Non-Tariff Barriers Make ‘Little Sense’ Of Any FTA Deal with India.

A Free Trade Agreement (FTA) with India makes "little sense" for Bangladesh if New Delhi does not remove more than a dozen non-tariff and para-tariff barriers to Dhaka's exports, a government study has said.

The study said Dhaka needs to sign a Mutual Recognition Agreement (MRA) with New Delhi, which will pave the way for acceptance of Bangladesh's tests and certifications in India, before the two neighbours enter into a bilateral FTA.

Bangladesh Tariff Commission conducted the study after it was asked by the Prime Minister's Office (PMO) as India has repeatedly showed its interest to strike a free trade deal with Bangladesh, a top official in the government said.

"The existing para-tariff and non-tariff barriers imposed often by Indian authorities on shipment from Bangladesh to India are the major obstacles hindering Dhaka's export growth to New Delhi," BTC Chairman Mojibur Rahman told the FE Thursday.

"If these barriers are in place, a bilateral FTA with India will make little sense for Bangladesh," the BPC Chairman said.

He said Bangladesh's current export to India would increase by two to three-fold if the barriers are lifted and a MRA is signed. "Dhaka would undoubtedly and highly benefit from an FTA, but only after the trade hurdles are gone."

According to the study, India has imposed 15 types of non-tariff barriers to the exports by Bangladesh.

Notable among the barriers are: importer-exporter code number, registration cum membership certificate, registration hassles for exporting medicines, obtaining licenses from Indian standard and testing agency and stringent packaging requirements.

India also does not accept standard certificates or test reports issued by the Bangladeshi testing authorities and it hardly provide adequate facilities and sheds to Dhaka's exports to its land custom stations.

In addition, Bangladeshi exports need to undergo marking, mandatory testing and special labeling requirements, face contradiction in standards and charges other than customs duty and very often need no-objection certificate.

"In fact, India has provided duty-free access to almost all potential items of Bangladesh but our exporters cannot utilize the opportunity mainly for various non-tariff measures by India," the BTC study report said.

"Therefore, non-tariff barriers are the key obstacles to exporting to India," it added.

The BTC chief said Bangladesh can narrow its ballooning trade deficit with India if New Delhi removes the NTBs and para-tariff barriers.

The trade deficit between India and Bangladesh doubled to $4.05 billion in fiscal year (FY) 2010-11 from $2.0 billion in FY2006-7, according to the statistics of the Export Promotion Bureau.

Bangladesh imported Indian goods worth $4.57 billion in FY2010-11, while it exported goods worth $512 million to India during the same period.

The report suggested for introducing incentive schemes by the government for the Bangladeshi manufacturers, similar to what the Indian government provides for its export-oriented sectors, so that the local exporters get advantage under an FTA with India.

The report said if the proposed bilateral FTA can ensure an MRA between the two nations, it could lead to harmonization of standards and quality, technical regulations and administrative and legal procedures in trade in goods and services and investment.

"In such a scenario, there exists a good prospect for growth of bilateral trade," the report said.

"A good deal of success of a bilateral FTA in favour of Bangladesh will depend on removal/reduction of the existing para-tariffs and non-tariff barriers applied by India. In fact, one of the prime objectives of bilateral FTA should be removal of non-tariff barriers," it added.

The FTA report said India has good demand for some products of Bangladesh like chemical fertilisers, frozen fish, leather and leather products, jute and jute products, cosmetics and toiletries, woven garments, pharmaceuticals, tea, dry food, betel nuts, PVC bags, dry cell battery, primary products, cotton waste and textile fabrics.

Early this month New Delhi unilaterally announced duty-free access to 46 Bangladeshi garment items in an effort to boost trade. Exporters fear they may not cash in on the offer due to the numerous NTBs erected by the Indian authorities.

Source : thefinancialexpress-bd.com