How to determine transit-transhipment fees and charges
Wednesday, 15 December 2010
Manzur Ahmed
Bangladesh-India 'Inland Water Transit Protocol' signed on March 28, 1972 for bilateral trade between the two countries provides for mutually beneficial arrangements for the use of their waterways for commerce maintaining the river routes within its territory in a navigable condition. It was renewed in 1999, 2001 and 2007 before the latest renewal on February 9, 2010 during the daylong visit of Indian External Affairs Minister Pranab Mukherjee.
Point to be noted here is that the protocol was signed explicitly to facilitate bilateral trade between the two countries and not for passage of Indian goods from Kolkata to Tripura.
In the 50-point Joint Communiqué issued on January 12 during Prime Minister Sheikh Hasina's visit to India, Bangladesh and India agreed as follows:
l "It was agreed that Ashuganj in Bangladesh and Silghat in India shall be declared ports of call. The IWTT Protocol shall be amended through exchange of letters. A joint team will assess the improvement of infrastructure and the cost for one-time or longer-term transportation of ODCs (Over Dimensional Cargo) from Ashuganj. India will make the necessary investment. Both Governments agreed to expedite implementation. Contractors from both countries shall be eligible for the work."
l "With a view to encouraging imports from Bangladesh, both countries agreed to address removal of tariff and non-tariff barriers and port restrictions and facilitate movement of containerised cargo by rail and water"
It is absolutely clear that neither the IWTT Protocol nor the Joint Communiqué even mention "transit and transhipment" of normal commercial cargoes from one place in India through Bangladesh to another place in India. Both the instrument entails only one-time or longer-term transportation of non-commercial ODCs from Ashuganj.
Bangladesh therefore, has absolutely no obligation to allow "transit and transhipment" of goods from one place in India through Bangladesh to another place in India neither under the Dhaka-Delhi January 2010 agreement nor the governing principles of "Transit and Transhipment in International Trade" as mandated under Article V of GATT 1994 (binding on both Bangladesh and India as members of WTO). The passage of Indian cargoes at the cost of our natural advantage and perpetual loss of our export to neighbouring seven sisters can never be an option. However, as a gesture of good will, with the mutual approval of terms and conditions on case basis, Bangladesh may agree to provide passage through its territory non- commercial goods and machinery relating to any public sector project for trade and economic development.
According to November 30, 2010 news reports, Bangladesh signed the Ashuganj transit deal, the first ever multi-modal transit accord with India only for carrying equipment to a power plant in Tripura allegedly without the concurrence of the foreign ministry mandated under the Rules of Business, 1996.
The reports add that Shipping Minister Shahjahan Khan, while talking to journalists, said India will not pay any extra charge, but will continue to pay the annual fee under the river protocol for maintaining navigability. "Why will they pay the charge twice?" he asked.
Under the 1972 protocol India pays a lump sum amount of Tk 42.5 million per annum only to maintain navigability of the river routes, as a government-to-government payment. Whereas, the charges to be levied for services rendered by the Customs and other agencies to facilitate transit are imposed on the basis of respective consignments.
Transit-transhipment fees and charges are acts of sovereign authority and are not required to be negotiated under WTO or WCO. Nepal Transit and Warehousing Co. Ltd. (NTWCL), the appointed agent of Indian Customs, levies a clearing fee of 0.20 per cent of the FOB value on Export and 0.30 per cent of the CIF value on import trade traffic moving through the Phulbari-Banglabandh route. The charges for issuing the letter of undertaking to the Indian Customs are 0.07 per cent for cement and fertiliser, and 0.15 per cent for other products on FOB exports and CIF imports. India did not negotiate these charges with either Bangladesh or Nepal, as they are not required to.
Marginal costs savings of the transit cargo has no bearing, as aired by some, with the transit-transhipment fees and charges, which are required to be fixed on MFN basis only to cover the costs of various services provided by the Customs and other authorities in facilitating passage of goods across its territory.
Bangladesh is therefore required to determine, as prescribed in WTO GATT Article V 3-6, its transit-transhipment charges on MFN basis against transportation, all supporting infrastructure and other administrative services rendered for facilitating transit or transhipment taking into account the following essential services as prescribed in World Customs Organisation Annex E on Transit:
l Sealing and identification of consignments.
l Full examination of the goods and recording the results thereof on the transit document.
l Affixing Customs seals or fastenings to individual packages.
l A precise description of the goods by reference to samples, plans, sketches, photographs, or similar means, to be attached to the transit document.
l Stipulation of a strict routing and strict time limits.
l Customs escort. Where the Customs offices concerned check the Customs seals and fastenings or examine the goods, they should record the results on the transit document.
l Surveillance to prevent leakage of transit cargo in the domestic market. It appears that India needs hardly any negotiators to negotiate any deal with us, as some of our own functionaries, knowingly or unknowingly, can do a better job for them and more effectively.
The writer is Chairman of Fair Trade Advocacy Centre FBCCI Standing Committee on WTO and RTAs and can be reached at e-mail: mahmed019@hotmail.com
Bangladesh-India 'Inland Water Transit Protocol' signed on March 28, 1972 for bilateral trade between the two countries provides for mutually beneficial arrangements for the use of their waterways for commerce maintaining the river routes within its territory in a navigable condition. It was renewed in 1999, 2001 and 2007 before the latest renewal on February 9, 2010 during the daylong visit of Indian External Affairs Minister Pranab Mukherjee.
Point to be noted here is that the protocol was signed explicitly to facilitate bilateral trade between the two countries and not for passage of Indian goods from Kolkata to Tripura.
In the 50-point Joint Communiqué issued on January 12 during Prime Minister Sheikh Hasina's visit to India, Bangladesh and India agreed as follows:
l "It was agreed that Ashuganj in Bangladesh and Silghat in India shall be declared ports of call. The IWTT Protocol shall be amended through exchange of letters. A joint team will assess the improvement of infrastructure and the cost for one-time or longer-term transportation of ODCs (Over Dimensional Cargo) from Ashuganj. India will make the necessary investment. Both Governments agreed to expedite implementation. Contractors from both countries shall be eligible for the work."
l "With a view to encouraging imports from Bangladesh, both countries agreed to address removal of tariff and non-tariff barriers and port restrictions and facilitate movement of containerised cargo by rail and water"
It is absolutely clear that neither the IWTT Protocol nor the Joint Communiqué even mention "transit and transhipment" of normal commercial cargoes from one place in India through Bangladesh to another place in India. Both the instrument entails only one-time or longer-term transportation of non-commercial ODCs from Ashuganj.
Bangladesh therefore, has absolutely no obligation to allow "transit and transhipment" of goods from one place in India through Bangladesh to another place in India neither under the Dhaka-Delhi January 2010 agreement nor the governing principles of "Transit and Transhipment in International Trade" as mandated under Article V of GATT 1994 (binding on both Bangladesh and India as members of WTO). The passage of Indian cargoes at the cost of our natural advantage and perpetual loss of our export to neighbouring seven sisters can never be an option. However, as a gesture of good will, with the mutual approval of terms and conditions on case basis, Bangladesh may agree to provide passage through its territory non- commercial goods and machinery relating to any public sector project for trade and economic development.
According to November 30, 2010 news reports, Bangladesh signed the Ashuganj transit deal, the first ever multi-modal transit accord with India only for carrying equipment to a power plant in Tripura allegedly without the concurrence of the foreign ministry mandated under the Rules of Business, 1996.
The reports add that Shipping Minister Shahjahan Khan, while talking to journalists, said India will not pay any extra charge, but will continue to pay the annual fee under the river protocol for maintaining navigability. "Why will they pay the charge twice?" he asked.
Under the 1972 protocol India pays a lump sum amount of Tk 42.5 million per annum only to maintain navigability of the river routes, as a government-to-government payment. Whereas, the charges to be levied for services rendered by the Customs and other agencies to facilitate transit are imposed on the basis of respective consignments.
Transit-transhipment fees and charges are acts of sovereign authority and are not required to be negotiated under WTO or WCO. Nepal Transit and Warehousing Co. Ltd. (NTWCL), the appointed agent of Indian Customs, levies a clearing fee of 0.20 per cent of the FOB value on Export and 0.30 per cent of the CIF value on import trade traffic moving through the Phulbari-Banglabandh route. The charges for issuing the letter of undertaking to the Indian Customs are 0.07 per cent for cement and fertiliser, and 0.15 per cent for other products on FOB exports and CIF imports. India did not negotiate these charges with either Bangladesh or Nepal, as they are not required to.
Marginal costs savings of the transit cargo has no bearing, as aired by some, with the transit-transhipment fees and charges, which are required to be fixed on MFN basis only to cover the costs of various services provided by the Customs and other authorities in facilitating passage of goods across its territory.
Bangladesh is therefore required to determine, as prescribed in WTO GATT Article V 3-6, its transit-transhipment charges on MFN basis against transportation, all supporting infrastructure and other administrative services rendered for facilitating transit or transhipment taking into account the following essential services as prescribed in World Customs Organisation Annex E on Transit:
l Sealing and identification of consignments.
l Full examination of the goods and recording the results thereof on the transit document.
l Affixing Customs seals or fastenings to individual packages.
l A precise description of the goods by reference to samples, plans, sketches, photographs, or similar means, to be attached to the transit document.
l Stipulation of a strict routing and strict time limits.
l Customs escort. Where the Customs offices concerned check the Customs seals and fastenings or examine the goods, they should record the results on the transit document.
l Surveillance to prevent leakage of transit cargo in the domestic market. It appears that India needs hardly any negotiators to negotiate any deal with us, as some of our own functionaries, knowingly or unknowingly, can do a better job for them and more effectively.
The writer is Chairman of Fair Trade Advocacy Centre FBCCI Standing Committee on WTO and RTAs and can be reached at e-mail: mahmed019@hotmail.com