Modalities for regional connectivity, transit and transhipment
Manzur Ahmed
The Bangladesh-India summit held in January, 2010 has broken through the cold spell of our bilateral relations and generated a great momentum and huge opportunity to strengthen and promote our trade and economic relations for mutual benefit.
In a rapidly modernising and globalising world, connectivity is the most imperative requirement and key to expediting speedy, efficient and sustainable regional and global trade. Bangladesh enjoys a strategic geographical location and can be the bridge between South Asia and South East Asia. It can be the regional hub of transportation for eastern India, northeast India, Nepal, Bhutan and ASEAN countries, if it can capitalize its location advantages.
But, it appears that a section of the society and some policy makers are bent upon confusing and detracting the newly generated dynamics of Bangladesh-India co-operations especially in trade and economic relations between the two countries by only linking and lobbying for the passage of goods between two places in India through the territory of Bangladesh with the current agenda on regional connectivity, Transit and Transhipment.
It is also reported in the newspapers that assistance has been sought from Asian Development Bank in carrying out a study on the economic benefits of providing transit facility to India, presumably, to emphasize widely publicized financial allurements to lobby and promote the passage of goods between two places in India through the territory of Bangladesh.
The doctrine of third country transit, put forward by Honorable Indian Prime Minister, Dr. Manmohan Singh in his opening address given at the 13th SAARC Summit "that all South Asian countries would provide each other, reciprocally, transit facilities to third countries", is the cardinal principle and the best interpretation of our international and regional commitments and obligations relating to trade related Transit and Transhipment in the region and beyond.
Extracts: 'We need to recharge and regenerate the arteries of transport and communication that bind us together and in turn link our region to the rest of Asia to reclaim the property that is undoubtedly our due.'… 'In pursuit of this vision, let us agree, at this summit, that all South Asian countries would provide each other, reciprocally, transit facilities to third countries, not only connecting one another, but also connecting to the larger Asian neighborhood, in the Gulf, Central Asia and the South-East Asia."
It is essential for Bangladesh to first examine the governing principles of "Transit and Transhipment in International Trade" as mandated under ARTICLE V of GATT 1994 and take into account the obligations, options and flexibilities available for Bangladesh before accepting or adopting modalities on regional connectivity, transit and transhipment.
Governing principles of Transit and Transhipment in International Trade: Paragraphs 1 and 2 of Article V of GATT 1994: GATT Article V on Transit and Transshipment in International Trade is an integral part of WTO framework Compliance of Transit and Transshipment provisions of GATT Article V is obligatory for both Bangladesh and India subject to flexibilities accorded to LDCs.
Article V (1) Goods (including baggage), and also vessels and other means of transport, shall be deemed to be in transit across the territory of a contracting party when the passage across such territory, with or without trans-shipment, warehousing, breaking bulk, or change in the mode of transport, is only a portion of a complete journey beginning and terminating beyond the frontier of the contracting party across whose territory the traffic passes. Traffic of this nature is termed in this article traffic in transit.
(2) There shall be freedom of transit through the territory of each contracting party, via the routes most convenient for international transit, for traffic in transit to or from the territory of other contracting parties. No distinction shall be made which is based on the flag of vessels, the place of origin, departure, entry, exit or destination, or on any circumstances relating to the ownership of goods, of vessels or of other means of transport."
Transit and Transhipment in Bangladesh: Bangladesh is pursuing outmoded, asymmetric, and unilateral Transit and Transhipment policies, much to the detriment of Bangladesh's interest, deviating from ARTICLE V OF GATT 1994 and Article - 8 of SAFTA Agreement: relating to "g) transit facilities for efficient intra-SAARC trade, especially for the land-locked Contracting States".
Bangladesh agreed to provide passage (Transit) of goods between two places in India through the territory of Bangladesh under Article VIII of Bangladesh-India Trade Agreement, 1986 "Article VIII The two Governments agree to make mutually beneficial arrangements for the use of their waterways, roadways and railways for commerce between the two countries for passage of goods between two places in one country through the territory of the other."
Bangladesh-India Trade Agreement was signed in 1986 by C. T. A. Siddiki and Pronob Mukharjee. Unless renewed it expires in three years. It was renewed on 21.03.06 in New-Delhi by Mr. Kamal Nath and Mr. M. Saifur Rahman and renewed again on February 9, 2010 signed during the day-long visit of Indian External Affairs Minister Pronob Mukherjee.
Nepal-India-Bangladesh Transit: Nepal and Bangladesh signed a Trade and Payments Agreement and a Transit Agreement in 1976. The following six places have been approved for the movement of traffic-in-transit through the ports and other territory by all means of transport: The seaports of Khulna-Chalna and Chittagong The following border points on the Bangladeshi-Indian border - Biral, Banglabandh, Chilhati, and Benapole.
Border Points: Benapole is a road crossing point near Calcutta and its Indian side border point is Petrapole. Chilhati is a broad gauge rail terminal which used to be connected with the Indian side of border rail station Haldibari before 1971. Currently, Nepal is using the border crossing points of Biral and Banglabandh, which will be described in the following paragraphs.
Transit Routes: Biral which is a meter gauge rail point at Bangladesh border was brought under regular use for the movement of Nepal's trade traffic to and through Bangladesh after the Government of India allowed the rail connection from its border station Radhikapur to Biral.
India has allowed use of the road connecting its Phulbari border point with Bangladesh. The Kakarvita (Nepal Border)-Panitanki (India Border with Nepal)-Phulbari (India Border with Bangladesh) route provides a shortest access of only 44 km to Banglabandh border for Nepal's trade with and through Bangladesh. As the short route was very congested, a new route of about 55-km passing through Bagdogra and Ghose Pukur by-pass is made open for truck transportation all days of the week.
Compared to Radhikapur-Biral rail route connecting the India-Nepal border transit points and requiring to follow all the transit procedures as laid down in the Treaty of Transit, the Phulbari-Banglabandh route was allowed only for one border crossing point of Kakarvita- Panitanki road with the application of different operational modalities.
Transit procedures in India: Transit procedures as laid down in the Treaty of Transit signed between Nepal and India for the movements of third country trade traffic apply to Nepal's trade with and transit traffic through Bangladesh. The Calcutta Customs has authorized the border customs offices of Radhikapur and Phulbari to process CTD and other documents for the clearance of Nepal's transit traffic. Nepalese exporters and importers are not required to go to the Calcutta Customs for processing of documents.
With the stationing of Nepal Transit and Warehousing Co Ltd. (NTWCL) offices at both the transit points of Radhikapur and Kakarvita, an undertaking letter in lieu of duty insurance to the Indian customs is easily obtainable on the spot for trading with and through Bangladesh. For goods moving through the Phulbari- Banglabandh route, the private sector importers and exporters also obtain NTWCL's undertaking letter and clearing services as per the operational modality applicable to this route.
From 1984 the branch office of NICL at Raigunj City, which is close to Radhikapur border also started issuing duty insurance policy coverage for the goods passing through the rail route of Radhikapur-Biral. The duty insurance is issued by NICL after the Radhikapur land border customs examines CTD indicating the customs valuation for duty insurance.
NTWCL levies a clearing fee of 0.20% of the FOB value on Export and 0.30% 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% for cement and fertilizer, and 0.15% for other products on FOB exports and CIF imports.
Transit Procedures in Bangladesh: The bilateral Transit Agreement between Nepal and Bangladesh has prescribed documentation procedures and formatted a document called 'Transit Declaring Invoice' (TDI) separately for imports and exports via Bangladesh routes. The procedures elaborated by the Standing Order No 6 dated 27 June 1979 of the Customs House of Chittagong constitute import and export procedures in Bangladesh.
For the movement of goods to and through Bangladesh in Radhikapur-Biral rail route or Phulbari-Banglabandh road route, documentation requirements of the Indian Customs as well as of the Bangladesh Customs relating to processing of both the CTD and TDI have to be met by the Nepalese traders.
Nepal-India-Bangladesh Customs Transit Procedure: Goods when exported and imported to and from the third country by sea cargo, the consignment have to be passed through India or and Bangladesh for transit route. The Calcutta port of India is about 1150 Km from Nepalese border. Registered clearing agents could assist in speedy clearance of goods through the port of Calcutta.
All the traffic in Transit via Calcutta Port could pass only through the following routes: Galgalia -Jogbani -Bhimnagar -Jaynagar -Raxaul -Nautanawa -Barhni -Nepalgunj Road -Gauri -Phanta -Banbasa -Tikonia -Jarwa -Bhitamore (Sitamarhi) -Sukhia Pokhari
Bangladesh-India 'Inland water transit protocol: The inland water transit protocol was first signed in 1972. The protocol provides to make 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, 2007 before the latest renewal on February 9, 2010 signed during the day-long visit of Indian External Affairs Minister Pronob Mukherjee.
The countries now allow each other ten points as ports of call to ferry their goods. The ports are Ashuganj, Narayanganj, Mongla, Khulna and Sirajganj for India and Kolkata, Haldia, Karimganj Silghat and Pandu for Bangladesh. In keeping with the protocol, both the countries allow transit for cargo through eight routes, counting both ways.
l The Kolkata-Pandu route stretches via Haldia, Raimangal, Chalna, Khulna, Mongla, Kaukhali, Barisal, Hizla, Chandpur, Narayanganj, Aricha, Sirajganj, Bahadurabad, Chilmari and Dhubri.
l The Kolkata-Karimganj route stretches via Haldia, Raimangal, Mongla, Kaukhali, Barisal, Hizla, Chandpur, Narayanganj, Bhairab Bazar, Ajmiriganj, Markuli, Sherpur, Fenchuganj and Zakiganj.
l Two of the routes are between Rajshahi and Dhulian via Godagari, both ways.
l The Karimganj-Pandu route stretches via Zakiganj, Fenchuganj, Sherpur, Markuli, Ajmiriganj, Bhairab Bazar, Narayanganj, Chandpur, Aricha, Sirajganj, Bahadurabad, Chilmari and Dhubri.
ODA Consignment: India has sought 'special permission' from Bangladesh under "Protocol on Inland Water Transit and Trade" between Bangladesh and India (PIWTT) for transportation of the some 'over-dimensional consignments' (about 290 tonnes) of power generation equipments from Kolkata port to Pallatana in Tripura state through Bangladesh for setting up a power plant.
The transport of goods from Ashuganj by road to Akhaura is not covered by the PIWTT. Transportation of goods from one part of India to another part through Bangladesh is beyond the scope and mandate of the PIWTT. The PIWTT does not allow multi-modal transport facilities as it is only meant for transport of goods for transit through waterways and not through the land route.
Bhutan-Bangladesh Transit: Bhutanese exporters have started using the new trade route via Dawki-Tamabil land custom station route via India's north-eastern region to export to Bangladesh from January 25, 2010. Until recently Bhutanese exporters used the route through Siliguri in West Bengal to transport goods to Bangladesh. The new route is expected to reduce distance (Bhutan- Changrabandha to Dhaka is 600+450 km Bhutan- Dawki-Tamabil is 280+54 km) to only 334 Kilometers from around 1050 km, save time and cut transportation cost. New Delhi and Dhaka recently agreed to upgrade facilities in the Dawki-Tamabil Land Custom Station.
ADB study: Without emphasising widely publicised financial allurements to promote the passage of goods between two places in India through the territory of Bangladesh the TOR of the proposed study by the Asian Development Bank have be specified to cover third country transit and transshipment through land, sea and air routes, infrastructure, capacity & management development and formulation of appropriate regional "Transit & Transshipment" protocol.
Movement of vehicles for mutual or and international trade from Bangladesh, Bhutan, India and Nepal have to be allowed for transit to designated port of export through specified routes or enter Zero Point for transshipment as the case may be.
Appropriate protocol with regulations on fees and charges with harmonized and simplified customs procedures have to be operationalized to expedite mutual trade and third country transit facilitating movement of goods and vehicles to and from Bangladesh through the territories of India-Bangladesh-Nepal- Bhutan and beyond.
Myanmar India gas pipeline: In order to ensure long term energy security Bangladesh must outsource energy and Myanmar, because of its proximity, is the ideal source of most convenient, safe and continued supply of electricity, oil and gas. Bangladesh therefore should agree, as the first beneficiary at virtually no cost, to allow Myanmar India gas pipeline through its territory to avail the opportunity of obtaining supply of gas at highly cost effective price from Myanmar to meet its growing energy needs in addition to inherent revenue and other associated benefits. Bangladesh-India should also undertake joint ventures to harness energy resources in Myanmar for mutual benefit.
(The writer is Chairman, Fair Trade Advocacy Centre and chairman: FBCCI Standing Committee on WTO and RTAs. He can be reached at email: mahmed019@hotmail.com, a.manzur@yahoo.com)
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