SINCE the independence. Bangladesh has had an increasingly unfavourable balance of trade with India. Instead of being narrowed down, the trade gap has been persistently widening at a very alarming Me In recent years.

Export to India sharply declined from 40 million US dollars In 1984-85 to a paltry amount of 8 million US dollars In 1991-92 and also in 1992-93. and then increased to 21 million in 1993-94 and 28.6 million dollars In 1994-95. which is still lower than that of 1984-85. Export during the period declined by 28.5 per cent. On the other hand, imports from India registered a sharp and constant increase from 67 million in 1984-85 to 414 million dollars in 1993 94. and to 676 million dollars in 1994-95. Import during the period Increased by 966.27 per cent. Consequently the trade gap widened from 27 million dollars in 1984-85 to 393 million in 1993-94 and to 647.4 million in 1994 95

It will not be out of place to examine here the Indian import policy India has always been following a strict protectionist Import policy. According to the Indian import policy. "All consumer goods how ever described, of Industrial, agricultural, mineral or anl mal origin, whether in SKD/CKD condition or readv to assemble sets or in finished form* are 'not permitted to be imported except against a licence or in accordance with a public notice Issued in this behalf

Besides, the following

goods are also included in the list of consumer goods: consumer electric goods, equipment and systems: consumer telecommunications equipment; watch, in SKD/CKP assembled condition

eases, watch dials: eottoL woolen silk and blended tabi-rics including cotton"terry . towel fabrics; concentrates of alcoholic beverages; wine, saffron, cloves, cinnamon and cassia.

High tariff on Indian imports and high tariff value fixed on Indian Imports, which in many cases are actually higher than CIF cost also have seriously limited our exports to India. As a result. Bangladesh s exports to India seriously declined from 40 million dollars in 1984-85 to 8 million dollars in 1991 92 and also in 1992 93

On the other hand, we have been following a liberal Import policy, which in fact started in 1985 86 when, for the first time, goods outside the control list of the Import Policy were made freely Importable Con sequently. imports from India Increased from 67 million dol lars in 1984-85 to 181 million in 1990-91 To worsen the sit uation. a vigorous • attempt was made to further liberalise our Imports by drastically reducing the number ot items on the control list from 329 HS code headings in our Import Policy of 1989 91 to 203 in the Import Policy of 1991 93 and further to 114 in the Import Policy of 1993-95 As a result the Indian imports sky-rock eted both absolutely and rela lively, widening further the trade gap between India and

Bangladesh to 647.4 million dollars in 1994-95.

Due to drastic liberalisa-Jlqn. of trade since 1991-92, the additional increase in imports ■ from India was 49.71. mUlion dollars in 1991-92.J ,140.78 rntfiion in 1992-93. 192.85 million in 1993-94 and 434.92 million dollars in 1994-95. The additional increases in the coming years are likely to be much more if the unbridled trade liberalisation continues in the future.

The massive Indian Imports have not only widened our trade gap with India, it has been one of the main causes which have seriously affected our indigenous Industries, a number of which have already been closed down, causing a significant reduction in the number of jobs.

Consequently, production in a number of Indigenous Industries has alarmingly fallen.

Recently 73 consumer goods have been placed on the free list under the Indian Import policy, the effect on our exports is yet to be seen. However it may be noted that even among 73 items placed on the free list, some are commercially insignificant.

Even the present Import policy of India will not be able to boost Bangladesh's exports to India to a remarkable extent

US-Japan trade war

in this context. It will be Interesting to discuss the recent trade war between US

and Japan. Currently, the US has a 60 billion dollar trade deficit with Japan. In order to narrow the trade gap. the US wanted Japan to open its market to US made car and auto parts, a sector that accounts for nearly two-thirds of the US deficit with Japan. A series of trade talks were held between the two countries in which the US pressed for accords that Included ways of measuring progress in opening Japan's markets. But the Japanese insisted that they would never agree to numerical targets as II tantamounts to managed trade. Being frustrated after prolonged talks which failed to yield a deal, the US threatened to impose sanctions which included 100 per cent import tariffs on 13 luxury Japanese car models if no accord was reached by June 28. 1995.

However, on June 18. 1995 a car trade deal was concluded. Though the deal set no specific numerical targets, it acceded to US demands for better access to Japan's market for cars and car parts. Under the deal. Japanese regulations that kept many US-built replacement autoparts out of its market are to be reformed Japan will loosen the rules governing repair work that Is now largely in a network of garages tied to the Japanese car makers. US auto companies will gain greater access to auto dealership tn Japan. American negotiators predict US auto companies could open 200 new outlets in Japan by 1996 and the nam-

ber will rise to 1000 new outlets by 2000.

In view of the recently con-< hided auto-trade pact be-i ween the US and Japan, the following suggestions can be

made to narrow the trade gap between Bangladesh and India:

a) India must open its market for Bangladeshi ex portable goods. For this, all our exportable goods should be placed on the free-list of the Indian import policy. Be sides. Indian tariff on our ex portable goods should be re duced to zero and 5 per cent Again. Indian tariff value fixed on Its imports should in no case exceed the respective CIF value.

b) In order to reduce the huge trade gap. India should Increase purchase of our ex portable goods through the State Trading Corporation of India Ministry of Commerce and Export Promotion Bureau should chalk out a list of our exportable goods for the pur pose. Besides, big Indian companies should be eocour aged to purchase goods from Bangladesh

c) Bangladesh Government should carefully monitor the implementation of the above measures A detailed package should provide a variety of ways to measure success In increasing exports to India The Ministry of Commerc e Export Promotion Bureau and Bangladesh Bank should join

hands to collect sales information.

d) Barter trade between India and Bangladesh should be encouraged. Barter and counter-trade appear to be on

I he Increase In the world economy, a consequence of increased trade between the former Eastern bloc countries and developed nations, according to the US-based International Trade Commls slon

If the above measures are not acceptable to India or measures acceptable are not enough to narrow the trade I gap sufficiently then the following additional measures should be taken:

Imports from India, of all consumer goods, raw materl , als and capital goods which | Bangladesh is producing or Is capable of producing and all 1 luxury and non essential goods should be strictly re stricted; 100 per cent punitive tariff should be imposed on all Indian Imports of essential consumer goods not produced ' in our country. Imports from India, of raw material and capital goods not produced In Bangladesh should be made under barter and counter I trade system, and Instead of depending heavily on India for Its goods, a vigorous attempt should be made to diversify Bangladesh’s, import trade

The writer Is former Collec lor oj Customs