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Reducing non-tariff barriers the key

ANM NURUL HAQUE
THE Bangladesh-India Joint Working Group meeting ended on August 2 with the two sides signing a 13-page agreement. The joint working group had met to discuss bilateral trade issues with particular emphasis on eliminating non-tariff barriers. other important issues discussed in the meeting were problems relating to banking, land port, and infrastructure. But the meeting ended with only meagre progress on resolving a good number of negotiable trade issues, as both sides passed those on to the respective agencies to deal with.
The meeting delegated authority to the respective customs authorities to negotiate and resolve customs related issues including the non-tariff barriers. The two teams also discussed some functional problems, including pre-shipment inspection, standards and testing, and product-to-product non-tariff barriers. It was decided that a joint team comprising officials of the Bangladesh Standards and Testing Institution (BSTI) and Bureau of Indian Standards (BIS) will be formed to scrutinise the ten Bangladeshi testing laboratories to recognise them for certification.
Bangladesh has long complained against the non-tariff barriers put up by the Indian government under various pretexts. India has imposed non-tariff restrictions on Bangladesh export items which include biscuits, jam, jelly, fruit juice, soft beverage, vegetables, Jamdani saree, jute, jute goods, and cement. India also imposed anti-dumping duty on our dry cell battery exports. on the other hand, India has given duty free access to some Bangladeshi products which the country does not produce for export.
Non-tariff barriers imposed by India on importing food items from Bangladesh have resulted in unnecessary delay in shipment of Bangladesh products to the Indian market and also harassment to the exporters. In view of the hurdles created by the Indian government in the name of adulteration test of export items, the commerce ministry had asked the International Trade organisation (ITo) cell to pursue the Indian authorities to resolve the longstanding problem. The ITo is assigned to settle such issues through the existing joint working group, which generally does not meet more than once a year. Similarly, harassment of Bangladeshi exporters in the name of technical standards and
regulations has also been a common phenomenon when exporting any product to India. But the Bangladesh-India Joint Working Group has made little progress on resolving these negotiable trade issues.
Bangladesh, which has a small export-basket, has been perusing India for the last several years for unhindered market access for our products. Bangladesh claims that the trade relationship between the two countries has not been fair and equitable, for which trade balance remains overwhelmingly in favour of India. The decision reached at the end of a crucial round of Joint Economic Commission (JEC) meetings held in July 2003 fell short of India showing a give-and-take attitude. India agreed earlier to offer duty free access to 40 Bangladeshi products under 16 categories which was apparently linked to the Indian demand for lifting the ban on import of yarn and sugar through overland routes. Bangladesh has had bilateral talks at the official, ministerial, and Prime Ministerial level for quite a few years now, where among other things the question of offering duty-free access for 191 products under 25 categories from Bangladesh figured routinely.
The existing trade deficit with India is really a matter of great concern for Bangladesh. Bangladesh exported goods worth $50.280 million to India in the fiscal year 2001-02 and imported goods worth $1010.605 million -- a deficit of $960.325 million with India. During the fiscal year 2002-03 Bangladesh's import from India stood at $940 million against India's import from Bangladesh of around $50 million only. Bangladesh imported goods worth $1600.00 million from India in the fiscal year 2003-04 while exporting goods worth only $90 million to India -- a deficit of $1510.00 million. The trade deficit with India can thus be seen to be increasing by leaps and bounds with the passing of every year, and stands now at $1.66 billion. The trade gap with India would be much higher (probably more than double) if the unofficial trade is accounted for. There is no denying that the existing situation in not at all condu-
cive to a viable economic cooperative relationship with India as the quantum of export from Bangladesh is only five percent of the total official trade between the two countries.
Bangladesh has sought unilateral free trade access of its products to the Indian market, particularly in the North-East Indian states, for six months as a test case to see if Dhaka would benefit from it. Bangladesh has also sought creation of a permanent trade mission in Guwahati, the capital of Assam, and opening of some new air routes to India. But India has not agreed with these proposals of Bangladesh. A joint market survey undertaken by the Metropolitan Chamber of Commerce and Industry (MCCI) and the Confederation of Indian Industry (CII) a couple of years ago revealed that there was good demand for our products in India. But tariff and nontariff barriers imposed by India are obstacles to the growth of Bangladesh's exports.
The Bangladesh-India trade talks at ministerial level held in New Delhi in November 2004, also resolved to reduce the whopping trade deficit. The commerce minister of India Kamal Nath assured his Bangladeshi counterpart Altaf Hossain that "necessary measures" would be taken by February 2005 to eliminate trade barriers. But the time-frame was nothing but rhetoric as no progress has so far been made to eliminate the trade barriers for meaningful access of Bangladesh products to Indian markets.
Indian External Affairs Minister K. Natwar Singh, who visited Bangladesh recently, proposed a bilateral free trade agreement between Bangladesh and India. But Finance and Planning Minister M. Saifur Rahman ruled out the proposal of FTA with India. A high profile civil society forum of India also felt that trade balance and gains of business will be satisfactory for Bangladesh if a free trade agreement is implemented. A 14-member Indian delegate recently visited Bangladesh to participate in a dialogue jointly organised by the Centre for Policy Dialogue of Bangladesh and the Indian International Centre, focusing on trade and commerce.
The fate of the proposed bilateral free trade agreements (FTAs) with neighbouring India, Pakistan, and Sri Lanka is still hanging in the balance, as the government of Bangladesh in a major policy shift, is now attaching more priority to regional economic and trade groupings like Safta and Bimstec. The governments of Bangladesh, India, Pakistan, and Sri Lanka earlier, in principle, agreed to sign FTAs among themselves after holding a series of bilateral meetings in a bid to enhance regional economic and trade relations. Bangladesh in recent days has realised the potentiality that the new trading blocs like Safta and Bimstec offer and will not speed up the pace of bilateral trade negotiations in the South Asian region before formal inception of Safta.
The volume of trade between Bangladesh and India has increased manifold since the independence of the country and stands now at $2 billion a year. India is a huge market and its economy is also very large. Without India agreeing to open her vast market to her small neighbour, Bangladesh's huge and growing trade deficit with India would in no way be corrected even to any reasonable extent. The commerce minister of India while attending the World Trade organisation (WTo) meeting in China in July announced that his country would soon allow duty-free entry of goods from the least developed countries (LDCs).
As an LDC, Bangladesh has reason to claim preferential treatment from India under WTo rules. But in the event that non-tariff and para-tariff barriers exist, the LDCs, including Bangladesh, have little chance of benefiting from duty-free access of their goods to Indian market. So now is the time for India to eliminate the non-tariff barriers and allow 25 categories of Bangladeshi products in the Indian market on zero tariff basis to help reduce the huge trade deficit. This is crucial for Bangladesh-India trade relations.