Free transit to India? One of the provisions of the Article V states that "traffic in transit shall be exempt from customs duties and from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expense entailed by transit or with the cost of services rendered." Thus, Bangladesh cannot impose any customs duties or transit duties for goods entering its territory from one part of India for destination to other parts (such as the Eastern part). So far, so good. I think what is not being pursued in earnest by the Bangladesh government is collecting administrative fees and other charges for services provided to India in its transportation of goods through Bangladesh, whether using Bangladesh's roads, railways or rivers. There is no bar to collecting such fees and charges under the WTO rules. A recent article in a newspaper in Bangladesh quoted Dr. Mashiur Rahman, adviser to Prime Minister Sheikh Hasina on economic affairs, as saying that Bangladesh will be called "uncivilised" if it charges any fees for providing transit facilities to India. I consider that the view expressed by Dr. Rahman does not make sense as the WTO rules provide for such legitimate fees and charges except customs duties or transit duties for transport of goods through another country. Is Egypt an "uncivilised" country because it charges "transit tolls" for foreign ships passing through the Suez Canal? Like Bangladesh, Egypt is a WTO member. Egypt collects transit tolls for ships and vessels passing through the Suez Canal. The Suez Canal Authority of Egypt collects these tolls based on net tonnage of goods transported in transit. The transit toll also depends on the type of vessels passing through the canal -- for example tankers of crude oil or petroleum products, LPG or LNG carriers, container ships and general cargo ships. I think it is against the national interest of Bangladesh to give India a free ride on traffic in transit. While Bangladesh cannot charge transit duties, it should charge administrative fees and other expenses associated with the use of its infrastructure, including the use of roads, railways and rivers based on the actual costs involved. The charging of any fees should not be treated as a customs revenue raising exercise, rather it could be based on the user-pays principle. This will be in line with the view of Finance Minister A.M.A. Muhith, who announced last year that Bangladesh will take "something" from India for using infrastructure facilities for transport of goods. To be consistent with his announcement, it is now incumbent on him to show real political will and leadership and take credible action to get that "something" from India. Insincere political statements and subservient foreign policy will not bring any benefit to the country. Creation of confusion by those in power on issues of great national significance creates further problems, with potential adverse impact on public trust in the government and its machineries of administration. If the Hasina government continues to be surrounded by the so-called "civilised" advisers, it will not receive right, objective and robust advice on the governance of the country. Sycophants and self-seeking advisers or ministers love clinging to power and authority without doing any real service to the prime minister in terms of good governance that benefits the nation and the party in power as well. Sycophants do harm to the nation through their public behaviour and actions. They understand what is right or wrong but pursue the wrong with the intent of either appeasing their political masters or securing personal benefit. These people are quite clever. Sometimes they pretend to be loyal to an ideology but are actually self-serving in the ultimate analysis. To conclude, Bangladesh will not be an "uncivilised" nation if it charges "something" from India for the traffic in transit. The writer is an Economist. | |
On Mon, Apr 11, 2011 at 8:23 AM, Isha Khan <bdmailer@gmail.com> wrote:
User fee for transit facilities, not transit fee suggested
It suggested that the government should not impose any transit fee for only geographical advantages unless the country (Bangladesh) provides any services involving cost or expenses for the routes,
The core committee in its report on transit has recommended for imposition of a 'user fee' on use of transit facilities by the neighbouring countries of India, Nepal and Bhutan.It suggested that the government should not impose any transit fee for only geographical advantages unless the country (Bangladesh) provides any services involving cost or expenses for the routes, the report said.
"….transit trade cannot be subject to any customs duties or fees/ charges that are purely transit-related unless the transit entails some costs for the host country," the report of sub-committee-3 titled, 'economic of transit access to India, Nepal and Bhutan through Bangladesh,' said.The committee recently submitted its study report to the commerce ministry suggesting imposition of user fee on cost involvement-related transit. It has also calculated an estimated cost for the required investment and identified potential routes for transit.
Dr. Sadiq Ahmed, vice chairman of Policy Research Institute (PRI) and head of the subcommittee, said: "It is against international convention on charging any fees for transit, based on geographical advantage alone."A country can impose user charges to other country in case of any cost or expenditure involved for offering the facility, Ahmed said, who is a leading economist of the country.It will be justified to slap user charges if any country takes services on use of transit, he said.
The core committee report said, it will be misleading if any host country charges any transit fee as a percentage of cost saving for the landlocked country. The committee proposed imposition of user fee on transportation services, administrative expenses (e.g costs of inspection etc) and use of any services."..if any guest countries use their own transport facility (ships, trucks or trains), transit may involve the use of port services, road services, or rail network services from the host countries," the report said.It defined those as 'economic services' which need investment, operation and maintenance cost.
The report said the guest countries are obliged to pay user fee for these services in the transportation process.For road transit, the committee identified four elements on which user charges can be imposed. Those are, road damage cost, accident externalities, congestion costs and environmental costs.
The report suggested transit fees for each truck at the rate of US$11.2 per 100 kilometre or $55.6 per trip. The fees include capital charge, routine and periodic maintenance, rehabilitation, traffic control and enforcement.
The core committee estimated US$ 7.13 billion or Tk 499.261 billion investments for infrastructure development on its identified routes for providing transit facilities for India, Nepal and Bhutan.The committee estimated the investment for the next ten years to develop the rail, water and road routes. It has also expressed concern over effective implementation of the transit agreements with the existing capacity and quality of road and rail infrastructure of Bangladesh.
Development of the road networks will require highest investment worth Tk 119.41 billion, followed by rail network at Tk 320.234 billion and inland water transport at Tk 11.715 billion, the report said.
According to the inland water protocol of 1972, India is enjoying transit and transshipment facilities on the river routes without any fees, excepting an annual maintenance charge.
Recently India has started using country's Ashuganj port to transship heavy equipments of Palatana power project in its state of Tripura. The core committee on transit identified seven routes for road transit followed by six routes for rail transit and three new routes for inland water transport.
Currently, only inland water transit is active which India is using for transshipment. Other routes, rail and road, require a large amount of investment to offer transit and transshipment facilities to India, Nepal and Bhutan.
The core committee also identified three potential new rail routes and two for inland water transport.It has identified the routes on the basis of distance, travel time and financial cost advantage.
The study has estimated 17.64 million tonnes of annual transit traffic after diversion of 41 per cent traffic to Chittagong port.'…the expected volume of transit will likely be substantial and in excess of 17 million tonnes per year," the study report said.The study report suggests improvement of port terminal facilities including docking, loading and unloading, storage and other facilities to meet international standards.
It also laid emphasis on investment in river dredging, road and rail networks through mutual agreements with India.Five sub-committees have finalized their reports on routes, the required infrastructure, transit traffic, economic analysis and legal issues, he said.
Talking to the FE Saturday, Bangladesh Tariff Commission (BTC) Chairman Dr Mojibur Rahman, who is the convener of the core committee, said: "We have submitted the report to the commerce ministry within the given time-frame, by March 31." He declined to comment on the issue as it is under review of the commerce ministry.
http://www.thefinancialexpress-bd.com/more.php?news_id=132208&date=2011-04-11
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