CUTS calls for an India-Bangladesh agreement on non-tariff barriers

May 31, 2012, Jaipur
“Tariff is no longer a major issue affecting cross-border trade. Over time, tariffs have come down and they are expected to be reduced further. We have to focus on how to remove and/or harmonise non-tariff barriers to facilitate trade across border. There should be bilateral agreement between trading partners in order to address procedural non-tariff barriers,” said Bipul Chatterjee, Deputy Executive Director, CUTS International. About 20 per cent of cost of non-tariff barriers is on account of procedural barriers which have two major parts and they are trade logistics and trade finance.

He was speaking at a Stakeholder Consultation on India-Bangladesh Bilateral Trade and Non-Tariff Barriers, held in Kolkata. CUTS International organised this consultation with support from Friedrich Ebert Foundation, Germany. More than 30 participants representing government, business associations, export promotion agencies, exporters, consumer and other civil society groups, research institutions and media took part in a day-long deliberation on why procedural non-tariff barriers affecting India-Bangladesh trade should be addressed on priority.

Presenting on the theme, Joseph George, Assistant Policy Analyst of CUTS emphasised on why stakeholders are to be engaged with the process of identification of procedural non-tariff barriers. “Removal and/or harmonisation of non-tariff barriers should accompany tariff reforms as the opportunity cost of non-tariff barriers is very high.” “In 2010, value of unexplored market was more than 48 per cent of total value of India-Bangladesh trade and potential saving, which is a proxy for cost of non-tariff barriers, is more than seven per cent of total value of Indo-Bangla trade.”

Prabir De, Fellow, Research & Information System for Developing Countries presented a recently published study on trade potentiality between India and Bangladesh. “A 10 per cent reduction in trade-related documentation could result in more than seven per cent increase in bilateral trade and a 10 per cent improvement in efficiency of trade clearance process by border control agencies might lead to almost four per cent increase in bilateral trade.”

“Trade complementarity and trade intensity between India and Bangladesh are increasing and so is intra-industry trade in some manufacturing sectors,” De added. He urged Bangladesh to create a more enabling environment for foreign investment in infrastructure as one per cent improvement in trade facilitation would result in a four per cent increase in their exports.

Speaking at the event, Sunil Mitra, former Revenue Secretary of Government of India said, India has a significant geo-strategic interest in Bangladesh and trade should be at the centre of India’s Look East Policy. As India does not have much concern on revenue aspects of trade, it should take proactive initiatives to address tariff and non-tariff issues affecting cross-border trade. Infrastructure development, mutual recognition of standards and reciprocity in addressing technical barriers to trade, pre-transhipment and transhipment requirements, inland water transport are major issues which are to be resolved through dialogues, he underlined.

Manzur Ahmed, Advisor to the Federation of Bangladesh Chambers of Commerce & Industry said, “All of us are aware of what and why procedural non-tariff barriers are to be removed and/or harmonised. The question is how to do that.” He urged CUTS to prepare an issue-specific agenda on how to transform political will into implementing specific measures on the ground.

Agneshwar Sen, Joint Director General of Foreign Trade, Department of Commerce, Government of India suggested that CUTS should prepare an inventory of trade facilitation measures recently taken by South Asian countries. That would help in facilitating knowledge and experience sharing within the region.

Mostafa Abid Khan, Joint Chief, Bangladesh Tariff Commission said, other than investment requirements there is a huge need for technical assistance and capacity building support so that benefits from trade facilitation are better realised.

Presentations were followed by an interactive discussion moderated by Shashank Priya, Professor, Centre for WTO Studies, Indian Institute of Foreign Trade and Rupa Chanda, Professor, Indian Institute of Management, Bangalore. Participants urged CUTS to prepare a concrete plan of action on specific aspects of procedural non-tariff barriers for conducting evidence-based policy advocacy.

According to Shashank Priya, in order to harmonise procedural non-tariff barriers there should be harmonisation of trade facilitation measures on both sides of a border. Rupa Chanda emphasised on the importance of cross-border trade in services as a tool for trade facilitation.

The consultation is part of CUTS’ work on regional economic cooperation in South Asia. Similar consultation will be held on cross-border trade between India and other South Asian countries and how procedural non-tariff barriers are to be addressed to facilitate regional trade. CUTS will prepare an issue-specific agenda to advocate for the removal and/or harmonisation of procedural non-tariff barriers in bilateral trade within South Asia.

For more information, please contact:
Bipul Chatterjee,+91(0)9829285921,
Joseph George,+91(0)8003766304,
Anutosh Biswas,+91(0)9829041854,
Arnab Ganguly,+91(0)9873678055,