Afghanistan

Afghanistan is a beneficiary of the EU's "Everything but Arms" (EBA) scheme for least developed countries. The World Bank considers Afghanistan a low-income economy with a per-capita income of $ 540 in 2019. Preferential imports to the European market from Afghanistan amounted to about €16 million in 2019, more than double the preferential imports of 2018.

What is the EBA?

The “Everything but Arms”(EBA) scheme is a permanent arrangement covering Least Developed Countries (LDC’s) as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products (7200 products in total) originating in LDC’s except for arms and ammunition. Different from the Standard GSP and GSP+, LDC’s are not excluded from the scheme if they benefit from other preferential arrangements.

Afghanistan flag

At a glance: EBA beneficiaries' preferential imports to the EU

group

37.17 million

Population

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Presidential Islamic Republic

Government

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3.00%

GDP Growth

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2.30%

Inflation

money

$ 19 bn

GDP

Facts about Afghanistan's economy

Fragile Country

Afghanistan is a landlocked economy with mountainous terrain and one of the poorest countries in the world. Years of conflict and the persisting political instability have left the economy highly dependent on international aid.

Export Products

Afghanistan's main export commodities originate from the agricultural sector and include dried grapes, figs, almonds, pistachios, and other nuts, saffron and onions. Afghanistan also exports lac and precious/semi-precious stones.

Trade Partners

Afghanistan's most important trading partners are neighbouring Pakistan, Iran, and China. India is the most important export market, while most imports originate from Iran, China, and Pakistan.

Economic Structure

Agriculture plays traditionally an important role for the Afghan economy, it employs the majority of the population and supplies the manufacturing sector with important inputs, such as raw cotton. The cotton textile industry is among the most important industrial sectors, together with cement, sugar, vegetable oil, soap, and shoes.

Usage of EBA Preferences

About 30% of overall imports from Afghanistan make use of EBA preferences. The preference utilisation rate, which represents the ratio of preferential imports to GSP eligible imports, currently stands at 76%.

Trade with the EU

Total trade with the EU summed up to € 325 million in 2019. With a share of 1.9%, the EU only plays a minor role in Afghanistan's trade relations.

Afghanistan and the EU

Imports from Afghanistan by product section

Imports from Afghanistan over time (in € m)

AFGHANISTAN AND THE EU’s GSP

Economic Impact

39%

More than one third of Afghanistan's exports to the EU are eligible for EBA preferences.

75.9%

Afghanistan currently has a preference utilisation rate of 75.9%

Preference utilisation and export diversification

Afghanistan's imports to the EU

Preference Utilisation vs. total eligible imports

The largest product sections under EBA

SUSTAINABLE DEVELOPMENT

As a beneficiary of the EBA scheme, Afghanistan's preferential access to the EU market is not bound to the ratification of international conventions. Nonetheless, Afghanistan has a good level of ratification of international conventions. The country has ratified all 7 fundamental conventions on human rights and 5 of the 8 core conventions on labour standards. In addition, Afghanistan 8 conventions on environmental protection and 4 good governance conventions.

Core international conventions on human rights and labour standards

Ratified

  • Convention on the Prevention and Punishment of the Crime of Genocide (1948)
  • International Convention on the Elimination of All Forms of Racial Discrimination (1969)
  • International Covenant on Civil and Political Rights (1976)
  • International Covenant on Economic Social and Cultural Rights (1976)
  • Convention on the Elimination of All Forms of Discrimination Against Women (1981)
  • Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
  • Convention on the Rights of the Child (1990)
  • Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
  • Convention concerning the Abolition of Forced Labour, No 105 (1957)
  • Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
  • Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
  • Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Not Ratified

  • Convention concerning Forced or Compulsory Labour, No 29 (1930)
  • Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
  • Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)

Additional Conventions

  • Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
  • Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
  • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
  • Convention on Biological Diversity (1992)
  • The United Nations Framework Convention on Climate Change (1992)
  • Cartagena Protocol on Biosafety (2000)
  • Stockholm Convention on persistent Organic Pollutants (2001)
  • Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
  • United Nations Single Convention on Narcotic Drugs (1961)
  • United Nations Convention on Psychotropic Substances (1971)
  • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
  • United Nations Convention against Corruption (2004)

EU-Afghanistan Bilateral Development Assistance

€ 1.4 billion

Throughout the period 2014-2020, the EU supported Afghanistan with a budget of €1.4 billion, which madeAfghanistan the largest recipient of bilateral development aid among all GSP beneficiaries. Focal areas included sustainable economic development, poverty reduction, governance, peace and security. More particularly the EU supported Afghanistan to foster small and medium enterprises, promote rural development, improve the quality of basic social services, enhance the quality of the health sector, increase domestic accountability, and improve the effectiveness of institutions.

Opportunities in Afghanistan

  • Recent effort by the government to improve the business climate, including for instance facilitating the process of starting a business, applying for credits, and a reformed insolvency law

Most recent events

Date Event

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