Trade facilitation in South Asia

The growth of intra-regional trade in South Asia, fraught as it is with barriers, is slow. Although most of the barriers are already identified, removal of these becomes difficult due to lack of effective commitments. SAARC to SAARC trade increased from $16.64 billion in 2005 to $49.57 billion  in  2014. Given the low base, this growth is not inspiring at all in the context of the growth of global trade during the period. Compared to global trade, SAARC intra-regional trade was only 5.11 per cent last year, while in 2005 it was 5.84 per cent. A reversal in terms of global trends!
Against this backdrop, the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) has formulated a set of proposals for effective regional trade facilitation mechanism under the framework of the South Asian Association for Regional Cooperation (SAARC). The idea behind the proposals is to highlight and discuss the issues of Non-Tariff Barriers (NTBs) and Non-Tariff Measures (NTMs) in the region besides removal of tariff barriers. FBCCI's proposal comes in preparation for the meeting of SAFTA (South Asian Free Trade Area) Committee on Experts scheduled to be held in Kabul next year.
It is important to note that trade facilitation -- cutting red tape at borders to reduce trade cost -- is now one of the vital issues in global trade. The World Trade Organisation (WTO) members have already agreed to adopt a global rule of trade facilitation. The Bali Ministerial Declaration, adopted in December 2013, asked the members to finalise the deal on trade facilitation so that it could be accommodated as an agreement, Trade Facilitation Agreement (TFA), with the other agreements of the WTO. Members are now under the process of ratifying the TFA. According to WTO norms, for the TFA to come into force, two-thirds of the entire WTO membership must ratify the agreement by submitting 'instrument of acceptance' to the multilateral trade body. Finally, TFA has to be ratified by the 10th ministerial to be held in Nairobi in December this year.  
To be precise, trade facilitation is a set of measures that will streamline the movement of products across borders by simplifying the requirements of the export-import documents and the procedures followed by the border agencies. For instance, fully automated electronic documentation system is a part of trade facilitation as it takes little time to examine and clear goods at ports. For exporters and importers, the TFA holds the commitment of simpler, faster and predictable transit in border and leads to lower trade costs. For governments, TFA will allow clearing and forwarding agents to focus on higher risks while speeding transit and improving revenue collection.
It is widely held since the Bali Ministerial Conference that through trade facilitation measures global trade could increase by as much as $1.0 trillion, equally divided between developed and developing countries, and create as many as 21 million jobs worldwide.
In this connection, pushing trade facilitation in South Asia has utmost importance as the region is now looking for greater connectivity for greater economic cooperation. Thus FBBCI has rightly mentioned measures on trade facilitation along with the proposals on sensitive lists and preferential tariffs. But the 15-point proposal has some limitations and seems, to some extent, fragmented.
FBCCI proposes introduction of SAARC multiple business visa to ensure free travel of the businessmen of the SAARC countries and from the rest of the world to the entire region. In the SAARC region, India and Pakistan maintain stringent visa regimes for each other and also to some extent for Bangladesh. And these three countries, having more than 90 per cent of the regional trade, constitute a major part of South Asia. The SAARC visa exemption mechanism does not work as expected due to alleged misuse of SAARC stickers in some countries and reservation of India. Although validity of SAARC sticker, allowing the passport holder to visit all the SAARC countries, was one year initially, India's reservation makes it valid for only three months. So, it needs to be reviewed.
The proposal for harmonising cross-border trade regulations, documents and daily/weekly schedules of working hours in border customs stations is also important.  It suggests minimum 12 working hours in all seven days of the week.  But daily or weekly schedule for all border customs stations can't be uniform and it will not be viable for many small customs stations to run `12 hours and seven days' due to low volume of trade. Thus, big and busy customs stations may operate for 12 to 24 hours and on all seven days, while smaller ones with weekly holiday or half-day working schedule. FBCCI may go for a detailed study on this matter.
FBCCI also proposes simplification of the customs procedures for reducing the time and cost of transactions at each customs point and suggests a regional customs action plan that should be implemented by an end date.   
Exporters and importers in South Asia are still facing problems of updated information, especially regarding different compliance requirements on packaging and labelling. They also face difficulties as regards information on various procedures including those related to tariff schedules and occasional changes made from time to time. That's why, FBCCI proposes on-line publication of the Tariff schedules, NTMs and regulations on rules of origin, labelling requirements, customs clearance and appeal procedures. All these have to be available in designated focal points, as proposed by the FBCCI, within a stipulated period of time. It is to be noted that a few years back, Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) proposed for laboratory testing reports to be sent to the border customs stations electronically (by fax or email) to reduce time. The issue also figured at official-level talks, but with no positive results.  
Certificates of Bangladesh Standard Testing Institution (BSTI) for all products are not accepted by Indian authority. This is a prolonged problem and Bangladesh is trying to improve the capacity and quality of BSTI. In this connection, the proposal of 'acceptance of certificates issued by respective pre-selected designated institutions should be ensured in all ports of entry as an interim measure' is welcome. SAARC countries have agreed to develop a comprehensive regional standard and a body named South Asian Regional Standard Organisation (SARSO) has started its work. Thus, in the long-run a set of regional standard will be beneficial.
FBCCI also stresses on MFN and National Treatment and proposes that MFN treatment should be accorded in respect of registration, packaging & labelling and testing requirements along with charges and fees thereof.
Another FBCCI proposal states that fees levied should be on the cost of services rendered and shall not be used for fiscal purposes or as protection to domestic products. Minimal fees are essential components of trade facilitation and are meant to run the cost of customs operations. Lower fees will help reduce trade cost and ultimately consumers will be benefited.
In South Asia, according to the World Bank's Ease of Doing Business Index, Sri-Lanka ranks 99 out of 189 countries. Nepal, Maldives, Bhutan, Pakistan, India, Bangladesh and Afghanistan rank 108, 116, 125, 128, 142 173 and 183 respectively. This clearly reflects the high cost of doing business in the region and importance of trade facilitation.
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