A proposed MoU sent by Delhi on steady supply of some key essential commodities lacks governmental guarantee of delivery to Bangladesh by neighbouring India and prices quoted high above their domestic rates, officials say.
Among the downside issues detected so far is that the draft is not entitled Government-to-Government arrangement, but carries government assertion on unfailing payments to the exporters.
As such, the government authorities here are preparing to send a request for a rejig of the memorandum of understanding to be signed.
Bangladesh Trade and Tariff Commission (BTTC) has made some observations that include the points regarding issues as per request from commerce ministry.
Recently, the ministry received the draft memorandum of understanding or MoU from the neighbouring country, a major source of supplies when needed to supplement local requirements and tame price rises.
According to the agreed minutes of the 15th India-Bangladesh Joint Working Group discussion held on September 26-27 in 2023 about the supply of essential commodities from India to Bangladesh this deal-making is underway.
In the meeting, the Bangladesh side raised the issue of imposition of minimum export price of U$ 850 per metric tonne whereas local price was US$ 250-280 per MT, export ban and 40-percent export duty on onion in-between 2019 and 2023 and the imposition of export quota and 20-percent export duty on sugar. The draft deal (MoU) does not reflect any solution to these issues.
It appears that the text spells out procedural aspects of exporting food and agricultural commodities. It does not make any promise to supply essential commodities, when needed most. "Obligations of Indian side are not clear from the draft text," says a scrutiny report.
The clause 15 of the draft clearly states that the Indian government is not a party to the MoU and does not have any obligation whatsoever.
"The entirety of the MoU is intended to ensure smooth payment for export proceeds of Indian counterpart. It is not clear what kinds of benefit/privileges are offered to Foreign Importer (Bangladeshi Agency like TCB)," says one commerce official in Dhaka. In this context, "The MoU does not bear the status of Government-to-Government (G2G) MoU," the BTTC viewed.
In the December 2022 Indo-Bangla commerce-ministerial meeting, Dhaka proposed a quota of 4.5 million tonnes of wheat, 2.0 million tonnes of rice, 1.5 million tonnes of sugar, 0.7 million tonnes of onions, 0.125 million tonnes of ginger, 30,000 tonnes of lentils and 10,000 tonnes of garlic.
Later on, Bangladesh placed a revised quota of such key essentials several times.
India is one of the major sources of essential commodities imported by Bangladesh from the world market. As the essential commodities are agricultural products, importing those from India is advantageous because of geographical proximity, a source says.
He also says export restrictions, either by export ban, quota or imposition of export tariff, causes disruption to supply chain as well as cause price hike in Bangladesh. Bangladesh brings the issue of ensuring steady supply of essential commodities as one of the prioritized negotiation points in different levels of bilateral talks between two countries.
The MoU is designed to be signed between importing agencies (TCB) and exporting agencies of Bangladesh and India respectively. The exporting agency may not be competent enough to overrule the regulatory orders of imposing export ban, export quota or export tariffs. If not, the purpose of such MoU may not be served.
Alternatively, if the MoU is signed between the responsible ministries of both countries-whatever be the name-the deal will be more authoritative.
The state agency believes that the text of the MoU is drafted as a model or template, not drafted specifically for Bangladesh. "So, it is important to scrutinize the texts carefully and replace some words with appropriate words that best accommodate Bangladesh's perspective."
Clause 10 of the draft MoU spells out the dispute -settlement mechanism. The draft mentions two exhaustive ways of dispute settlement -mutual consultations and through the Arbitration and Conciliation Act 1996 of India. The MoU is said to be governed exclusively by Indian laws.
There are two points of concern in the clause. Firstly, the document is going to be an MoU and not an agreement. Generally, MoUs are non-binding written records of an understanding between two or more parties-although exceptions are also observed.
In addition to dispute -settlement clause, the draft contains confidentiality clause (clause 16). These are elements of an agreement or formal contract. So, the government may consider the draft as an international contract, not an agreement.
Secondly, if the MoU is governed by Indian laws and arbitration takes place as per Indian law in India, there may be scope of partiality in judgments.
"We are working on the issue. The NBR and the BTTC have sent their opinions regarding the matter. We will take next course of action on the issues," says a senior official of the commerce ministry.
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