Indo-Bangladesh trade has caused another hitch in bilateral relations which has recently been faced with a number of political hurdles. The differences surfaced in the course of the regular trade talks between the countries.
Though both have always shown their willingness to raise the volume of regional trade through preferential trading arrangements, problems crop up when details are discussed. A major irritant is the huge trade imbalance that exists between the countries and India’s dominance in trade. Bangladesh’s imports from India amounted to $ 1,022 million in 2001-02 while its exports to India were only $ 50.28 million. Its trade deficit with India jumped to $971.72 million in 2001-02 from $332.12 million in 1992-93.
To reduce this imbalance, Bangladesh has demanded easy and tariff-free access to India on a non-reciprocal basis. As India also has to safeguard its trade interests, it has suggested an alternative. Like Sri Lanka, it wants Bangladesh to sign a free trade agreement with it. A freer trade environment can also take Nepal in its ambit and start a process of sub-regional cooperation between Nepal, Bangladesh and India. India especially wants Bangladesh to provide it with transshipment facility which will facilitate the movement of goods to and from its landlocked Northeast. It believes that this facility would give a major impetus to development in this area which is infested by insurgents. Besides, it can also provide some useful revenue to Bangladesh.
But Bangladesh has been accusing India of obstructing its exports through non-tariff barriers. It wants preferential market access as a south Asian association for regional cooperation member. It also wants that the bilateral trade agreement be rewritten to pave the way for more trade with northeastern Indian states.
To sort out some of these issues, Bangladesh and India signed an agreement in New Delhi on March 25 under which India agreed to provide duty-free access to 39 more items out of the 121 Dhaka has been pressing for. Earlier, India had allowed duty-free access to 40 items. Pharmaceuticals, toiletries, cosmetics, steel and plastic furniture, and copper wire are among the new items.
There is also the problem of the underdevelopment of land customs stations, infrastructural bottlenecks at the entry and exit points at the border, banking problems and administrative complexities. To tackle these problems, India and Bangladesh agreed on the common list of ten land customs station, five on each side in the first phase. They also agreed to improve the infrastructural facilities within a timeframe. India also agreed to provide Bangladeshi exporters with facilities at the customs points.
Some outstanding issues remain. The countries could not complete the negotiations for a new or revised bilateral trade agreement, but agreed to renew the existing trade agreement from time of time till its replacement. India also promised to consider more duty-free concessions under the framework of a bilateral free trade arrangement.
During the talks, India pointed out the significant delay in convening a meeting of the joint group of experts to consider issues related to border trade, trans-shipment of Indian goods through Bangladesh territory, and deepening of tariff concessions. Bangladesh conceded that the issues would be discussed at the forthcoming joint economic commission meeting in Dhaka in July. But a free trade agreement with New Delhi would be considered only when the trade deficit with India was reduced significantly.
The latest round of commerce secretary level talks has made some headway. But Bangladesh has to realize that to get a favourable trade balance, it has to take steps to make its industries more competitive so that they can sell their products in the south Asian markets. Without that edge, Bangladeshi goods cannot create their niche in the Indian market.