Faruq portrays bureaucracy as main villain
Sunday, 27 June 2010
FE Report
Commerce minister Faruq Khan Saturday berated the Indian bureaucracy for creating tariff and non-tariff barriers that choke off increased bilateral trade between Dhaka and New Delhi.
"In the past, political acrimony was a big barrier. But now that (barrier) lies with the bureaucracy," he said.
The joint-communiqué came out after the January talks of the prime ministers of Bangladesh and India reflects the political commitment to remove barriers to cross-border trade but Mr. Khan said the implementation at the bureaucratic level was not so prompt as previously thought."
Seemingly frustrated with the lack of cooperation of the Indian civil administration, the commerce minister said that he expected the political decisions to be translated into reality for the benefits of the common people.
"India needs to understand that it would be the biggest beneficiary of any move to boost intra-regional trade," the commerce minister told a regional conference that focussed on tariff and non-tariff barriers in South Asia.
In the fiscal 2009, Bangladesh imported goods worth US$2.32 billion from India, mostly basic raw materials and intermediate goods, making New Delhi the country's second biggest importing source after China.
Bangladesh is also among India's top 15 export destinations, but trade economists say it could rank among top five if considered the volume of informal trade, which is taking place between the two neighbouring nations.
Policy Research Institute of Bangladesh (PRI) in collaboration with Commonwealth Institute organised the day-long conference in the city with its vice chairman Dr. Sadiq Ahmed in the chair.
In the morning session, chairman of PRI Dr. Zaidi Sattar and Shravani Prakash of India presented papers that also dwelt on tariff and non-tariff barriers in South Asia.
The commerce minister referred to the article 32 of the joint-communiqué, saying it clearly mentions the need for removing tariff and non-tariff barriers that stand in the way of boosting the bilateral trade.
He cited an example of the border haat, saying Bangladesh opened it on April 14, although the Indian side is yet to come forward to operationalising the initiative.
He frowned upon the Indian bureaucracy for its lack of cooperation to make the joint move a success.
"I'm a hero. I will block it," said the minister told reporters coming out of the conference, referring to the mentality of bureaucrats.
He said trade restrictions are undermining the efforts to reduce poverty and increase welfare of the common people in the region, which hosts one-fifth of the world's population and also half the world's impoverished people.
The minister insisted that there is a potential to scale up trade significantly in the region, where intra-regional trade now makes up a minuscule 3.0 per cent, from more than 30 per cent before the partition of the subcontinent in 1947.
South Asia remains the least-integrated region in the world, according to the World Bank.
But Mr. Khan said trade barriers-both tariff and non-tariff ones-impede the flow of trading.
Dr. Sadiq Ahmed, who moderated the morning session, said there are misperceptions about the non-tariff barriers that hamper intra-regional trade and said South Asian nation should move beyond trade barriers.
In his welcoming address, PRI executive director Ahsan H Mansur said economic integration is the key to success and the European Union is the best example of it.
Saying that cross-border investment drives trade, Mr. Mansur said it proved so in the cases of the EU and North America.
For decades, Canada is the USA's biggest trading partner while NAFTA (North American Free Trade Area) opened up trade opportunities for both America and Mexico.
In his paper, Dr. Sattar identified politics, protectionism, low trade complimentarity and low intra-industry trade as the major hurdles that crimp trade integration in the region.
South Asia's trade with rest of the world amount to $350 billion a year, while the trade within the region totals $6.8 billion, making up the intra-regional trade a paltry 2.0 per cent.
Countries in the region, however, inked the South Asian Free Trade Area (SAFTA) agreement in January 2004, which came into force in July 2006, aiming to bump up commerce among themselves.
Although aimed at achieving zero tariffs on almost all products by 2012, the regional trade treaty has witnessed squabbles over tariff concessions with Pakistan accusing India of violating the agreement with various non-tariff barriers.
Dr. Sattar, a former economist at the World Bank, said the SAFTA can promote trade if members continue to open their economies on an MFN (most-favoured nation) basis.
Shravani Prakash, in her paper, argued that India should take the lead in implementing all its commitments "at the earliest" and even bring down items on the sensitive list to zero.
India, whose economic growth is the second highest in the world after China, is the biggest economy in South Asia, growing at close to 8.0 per cent despite the global recession.
Ashutosh Bajpai who directs the Indian operation of DHL said trade facilitation is not only related to tariff liberalisation, but also issues such as transparency, customs simplification and institutional strengthening.
"Beyond tariff, we need to look at other issues that keep from boosting trade in South Asia," he said, adding trade remained the same, although Nepal and Bhutan lowered tariffs.
Speaking at the afternoon panel discussion, Usman Khan said South Asia should work on issues beyond the tariff and non-tariff barriers to help enhance trade.
Dr Safdar Sohail, director general of Pakistan Institute of Trade and Development, said there is no denying that trade is a way forward wherever the regional countries head to.
He said every country has the right to form its own mode of commerce. "If India modernises its foreign trade policies it will benefit it first."
The Pakistani analyst also urged the member countries to activate the SAARC Secretariat as it still moves slowly and continues to hold meetings after meetings like those seen in the bureaucracy.
"Let's dig deeper into implementing the commitments the members countries made under the SAFTA," Mr. Sohail said.
He said the main problems lie with the SAFTA as it does not clearly say that products belonging to negative lists of a certain country will be phased out after a period of time as was seen in the case of ASEAN, leaving the scope for further negotiations.
Anti-import bias also works in India, said Mr Sohail adding that deeper integration is needed among the member countries. "Inflow of foreign direct investment can also play a bigger role."
"South Asia must have a long-term vision about its future instead of mistrust, misconception and fear, which have been dogging us for decades."
Senath Jayatilake, former director general of Sri Lanka Customs, blamed the tariff and non-tariff barriers for low level of intra-SAARC trade.
Formed in 1985, SAARC groups India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Afghanistan and Maldives.
He said: "Regional trade is not expanding among regional partners as it should be. Port clearance has to be made faster for smooth release of goods. Besides, dispute settlement mechanism has to be strengthened."
Sadiq Ahmed said the SAFTA offers options for the member countries to negotiate each other on their negative lists.
"It's true that the negative list is large. Besides, there are other areas which are holding back the potential of trade."
Mr. Ahmed, formerly of the World Bank and a top expert on regional cooperation, said transportation costs put a burden on traders, discouraging businesses to harness the potential of trade.
Indra Nath Mukherji, senior consultant of RIS, New Delhi, said South Asian economies should not worry about their trade imbalance with India.
"India still provides raw materials to the countries at competitive prices," he said.
He, however, said there are some items on the negative list, which could be excluded and there are also items which have got exempted.
M A Razzaque, economic adviser at Commonwealth Secretariat, said all member countries need to come up with widespread cooperation while sitting with India on tariff and non-tariff issues.
Ashutosh Bajpai, senior director of DHL, India, said visa issuance has to be simplified to increase people's movement, which can better relations among the governments.
Commerce Secretary Ghulam Hossain said Bangladesh is still hopeful about the SAFTA and committed to its faster implementation.
He said all member countries need to work together to remove tariff and non-tariff barriers.
"This cannot be done overnight. Investment and infrastructure development are also important as we try to remove tariff and non-tariff barriers."
Commerce minister Faruq Khan Saturday berated the Indian bureaucracy for creating tariff and non-tariff barriers that choke off increased bilateral trade between Dhaka and New Delhi.
"In the past, political acrimony was a big barrier. But now that (barrier) lies with the bureaucracy," he said.
The joint-communiqué came out after the January talks of the prime ministers of Bangladesh and India reflects the political commitment to remove barriers to cross-border trade but Mr. Khan said the implementation at the bureaucratic level was not so prompt as previously thought."
Seemingly frustrated with the lack of cooperation of the Indian civil administration, the commerce minister said that he expected the political decisions to be translated into reality for the benefits of the common people.
"India needs to understand that it would be the biggest beneficiary of any move to boost intra-regional trade," the commerce minister told a regional conference that focussed on tariff and non-tariff barriers in South Asia.
In the fiscal 2009, Bangladesh imported goods worth US$2.32 billion from India, mostly basic raw materials and intermediate goods, making New Delhi the country's second biggest importing source after China.
Bangladesh is also among India's top 15 export destinations, but trade economists say it could rank among top five if considered the volume of informal trade, which is taking place between the two neighbouring nations.
Policy Research Institute of Bangladesh (PRI) in collaboration with Commonwealth Institute organised the day-long conference in the city with its vice chairman Dr. Sadiq Ahmed in the chair.
In the morning session, chairman of PRI Dr. Zaidi Sattar and Shravani Prakash of India presented papers that also dwelt on tariff and non-tariff barriers in South Asia.
The commerce minister referred to the article 32 of the joint-communiqué, saying it clearly mentions the need for removing tariff and non-tariff barriers that stand in the way of boosting the bilateral trade.
He cited an example of the border haat, saying Bangladesh opened it on April 14, although the Indian side is yet to come forward to operationalising the initiative.
He frowned upon the Indian bureaucracy for its lack of cooperation to make the joint move a success.
"I'm a hero. I will block it," said the minister told reporters coming out of the conference, referring to the mentality of bureaucrats.
He said trade restrictions are undermining the efforts to reduce poverty and increase welfare of the common people in the region, which hosts one-fifth of the world's population and also half the world's impoverished people.
The minister insisted that there is a potential to scale up trade significantly in the region, where intra-regional trade now makes up a minuscule 3.0 per cent, from more than 30 per cent before the partition of the subcontinent in 1947.
South Asia remains the least-integrated region in the world, according to the World Bank.
But Mr. Khan said trade barriers-both tariff and non-tariff ones-impede the flow of trading.
Dr. Sadiq Ahmed, who moderated the morning session, said there are misperceptions about the non-tariff barriers that hamper intra-regional trade and said South Asian nation should move beyond trade barriers.
In his welcoming address, PRI executive director Ahsan H Mansur said economic integration is the key to success and the European Union is the best example of it.
Saying that cross-border investment drives trade, Mr. Mansur said it proved so in the cases of the EU and North America.
For decades, Canada is the USA's biggest trading partner while NAFTA (North American Free Trade Area) opened up trade opportunities for both America and Mexico.
In his paper, Dr. Sattar identified politics, protectionism, low trade complimentarity and low intra-industry trade as the major hurdles that crimp trade integration in the region.
South Asia's trade with rest of the world amount to $350 billion a year, while the trade within the region totals $6.8 billion, making up the intra-regional trade a paltry 2.0 per cent.
Countries in the region, however, inked the South Asian Free Trade Area (SAFTA) agreement in January 2004, which came into force in July 2006, aiming to bump up commerce among themselves.
Although aimed at achieving zero tariffs on almost all products by 2012, the regional trade treaty has witnessed squabbles over tariff concessions with Pakistan accusing India of violating the agreement with various non-tariff barriers.
Dr. Sattar, a former economist at the World Bank, said the SAFTA can promote trade if members continue to open their economies on an MFN (most-favoured nation) basis.
Shravani Prakash, in her paper, argued that India should take the lead in implementing all its commitments "at the earliest" and even bring down items on the sensitive list to zero.
India, whose economic growth is the second highest in the world after China, is the biggest economy in South Asia, growing at close to 8.0 per cent despite the global recession.
Ashutosh Bajpai who directs the Indian operation of DHL said trade facilitation is not only related to tariff liberalisation, but also issues such as transparency, customs simplification and institutional strengthening.
"Beyond tariff, we need to look at other issues that keep from boosting trade in South Asia," he said, adding trade remained the same, although Nepal and Bhutan lowered tariffs.
Speaking at the afternoon panel discussion, Usman Khan said South Asia should work on issues beyond the tariff and non-tariff barriers to help enhance trade.
Dr Safdar Sohail, director general of Pakistan Institute of Trade and Development, said there is no denying that trade is a way forward wherever the regional countries head to.
He said every country has the right to form its own mode of commerce. "If India modernises its foreign trade policies it will benefit it first."
The Pakistani analyst also urged the member countries to activate the SAARC Secretariat as it still moves slowly and continues to hold meetings after meetings like those seen in the bureaucracy.
"Let's dig deeper into implementing the commitments the members countries made under the SAFTA," Mr. Sohail said.
He said the main problems lie with the SAFTA as it does not clearly say that products belonging to negative lists of a certain country will be phased out after a period of time as was seen in the case of ASEAN, leaving the scope for further negotiations.
Anti-import bias also works in India, said Mr Sohail adding that deeper integration is needed among the member countries. "Inflow of foreign direct investment can also play a bigger role."
"South Asia must have a long-term vision about its future instead of mistrust, misconception and fear, which have been dogging us for decades."
Senath Jayatilake, former director general of Sri Lanka Customs, blamed the tariff and non-tariff barriers for low level of intra-SAARC trade.
Formed in 1985, SAARC groups India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Afghanistan and Maldives.
He said: "Regional trade is not expanding among regional partners as it should be. Port clearance has to be made faster for smooth release of goods. Besides, dispute settlement mechanism has to be strengthened."
Sadiq Ahmed said the SAFTA offers options for the member countries to negotiate each other on their negative lists.
"It's true that the negative list is large. Besides, there are other areas which are holding back the potential of trade."
Mr. Ahmed, formerly of the World Bank and a top expert on regional cooperation, said transportation costs put a burden on traders, discouraging businesses to harness the potential of trade.
Indra Nath Mukherji, senior consultant of RIS, New Delhi, said South Asian economies should not worry about their trade imbalance with India.
"India still provides raw materials to the countries at competitive prices," he said.
He, however, said there are some items on the negative list, which could be excluded and there are also items which have got exempted.
M A Razzaque, economic adviser at Commonwealth Secretariat, said all member countries need to come up with widespread cooperation while sitting with India on tariff and non-tariff issues.
Ashutosh Bajpai, senior director of DHL, India, said visa issuance has to be simplified to increase people's movement, which can better relations among the governments.
Commerce Secretary Ghulam Hossain said Bangladesh is still hopeful about the SAFTA and committed to its faster implementation.
He said all member countries need to work together to remove tariff and non-tariff barriers.
"This cannot be done overnight. Investment and infrastructure development are also important as we try to remove tariff and non-tariff barriers."