Making transit operation viable

Newspaper reports say that the government has almost completed its homework on transit and transhipment charges to formally operationalise the movement of Indian transit cargo through various modes of transport. It has been reported that the National Board of Revenue (NBR), at a recent inter-ministerial meeting, has proposed Tk 580 as customs fee for transit of each tonne of Indian goods through Bangladesh territory. The NBR has also proposed for bank guarantee equal to the value of the goods in transit.
One may recall that the issue of transit, despite talks for quite sometime, hinged largely on uninformed discussions and conjectures. There were debates both in favour and against-- some quite naïve based largely on tittle-tattle, some too stringent to allow any move forward, and sadly, very few that attempted to examine the issue in some depth. The inland water transit (IWT) protocol, which is in operation since long, appeared to have also added some confusion to the matter. The IWT protocol that allows transit of Indian goods through designated river routes in Bangladesh is, in fact, not a transit agreement per se. Given the small volume of transit traffic, neither Bangladesh nor India gave it much importance, except time to time renewal and realisation of yearly maintenance charge from India. But when the issue of offering transit facilities to India through all other modes of transport (roads, waterways and railways) emerged, the subject demanded to be looked at in line with the rules governing transit and international practices.  It is here that things got stuck. There are critical obligations on the part of both the transit-offering country and the transit-benefiting one that needed to be addressed. That is to say, to strike a deal, the foremost requirement is to go for negotiations on a host of issues, many of which are beyond the bounds of customs authorities.
Transit operation is a gigantic activity involving not only massive investment on the part of the country offering transit, but at the same time it is integrally related to economic, political, security and management issues. Standard international practices confirm that a sustainable transit operation is essentially about taking into account all such issues with as much accuracy and precision as possible in order that it is rendered win-win for the contracting parties. From an operational perspective, a transit operation involves goods, services, operations, vehicles or other means of transport and infrastructure. Transit must, therefore, comply with various national regulations, including traffic and transport laws, licence requirements, vehicle safety, environmental laws, immigration etc.
So, viewing transit as a mechanism that can be facilitated by customs charges alone is grossly erroneous. When a transit-offering country calculates the charges, it does take into account all the cost factors, even those that apparently may sound quite remote, such as environmental cost. The World Trade Organisation (WTO) is rather reticent on many of the nitty-gritties of transit operations, but it has outlined the broad rules. The WTO Article V.3 clearly spells out that transit traffic within the meaning of the Article 'shall be exempt from customs duties and from all transit duties or other charges …. except charges for transportation or those commensurate with administrative expenses entailed by transit or the cost of services rendered.'
This makes it absolutely clear that fees in respect of transit are chargeable against services rendered by the transit-offering country. For obvious reasons, customs is not the sole service-providing agency in any transit operation, but one of the many. And hence, to work out the administrative expenses in terms of services to be provided, it is important that inputs from all related agencies are put together in determining the amount to be charged.
This, in no way, can be done unilaterally. There is thus the need for negotiations, which experiences suggest, cannot be expected to be wrapped up in one or two bilateral meetings. Moreover, it must be noted that to put a transit operation in place, there has to be a framework agreement that should eventually include, among others, various protocols on various functional aspects.  In the absence of a negotiating platform for both sides to examine the matter on a host of issues, it is impossible to conceive of an agreement on as complex and multi-pronged a matter as transit. But the reality is, there are no negotiating groups at official levels so far from both sides to table the transit issue. True, there are working groups to discuss the IWT protocol, and annual meetings are held alternately in Dhaka and New Delhi. Understandably, issues discussed in that forum relate only to the waterways protocol and are mostly confined to yearly maintenance charges of the river routes, ports of call and so on.
Now that the issue of transit has come up encompassing all modes of transport, experts feel that there is no need for a separate (stray!) IWT protocol. Instead, a comprehensive agreement is required that should be able to address all components. Since Bangladesh is the transit-giving country, the onus is on it to see that the transit operation is rendered viable, and win-win for both countries. There are recognised international practices to follow, and asking India to sit for negotiation is the only choice whereby a deal could be struck. Transit is more than just determining the charges.
wasiahmed.bd@hotmail.com