Debapriya against invoking WTO

It will be difficult for Bangladesh to protect its interests if it selectively refers to WTO provisions on freedom of transit without full understanding of the fees that a country may charge to cover the costs of providing the transit facility, a WTO expert says. From the negotiation point of view, it will not be prudent for Bangladesh to arbitrarily invoke WTO rules in transit issues, said Debapriya Bhattacharya. Debapriya, a former ambassador of Bangladesh to the WTO and currently a distinguished fellow at the Centre for Policy Dialogue (CPD), spoke to bdnews24.com in an exclusive interview. "Bangladesh-India relationship is a very sensitive one and transit facility provided to India has to be substantially profitable-economically and financially - for Bangladesh to make the initiative politically viable," he added. "It will be advisable to work out the issues bilaterally or in a sub-regional framework so as to enjoy more flexibility to maximise the economic benefits," Debapriya said. Alternatively, Bangladesh should fully and faithfully use all the rights provided to it by the WTO, he said. "Initial ambition level of economic and financial benefits should be higher for Bangladesh rather than saying transit fee will cover only so-called basic costs," he said. It is particularly confusing when Indians are on record saying that they are agreeable to pay "reasonable fees", Debapriya added. "GATT Article V on freedom of transit has been around for the last six decades, but India never invoked it to obtain transit access through Bangladesh," the former WTO ambassador said. Why did not Bangladesh also ever invoke it for obtaining transit access to Nepal and Bhutan through India, Debapriya questioned. There is no precedence that a country compels another to provide transit facility through WTO Dispute Settlement Panel to secure the service, he said. The lone case of Columbia-Panama was more about enlarging the points of entry. Incidentally, Article V does not provide an explicit definition of the term "freedom of transit", although it appears trans-shipment comes under its purview, he pointed out. "It thus leaves us to choose between an "exclusive" interpretation (transit from country A through country B to country C) and "inclusive "interpretation (transit from country A through country B to country A)," said Debapriya. If Bangladesh-India transit issue is exclusively based on WTO provisions, Bangladesh (and India) will have to extend "most favoured nation" (MFN) status to all other interested member countries of WTO without any discrimination, Debapriya said. It will imply all other countries, say Myanmar, can seek similar treatment regarding access and costs from Bangladesh to get its goods to India, he said. "The same may apply to Pakistan if it wants to send its goods through India to Bangladesh." Similarly, under "national treatment (NT)" provision, no discrimination can be made between domestic agents and the international ones in terms of access and costs. Arguably, Bangladesh will be constrained to charge higher transportation fees for "goods in transit", discriminate by origins of carriers (flags of vessel) and cause no "unnecessary delays or restrictions". This aspect may become a barrier in developing Bangladesh's trucking industry as the prime carrier of Indian transit goods, pointed out Debapriya. Basing the bilateral transit on WTO provisions would imply that for resolution of all disputes arising out of operationalisation of the facility, the relevant countries have to resort to the dispute settlement mechanism of the WTO in Geneva, he added. Traffic in transit is exempted from custom duties. However, freedom of transit does not mean 'free' transit, said Debapriya. The CPD economist pointed out the nature of charges or regulations for transit goods is set out in Paras 3-5 of GATT Article V, which indicates two kinds of charges can be imposed. The first kind relates to "transportation" and it includes tolls and road charges and the second kind relates to "administrative expenses" caused by transit or services rendered. "But these charges cannot be used for generating fiscal resources and cannot be "unreasonable" - a term open to interpretation by any WTO Member," Debapriya said.