Expediting regional trade
Thursday, 29 April 2010
Manzur Ahmed
The Bangladesh-India summit held in January, 2010 has generated a great momentum and huge opportunity to strengthen and promote our trade and economic relations for mutual benefit. The two prime ministers agreed to put in place a comprehensive framework of cooperation for development between the two countries, encapsulating their mutually shared vision for the future, which would include, among others, cooperation in mutual trade and investment, water resources, power, transportation and connectivity, tourism and education. They agreed on the need to operationalise the various areas of cooperation at the earliest.
Terms of implementation of the summit commitments
1. Market access: India should extend and notify an early-harvest free trade package and grant duty and para-tariffs free market access to Bangladesh on India-Sri Lanka BFTA and SAFTA plus terms with greater flexibility and longer transition period for Bangladesh. Bangladesh should also reduce its Tariff infavour of India as per SAFTA tariff reduction schedule + 1% per annum. As for administrative mechanism for Rules of Origin, trade remedy measures, dispute settlement mechanism, provisions of SAFTA should be followed.
Dhaka has recently sought duty-free facility for 61 more items which include, among others, edible grade soybean oil, refined palm oil/palmolein, aviation turbine fuel and fuel oil. But edible grade soybean oil, refined palm oil/palmolein, aviation turbine fuel and fuel oil must be excluded from the list because all these are import based essential commodities for local consumption and not meant for export.
2. Services Trade: In terms of approach to liberalization of services following a positive list approach may best serve the purpose and undertake to progressive and sequential liberalization. We should also agree on some mutually beneficial priority sectors to liberalize forthwith. However the best and most prudent option is to liberalize Services Trade on MFN basis.
3. Investment: Bangladesh has a very liberal investment policy regime. We have a very large amount of Indian and US investment in Bangladesh spreading over many sectors including public procurement. However, Bangladesh need to develop sectoral domestic regulations, terms of investment and regulatory framework. In these respect Indian experience, expertise and practices can immensely benefit us. Bangladesh India Investment Agreement signed recently would enable Bangladesh to take full advantage of free trade with India. India is a country with exportable capital surplus and could play a major role in fostering investments in Bangladesh with buy back arrangements. The terms of investment should be without prejudice to the rights and obligations under the WTO Agreements and SDT provisions including GATS LDC Modalities.
4. Mutual Recognition Agreements: Technical Regulations and Standards: The bilateral trade regime should ensure harmonization of TBT and SPS measures and signing of MRA to streamline flow of traded goods.
Mutual recognition of testing laboratories: Certificates on Technical Regulations & Standards issued by the respective designated national bodies should be accepted. In order to ensure quality of traded commodities including Cement, Ceramics, Pharmaceutical, Foods, Jute and Leather products, Cosmetics & Toiletries and other priorities, there should be plans to set up Bangladesh-India joint venture accredited testing labs in Bangladesh. Non-acceptability of conformity assessment certificates of any particular product, if and when arise, should be resolved by mutual cooperation programmes without restricting its trade. Technical and financial assistance must be ensured for capacity building in this regard.
Accredited bodies/agencies of India may set up accreditation centers in collaboration with designated national agency of Bangladesh on a BOOT basis to facilitate mutual cooperation with necessary capacity building technical and financial assistance.
It is recommended that institutional arrangements are made (i) for expeditious action on conclusion of agreements on mutual recognition of standards, testing and measurements with a view to facilitating intra-regional trade; (ii) for organising on regular training & workshop for enhancement of skills in the area of accreditation and quality management; and (iii) to organise awareness and capacity building activities on regular basis for officials, board members, assessors & other professionals, CEOs including infrastructure, management and capacity development of laboratories, CBs and other quality management bodies
5. One of the most crucial areas where bilateral trade regime should concentrate is how best to address the prevailing barriers emerging out of non-tariff and para-tariff measures. To ensure level playing field for fair and seamless transaction of goods the following policy measures should be implemented in right earnest.
NTMs & PTMs: NTMs and PTMs not notified in WTO should be prohibited. A code of good practice should be followed before introduction of any new NTMs. Joint councils should resolve the issues on NTMs and PTMs annually within specified and bound time frame.
Customs Clearance: Value of imported products should be assessed only on the basis of WTO Customs Valuation Agreement. The practice of Indian Customs to determine the Assessable Value of the imported product by fixing 35% abatement on Retail Sales Price and or on the basis of pre-fixed Tariff Value is in violation of transaction value as prescribed in WTO Customs Valuation Agreement. Fixing and printing 'Retail Sales Price' of the exported product to be sold in the importing country is an internal taxation measure and should be dealt with accordingly at the local marketing level.
Import licensing: Both the countries should adopt and notify non-restrictive, locally administered, automatic and transparent import licensing procedures for mutual trade by an end date (Instead of Kolkata handling import licensing for Tripura licensing office should be opened in Agartala).
National treatment should be accorded to all products, including jute goods jute bags, in respect of registration, packaging & labeling and testing requirements along with charges and fees thereof. Fees levied must only be on the cost of services rendered and shall not be used for fiscal purposes or as protection to domestic products. Fees levied should only be on mfn basis and relate to the cost of services rendered and shall not be used for fiscal purposes or as protection to domestic products.
Transit-Transshipment and movement of vehicles through the territory of the second country to a third country, as per GATT Article V, should be ensured to facilitate India-Bangladesh-Nepal-Bhutan trade and beyond. Appropriate protocol with regulations on fees and charges with harmonized and simplified customs procedures should be made operational to expedite third country transit facilitating movement of goods and vehicles through the territories of India-Bangladesh-Nepal- Bhutan and beyond.
Trade facilitation: The following trade facilitation measures should be implemented to ensure enabling trade policy and governance for smooth and speedy movement of goods across the borders:
l Harmonization of cross-border trade regulations and documents by an end date.
l A SAARC Harmonized Tariff Nomenclature at 8-digit level should be created based on the Harmonized Commodity Description and Coding Systems (HS) of the World Customs Organisation by an end date
l Online publication in the designated focal point website of relevant trade regulations and procedures, including packaging & labeling requirements, fees and charges, in English. by an end date.
l Simplification of Customs procedures aimed at cutting the time taken and cost of transactions at each customs point. Regional customs action plan should be implemented by an end date.
l An effective appeal procedure for Customs and other Agencies rulings must be in place before an end date
l Transport and communications infrastructures, port and warehousing facilities should be developed to benchmark levels within specified time frames.
l Compliance of Articles V, VIII and X of the GATT 1994 by ensuring on-line publication in designated focal points respective Tariff schedules, NTMs and regulations on Rules of origin, labeling requirements, Customs clearance and Appeal procedures by an end date.
6. IPR: The bilateral trade regime should affirm the importance of effective protection and enforcement of intellectual property rights to encourage technological innovation, transfer of technology and investment under respective commitments and obligations of the WTO TRIPS Agreements;
7. Labour standards: The bilateral trade regime should affirm respective commitments made in respect of ILO core labour standards and recognize the importance of providing adequate and effective protection and enforcement of worker rights in accordance with respective international commitments, obligations and domestic labour laws.
8. Environment concerns: The bilateral trade regime should affirm respective commitments made in the Doha Declaration that expansion of trade and investment and the promotion of sustainable development and protection of the environment can be mutually supportive.
9. Joint Council: The bilateral trade regime should establish a Joint Council on Trade and Investment. The Joint Council should be composed of representatives of the private sector of both Parties. All meetings of the Joint Council shall be jointly chaired by the designated Ministers of both the governments. The Joint Council may establish ad-hoc working groups that may meet concurrently or separately to facilitate its work. The Joint Council may meet at least once a year and at such times to be mutually agreed upon, for the purpose of:
l Overseeing the implementation of the Free Trade Agreement;
l Reviewing the bilateral trade and investment relationship and identifying opportunities to expand and liberalize trade and investment;
l Implementing the work programme in the areas of mutual interests and periodic reviews of progress in the work programme;
l Organising consultations on specific trade or investment issues; and
l Resolving amicably any issues that might arise from implementing the provisions of the Free Trade Agreement.
Areas of the work programme:
l Facilitation and liberalisation of trade and investment, including non-tariff barriers;
l Promotion and protection of investment;
l Regulatory issues affecting trade and investment policies;
l Cooperation in promotion of bilateral trade;
l Trade in services, including Modes 1,3and 4;
l Information and communications technology;
lBiotechnology;
lTourism;
l Trade-related capacity building and technical cooperation;
l Enhancing the participation of SMEs in trade and investment; and
l Other areas of economic cooperation to be mutually agreed upon.
10. Private Sector Participation: Respective government agencies must regularly consult with the private sector on ways and means to further enhance mutual trade facilitation. Joint Councils must also include experts nominated by the respective National Apex trade bodies and trade policy experts of the member countries.
The writer is chairman of Free Trade Advocacy Centre. He can be reached at e-mail :mailto:a.manzur@yahoo.com
The Bangladesh-India summit held in January, 2010 has generated a great momentum and huge opportunity to strengthen and promote our trade and economic relations for mutual benefit. The two prime ministers agreed to put in place a comprehensive framework of cooperation for development between the two countries, encapsulating their mutually shared vision for the future, which would include, among others, cooperation in mutual trade and investment, water resources, power, transportation and connectivity, tourism and education. They agreed on the need to operationalise the various areas of cooperation at the earliest.
Terms of implementation of the summit commitments
1. Market access: India should extend and notify an early-harvest free trade package and grant duty and para-tariffs free market access to Bangladesh on India-Sri Lanka BFTA and SAFTA plus terms with greater flexibility and longer transition period for Bangladesh. Bangladesh should also reduce its Tariff infavour of India as per SAFTA tariff reduction schedule + 1% per annum. As for administrative mechanism for Rules of Origin, trade remedy measures, dispute settlement mechanism, provisions of SAFTA should be followed.
Dhaka has recently sought duty-free facility for 61 more items which include, among others, edible grade soybean oil, refined palm oil/palmolein, aviation turbine fuel and fuel oil. But edible grade soybean oil, refined palm oil/palmolein, aviation turbine fuel and fuel oil must be excluded from the list because all these are import based essential commodities for local consumption and not meant for export.
2. Services Trade: In terms of approach to liberalization of services following a positive list approach may best serve the purpose and undertake to progressive and sequential liberalization. We should also agree on some mutually beneficial priority sectors to liberalize forthwith. However the best and most prudent option is to liberalize Services Trade on MFN basis.
3. Investment: Bangladesh has a very liberal investment policy regime. We have a very large amount of Indian and US investment in Bangladesh spreading over many sectors including public procurement. However, Bangladesh need to develop sectoral domestic regulations, terms of investment and regulatory framework. In these respect Indian experience, expertise and practices can immensely benefit us. Bangladesh India Investment Agreement signed recently would enable Bangladesh to take full advantage of free trade with India. India is a country with exportable capital surplus and could play a major role in fostering investments in Bangladesh with buy back arrangements. The terms of investment should be without prejudice to the rights and obligations under the WTO Agreements and SDT provisions including GATS LDC Modalities.
4. Mutual Recognition Agreements: Technical Regulations and Standards: The bilateral trade regime should ensure harmonization of TBT and SPS measures and signing of MRA to streamline flow of traded goods.
Mutual recognition of testing laboratories: Certificates on Technical Regulations & Standards issued by the respective designated national bodies should be accepted. In order to ensure quality of traded commodities including Cement, Ceramics, Pharmaceutical, Foods, Jute and Leather products, Cosmetics & Toiletries and other priorities, there should be plans to set up Bangladesh-India joint venture accredited testing labs in Bangladesh. Non-acceptability of conformity assessment certificates of any particular product, if and when arise, should be resolved by mutual cooperation programmes without restricting its trade. Technical and financial assistance must be ensured for capacity building in this regard.
Accredited bodies/agencies of India may set up accreditation centers in collaboration with designated national agency of Bangladesh on a BOOT basis to facilitate mutual cooperation with necessary capacity building technical and financial assistance.
It is recommended that institutional arrangements are made (i) for expeditious action on conclusion of agreements on mutual recognition of standards, testing and measurements with a view to facilitating intra-regional trade; (ii) for organising on regular training & workshop for enhancement of skills in the area of accreditation and quality management; and (iii) to organise awareness and capacity building activities on regular basis for officials, board members, assessors & other professionals, CEOs including infrastructure, management and capacity development of laboratories, CBs and other quality management bodies
5. One of the most crucial areas where bilateral trade regime should concentrate is how best to address the prevailing barriers emerging out of non-tariff and para-tariff measures. To ensure level playing field for fair and seamless transaction of goods the following policy measures should be implemented in right earnest.
NTMs & PTMs: NTMs and PTMs not notified in WTO should be prohibited. A code of good practice should be followed before introduction of any new NTMs. Joint councils should resolve the issues on NTMs and PTMs annually within specified and bound time frame.
Customs Clearance: Value of imported products should be assessed only on the basis of WTO Customs Valuation Agreement. The practice of Indian Customs to determine the Assessable Value of the imported product by fixing 35% abatement on Retail Sales Price and or on the basis of pre-fixed Tariff Value is in violation of transaction value as prescribed in WTO Customs Valuation Agreement. Fixing and printing 'Retail Sales Price' of the exported product to be sold in the importing country is an internal taxation measure and should be dealt with accordingly at the local marketing level.
Import licensing: Both the countries should adopt and notify non-restrictive, locally administered, automatic and transparent import licensing procedures for mutual trade by an end date (Instead of Kolkata handling import licensing for Tripura licensing office should be opened in Agartala).
National treatment should be accorded to all products, including jute goods jute bags, in respect of registration, packaging & labeling and testing requirements along with charges and fees thereof. Fees levied must only be on the cost of services rendered and shall not be used for fiscal purposes or as protection to domestic products. Fees levied should only be on mfn basis and relate to the cost of services rendered and shall not be used for fiscal purposes or as protection to domestic products.
Transit-Transshipment and movement of vehicles through the territory of the second country to a third country, as per GATT Article V, should be ensured to facilitate India-Bangladesh-Nepal-Bhutan trade and beyond. Appropriate protocol with regulations on fees and charges with harmonized and simplified customs procedures should be made operational to expedite third country transit facilitating movement of goods and vehicles through the territories of India-Bangladesh-Nepal- Bhutan and beyond.
Trade facilitation: The following trade facilitation measures should be implemented to ensure enabling trade policy and governance for smooth and speedy movement of goods across the borders:
l Harmonization of cross-border trade regulations and documents by an end date.
l A SAARC Harmonized Tariff Nomenclature at 8-digit level should be created based on the Harmonized Commodity Description and Coding Systems (HS) of the World Customs Organisation by an end date
l Online publication in the designated focal point website of relevant trade regulations and procedures, including packaging & labeling requirements, fees and charges, in English. by an end date.
l Simplification of Customs procedures aimed at cutting the time taken and cost of transactions at each customs point. Regional customs action plan should be implemented by an end date.
l An effective appeal procedure for Customs and other Agencies rulings must be in place before an end date
l Transport and communications infrastructures, port and warehousing facilities should be developed to benchmark levels within specified time frames.
l Compliance of Articles V, VIII and X of the GATT 1994 by ensuring on-line publication in designated focal points respective Tariff schedules, NTMs and regulations on Rules of origin, labeling requirements, Customs clearance and Appeal procedures by an end date.
6. IPR: The bilateral trade regime should affirm the importance of effective protection and enforcement of intellectual property rights to encourage technological innovation, transfer of technology and investment under respective commitments and obligations of the WTO TRIPS Agreements;
7. Labour standards: The bilateral trade regime should affirm respective commitments made in respect of ILO core labour standards and recognize the importance of providing adequate and effective protection and enforcement of worker rights in accordance with respective international commitments, obligations and domestic labour laws.
8. Environment concerns: The bilateral trade regime should affirm respective commitments made in the Doha Declaration that expansion of trade and investment and the promotion of sustainable development and protection of the environment can be mutually supportive.
9. Joint Council: The bilateral trade regime should establish a Joint Council on Trade and Investment. The Joint Council should be composed of representatives of the private sector of both Parties. All meetings of the Joint Council shall be jointly chaired by the designated Ministers of both the governments. The Joint Council may establish ad-hoc working groups that may meet concurrently or separately to facilitate its work. The Joint Council may meet at least once a year and at such times to be mutually agreed upon, for the purpose of:
l Overseeing the implementation of the Free Trade Agreement;
l Reviewing the bilateral trade and investment relationship and identifying opportunities to expand and liberalize trade and investment;
l Implementing the work programme in the areas of mutual interests and periodic reviews of progress in the work programme;
l Organising consultations on specific trade or investment issues; and
l Resolving amicably any issues that might arise from implementing the provisions of the Free Trade Agreement.
Areas of the work programme:
l Facilitation and liberalisation of trade and investment, including non-tariff barriers;
l Promotion and protection of investment;
l Regulatory issues affecting trade and investment policies;
l Cooperation in promotion of bilateral trade;
l Trade in services, including Modes 1,3and 4;
l Information and communications technology;
lBiotechnology;
lTourism;
l Trade-related capacity building and technical cooperation;
l Enhancing the participation of SMEs in trade and investment; and
l Other areas of economic cooperation to be mutually agreed upon.
10. Private Sector Participation: Respective government agencies must regularly consult with the private sector on ways and means to further enhance mutual trade facilitation. Joint Councils must also include experts nominated by the respective National Apex trade bodies and trade policy experts of the member countries.
The writer is chairman of Free Trade Advocacy Centre. He can be reached at e-mail :mailto:a.manzur@yahoo.com