Transit: an explainer

Bangladesh cannot charge any fee for giving the right of transit and transshipment to other countries, but can collect other service charges and administrative costs in line with the World Trade Organisation (WTO) rules, experts said yesterday.
According to international practices, Bangladesh will receive service charges for across-the-country transports along with different regular service charges such as administrative costs, port use costs, health and environment costs, noise pollution costs, infrastructure development costs and others, they added.
International practices make it mandatory for a country to provide transit and transshipment facilities to another country if it is disadvantaged and landlocked.
The transit providing country needs to develop infrastructure, recruit extra staffers and develop ports to help deliver the additional services, they said.
Transit is the movement of passengers or goods on the way to a destination and transshipment is transfer of a shipment from one carrier, or more commonly, from one vessel to another.
"No country can collect fees only for giving the right of transit and transshipment; it is the violation of international norms. But all other appropriate charges are applicable," said Ahsan H Mansur, executive director of the Policy Research Institute (PRI).
"According to the international norms, one country should not exploit the disadvantages of other people. This is why the question of transit and transshipment comes."
He said the north-eastern region of India is landlocked and in a disadvantageous position.
Bangladesh can collect administrative and other expenses from Indian vehicles and vessels for using its territory, he added. "The country can be benefited indirectly."
Manzur Ahmed, an adviser to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said collecting fees in exchange of services is a global practice in case of providing the transit and transshipment facilities.
The WTO rules clearly define how a country can collect fees from transit and transshipment, he said.
The same rules will be applicable for India, although it is a single country business, he added.
Ahmed said, according to international rules, it is mandatory if a landlocked country demands transit and transshipment facilities through the territory of another country.
Syed Saifuddin Hossain, a senior research fellow of Centre for Policy Dialogue (CPD), said no country can collect fees only for giving the transit right.
For example, he said the Switzerland government collects infrastructure charges, administrative costs and other charges for transit and transshipment.
Similarly, the Tanzanian government collects fees from the Dar es Salaam corridor users, he said.
According to General Agreement on Tariffs and Trade (GATT), a country cannot deny transit facility if another country wants to carry goods through its territory, Hossain said.
In this case, no country can collect transit fees or make unnecessary delay, except those of transport and other administrative costs.
The GATT also states that all charges and regulations imposed by the contracting parties should be reasonable.
Recently, comments from a senior adviser to the prime minister created buzz in newspapers.
Prime Minister's Economic Adviser Mashiur Rahman had termed collection of fees from transit and transshipment as "uncivilised and illiterate".

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