted the procedure.

Regulations of Production and Importation of

Medicines and Medical Equipment of 24 February

2007 (concerning fees)

On August 27, 2016, the regulations were published in the official gazette.

Income Tax Law (concerning unequal treatment of import tax)

On March 18, 2017, the law was published in the official gazette.

Anti-Dumping, Countervailing Duties, and Safeguard Regimes

Law on Safeguards Measures for Domestic

Protection

On September 28, 2016, the law was published in the official gazette.

LEGISLATIVE ITEMS NOT PREPARED WITH ATAR'S SUPPORT

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27 Value Added Tax (VAT) On April 13, 2016, the law was published in the official gazette.

28 Law on Minerals On August 16, 2014, the law was published in the official gazette.

3. SUPPORTING IMPLEMENTATION OF WTO LAWS AND COMMITMENTS

Following accession, ATAR prepared the Afghan government and the private sector for implementation of the WTO laws, specifically in the areas of intellectual property, sanitary and phytosanitary measures, customs, and safeguards. ATAR also guided ministerial officials in developing procedures and regulations as well as preparing for institutional reforms to implement WTO laws.

3.1 PROCEDURES AND REGULATIONS IN SUPPORT OF WTO LAWS

At the ministerial level, ATAR regularly trained and assisted stakeholders with developing regulations and procedures to implement WTO-related trade laws. ATAR drafted the model regulations and procedures and guided the ministerial working group in reviewing and revising the legislative items to fit Afghanistan’s specific legal framework and requirements.

Ministries are responsible for sponsoring and adopting procedures that do not proceed through a further approval process. Regulations move from the sponsoring ministry to the MOJ and then to the Council of Ministers for final approval. Exhibit 5 illustrates

ATAR’s work with the relevant ministries on regulations and procedures in support of the WTO-related trade laws.

EXHIBIT 5. ATAR-SUPPORTED REGULATIONS AND PROCEDURES

ATAR-SUPPORTED REGULATIONS AND PROCEDURES

Legislative Item Ministerial Focal

Point Status

Law on Copyrights

• Regulation on the Copyright Board MOIC Approved by the Cabinet of

Ministers on August 24, 2017

Law on Protection of Trade and Industry Secrets

• Regulation on Trade and Industry Secrets MOI Draft finalized at MOCI and submitted to MOJ

Law on Geographical Indications

• Regulation on Geographical Indications MOCI Approved on May 5, 2017

• Procedure on Geographical Indications MOCI Approved on May 5, 2017

Law on Industrial Designs

• Two Procedures on Industrial Designs MOCI Approved May 20, 2017

Law on Food Safety

• Regulation on Control of Veterinary Drug

Residues

Ministry of Public

Health (MOPH)

Draft finalized; MOPH to send to

MOJ

• Procedure in Support of Regulation on Control of Veterinary Drug Residues

MOPH

Draft finalized; submitted for approval of MOPH minister

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ATAR-SUPPORTED REGULATIONS AND PROCEDURES

Legislative Item Ministerial Focal

Point Status

• Regulation on Labeling of Pre-Packaged Food MOPH Draft finalized; MOPH to send to

MOJ

• Regulation on Labeling of Food Additives

Offered for Sale

MOPH

Draft finalized; MOPH to send to

MOJ

• Regulation on Pesticide Maximum Residue

Limits

MOPH

Draft finalized; MOPH to send to

MOJ

• Procedure in Support of Regulation on

Pesticide Maximum Residue Limits

MOPH

Draft finalized; submitted for approval of MOJ

• Regulation on Labeling of Prepackaged Food MOPH Draft finalized; MOPH to send to

MOJ

• Regulation on Reconditioning of Food MOPH Draft finalized; MOPH to send to

MOJ

• Regulation on Composite Food Safety MOPH Draft finalized; MOPH to send to

MOJ

• 15 Procedures in Support of Composite Food

Safety Regulation

MOPH

Draft finalized; submitted for approval of MOPH minister

• Regulation on the Operation of a National

Food Safety Board

MOPH

Draft finalized; MOPH to send to

MOJ

Law on Plant Protection and Quarantine

• Regulation on Plant Protection and Quarantine

Ministry of

Agriculture, Irrigation and

Livestock (MAIL)

Draft finalized by MOJ Executive

Committee and submitted to the

Council of Ministers for approval

• 20 Procedures in Support of Regulation on

Plant Protection and Quarantine

MAIL

Draft finalized and pending MAIL minister approval

Law on Animal Health

• Regulation on Administration and Organization of Animal Health Authority

MAIL

Draft finalized with Animal

Health Directorate

• Regulation on Animal Health (disease surveillance, prevention, and control)

MAIL

Draft chapter ready for review by Animal Health Directorate

• Regulation on Import and Export of Animals, Commodities and Controlled Articles

MAIL

Draft finalized with Animal

Health Directorate

• 24 Procedures in Support of Regulation of

Import and Export of Animals, Commodities and Controlled Articles

MAIL

Draft finalized with Animal

Health Directorate

• Regulation on Veterinary Diagnostic

Laboratories and the Food Safety of Primary

Animal Products

MAIL

Draft finalized with Animal

Health Directorate

• Regulation on Animal Welfare MAIL Draft chapter ready for review by Animal Health Directorate

• Regulation on the Practice of Veterinary

Medicine and Surgery

MAIL

Draft chapter ready for review by Animal Health Directorate

• Miscellaneous final clauses MAIL Draft chapter ready for review by Animal Health Directorate

Law on Safeguards

• Regulation on Safeguards MOCI Draft being reviewed by MOCI

Legal Department

• Procedure in Support of Regulation on

Safeguards

MOCI

Draft being reviewed by MOCI

Legal Department

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3.2. IMPLEMENTATION OF KEY WTO-RELATED LAWS

In addition to assisting with the development of regulations and procedures to support the gamut of laws adopted as part of the WTO accession process, ATAR provided specific support to three areas: intellectual property rights, sanitary and phyto-sanitary measures, and safeguards and countervailing duties. This included supporting institutional reforms within the Afghan government and educating private-sector stakeholders about their rights and responsibilities under the new laws. (Note that customs-related support is described under Component 3.)

3.2.A. INTELLECTUAL PROPERTY RIGHTS

The WTO Trade-Related Intellectual Property Rights (TRIPS) Agreement requires that

WTO members protect intellectual property rights. By bringing laws on intellectual property up to the standards embodied by the WTO and international agreements, Afghanistan protects innovators in the country from infringements on trademarks, patents, copyrights, and geographical indications.

Laws on Trademarks, Patents, Copyrights, and Geographic Indicators

ATAR promoted the process of trademark registration in Afghanistan, following WTO considerations, intellectual property conventions, and international best practices. In support of the implementation of the Law on Trademarks, ATAR provided on-the-job training for MOCI’s Afghanistan Commercial Business Registry for Intellectual Property

(ACBR-IP) in performing trademark functions, including examination, classification, and trademarks registration. ATAR delivered formal trademark training for ACBR-IP staff and prepared a guiding document on the automated trademark registry, including the structure and functions of the database and an operational manual, and assisted ACBR-

IP in developing awareness materials for trademark registration. There are now 18,000 registered trademarks in the MOCI database. In support of implementation of the Law on Patents, ATAR trained ACBR-IP staff private-sector stakeholders on patents examination, awareness, and registration. ATAR also provided ACBR-IP with a concept note on electronic registration of patents and awareness materials on patents.

To foster awareness of the Law on Copyrights, ATAR assisted ACBR-IP with developing informational materials, including pamphlets that explained copyrights. ATAR also conducted copyright awareness training in partnership with the MOIC for publishers, professors, academics, and other government officials. With ATAR’s support and guidance, MOIC, the Afghanistan Customs Department (ACD), the Ministry of Interior, and Attorney General’s Office agreed to improve coordination for more effective enforcement of the Law on Copyrights. ATAR assisted MOIC with finalizing a draft memorandum of understanding, outlining the duty of each relevant agency in enforcing the copyright law, to be signed among these entities. ATAR also assisted MOIC’s copyright office with preparing two forms for copyright registration — one for literary and scientific works and the other for artistic works. MOIC approved both forms, and

MOIC is expected to start the optional registration of copyrighted works in 2018.

In support of the Law on Geographical Indications, ATAR trained ACBR-IP staff on geographical indications and registrar rules and provided private-sector members with

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awareness training seminars on geographical indications. As with previous laws, ATAR supported the development of awareness materials and assisted ACBR-IP with preparing a document on the organization of the Registrar of Geographical Indications.

Intellectual Property Conventions

As part of WTO membership, Afghanistan is expected to be a party to intellectual property conventions, including the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, the

Madrid Agreement Concerning the International Registration of Marks, and the

Singapore Treaty on the Law of Trademarks. The World Intellectual Property

Organization (WIPO) administers these conventions. By the end of the project, Afghanistan had become a member of the Berne Convention, the Paris Convention, the

Madrid Agreement, and the Singapore Treaty. ATAR also began supporting MOIC to accede to two intellectual property conventions: the WIPO Copyright Treaty and the

WIPO Performances and Phonograms Treaty. MOIC established a committee to review the treaties. By the end of the project, the committee was working on a preliminary review of the translations of the WIPO Performances and Phonograms Treaty.

Afghanistan Central Business Registry-Intellectual Property

In a major step toward facilitating business in Afghanistan, the licensing department of

Afghanistan Investment Support Agency (AISA) merged with MOCI’s ACBR-IP in

September 2016 thanks to ATAR support. ATAR worked with taxation authorities to identify businesses that had not renewed their licenses in the last five years. The project identified an estimated 95,000 businesses and flagged them in the ACBR-IP system.

ATAR also worked on a new web-based trademark registration system in accordance with best practices and developed a web-based trademarks registration system for

ACBR-IP. ATAR assisted with developing procedures for trademark registration and supported ACBR-IP and MOCI in assessing $2 million worth of hardware to…