Bangladesh-India trade talks
BANGLADESH and India held two-day trade talks on 12th March to review the current status of bilateral trade and discuss measures to remove the bottlenecks for promotion of trade between the two countries.
This has been the 9th round of talks at the official level under the framework of the bilateral trade agreement. The last meeting was held in New Delhi in June 2013.
Trade deficit for Bangladesh with India is huge. It is no more an economic issue but has turned into a political one in the country.
During 2012-13, Bangladesh imported goods worth $4.2 billion in official channel, while Bangladesh could only export goods worth about $563 million. In addition, unofficial imports from India are reportedly about 1.5 times more than official imports.
Item-wise break-up of Bangladeshi exports to India reveal that textile fibres, paper yarn, and woven fabric ( 23.74 percent), followed by man-made textile articles,(13.8 percent), edible fruit, nuts, (11.9 percent), articles of apparel, accessories (10.79 percent), cotton (4.58 percent) and copper and copper articles (4.37 percent).
While statistics show on average, Bangladesh imports from India more than 35% intermediate goods, a little over 30% final consumer goods, 15% basic raw materials and more than 10% capital goods of total imports
It is common knowledge that apart from inadequate border infrastructure on trade, tariff and non-tariff barriers impede the growth of trade from Bangladesh to India.
Given the above context, Paragraph 33 of the Joint Communique released after the Bangladesh Prime Minister's visit in January 2010 states clearly: “ With a view to encouraging imports from Bangladesh, both countries agreed to address removal of tariff and non-tariff barriers and port restrictions and facilitate movement of containerized cargo by rail and water.”
Although India has granted Bangladesh duty-free access to all items except tobacco and liquor, there exists reportedly several types of local duties (countervailing duty on the assessable value is 8 per cent, special additional duty is 4 per cent, secondary education cess is 2 per cent and higher education cess is 1 per cent). Altogether it comes to around 15 per cent and this discourages exports from Bangladesh to India.
Researchers in both countries have found that Bangladesh has a potential export market of $2 billion in India. However, the slow growth of Bangladesh's exports is for the following reasons among others:
Harsh testing requirements, complex harmonized code classification, and special labeling requirements and technical standards.,
Non-tariff measures are turned into non-tariff barriers while complying with sanitary and phyto-sanitary measures and technical barriers to trade.
Poor logistics for land ports, only certain commodities can pass through land ports, cumbersome customs requirements, manual clearance, excessive inspection as an excuse for security, no customs cooperation or joint inspection, lack of warehouse facilities in many land ports, and no testing facility nearby in any land port.
Non-acceptance of test certificates issued by Bangladesh Laboratory for certain products like soap, Jamdani saree, RMG and food products. In the absence of testing facilities in the locality, the samples are sent to far away laboratories (even to Chennai
Lack of banking services in border areas hampers the trade.
Some researchers have suggested to increase imports from Bangladesh, some steps such as, (a) India should recognise the principle of asymmetry and non-reciprocity in trade with Bangladesh, (b) there should be guaranteed market access of Bangladeshi products to India (liberal rules of origin,) (c) no tariff and non-tariff barriers and (d) export quality Bangladeshi products should not be in India's negative list, These measures will hardly dent India's large economy or market.
Furthermore, joint ventures at the private sectors level for local, regional and global markets, trade complementariness can be developed by vertical specialisation through production sharing, and gradual integration of Bangladesh's economy with that of northeastern states of India. For improvement of business cooperation, India -Bangladesh may sign an Investment Promotion and Protection Agreement and Double Taxation Avoidance Agreement
Another fact is that although Bangladesh runs trade deficits with China more than those of India, it does not get attention of the people because the issue is being looked at from perspective of bilateral relations.
Political and economic relations are interdependent and in most cases political relations fostered by mutual trust and confidence tend to promote close economic relations.
The public perception in the country is that India remains unresponsive to resolving core prickly issues which affect directly people, such as, water sharing of the Teesta river, ratification of land boundary agreement and continued abduction/ killing of Bangladeshis by BSF at the border.
Finally, there has been a clear commitment at the highest political level of both countries to remove tariff and non-tariff barriers for Bangladesh. . The sooner the agreement is translated into concrete result, the better will be the trade acceleration from Bangladesh for mutual benefits.
The writer is Former Bangladesh Ambassador to the UN, Geneva.
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