'There is no magic switch that can be turned on to begin transit.'

Prime Minister's Adviser for International Affairs Gowher Rizvi talks with Rifat Munim of The Daily Star about the "trial transit" and other related issues.

The Daily Star (DS): The consignments, transported through Ashuganj river port and Akhaura land port, are identified as "transit and transhipment goods" instead of a "trial transit." This revelation has led many to term it a surreptitious deal without going public. What is your take on this?
Gowher Rizvi (GR): The idea that the government has opened up "transit and transhipment" via Ashuganj and Akhaura surreptitiously without going public is preposterous and misleading. I have repeatedly pointed out that "transit" of Indian goods through Bangladesh is not a new phenomenon. The 1972 Inland Water Treaty Agreement had clearly provided for multi-modal transhipment. The agreement was also signalled in the 1974 Indira-Mujib agreement; and subsequently reiterated by General Zia. It has remained in effect and none of the governments -- military, BNP or Jatiya Party -- have ever rescinded or terminated it. It is true that the agreement has largely remained dormant for a whole host of reasons, including inadequate transport infrastructure and less than cordial relations between the two countries, for long periods of time. Recently, two or three shipments that have arrived in Ashuganj are intended as "trial runs" to see how things work in practice, to iron out wrinkles and to address administrative and logistical arrangements.

DS: Despite submission of the government core committee report, nothing has been decided yet about transit fee vis-a-vis invocation of the WTO rules. Added to this is our poor infrastructural condition. Against this backdrop, do you think we are ready yet to allow transit at the moment, whether trial or regularised?
GR: Indeed the core committee has submitted its report to the government, which is being examined now by the relevant ministries and committees. Determining the tariff rates is a hugely complicated process in which many factors have to be taken into account, detailed calculations have to be done, lessons have to drawn from the experiences of other countries, and multiple assumptions and scenarios have to be tested as hard data is not available. It is extremely important to get this right to the extent possible otherwise there is a distinct danger that we might either price it too low or price it too prohibitively high to price ourselves out of the market. It is better to take time rather than rushing merely because of the media hype.
As new routes and ports are opened up to traffic we will need to work a "protocol or agreement" that will spell out the modus operandi -- the terms and conditions for the use of our facilities, the usage fee to be paid and any restrictions that we may wish to impose on the use of our infrastructure.
It is obvious that our infrastructure -- rail, river and road -- are not sufficiently well developed and in some places non-existent. We have to take into account not only how much traffic our communications infrastructure can take but also investments that will be needed to make it fully functional to handle the increasing volume of traffic. It is for these reasons that the government has decided to focus first on rivers and subsequently on the roads. A new railway line is being built to connect Akhaura to Agartala -- entirely paid for by India -- to carry the goods by train so that our roads are not overcrowded. All this will take time and will happen gradually. There is no magic switch that can be turned on to begin "transit." It also stands to reason that the volume of traffic will increase only as our infrastructure improves. We will also perhaps do well to remember that most of the ships and trucks -- in fact well over 95% -- used in the transhipment of Indian goods belong to Bangladesh entrepreneurs and are earning handsome revenue.

DS: There is a speculation that transit facility to Northeast India will destroy Bangladesh's market there. What do you think about this?
GR: This is a very myopic view that lacks imagination and understanding of the full picture. Bangladesh enjoys advantage of geographic proximity to the Northeast of India and will continue to do so even when Indian goods are allowed to go through Bangladesh. Moreover, trade is based on competition. It might be good to remind ourselves that because our ready-made garments are competitive we can ship them to Europe and North America and earn large profit despite worldwide competition. The same applies to our manufactures being exported to the Northeast.
There is a much weightier argument that is lost in the public discourse. The market in the Northeast is small and only a fraction of the larger Indian market of over one billion people in India. Now that we have access to the whole of the Indian market, it does not make much sense to worry about a small part of the whole. With the recent removal of duties on the additional 46 items of exports to India, nearly 98% of our actual exports to India is now duty free. According to a recent statement by FBCCI president our export of garments to India over the next couple of years will exceed $2 billion. I suggest we remain focused on the entire market that is now open to us.

DS: Many experts argue that if WTO rules are invoked, then any additional cost required to build up the infrastructure should be funded by the beneficiary country under WTO Aid for Trade scheme. What is India's stance about this?
GR: I am not aware of India's stance -- it is a question best posed to them. However, I find your question fundamentally muddled. Do you mean to imply that the communication infrastructure is only for Indian use? Besides, as I have already stated earlier, in calculating the transit charges the core committee has already factored in the cost of infrastructure building and the returns necessary to cover the cost of investment. It is my firm conviction that if we can price the cost of usage of our infrastructure correctly we should be able to recover the entire investment in less then 12 years.

DS: Thank you.