Vision 2030 for Regional Trade
By Asaduzzaman
All around the world, global integration of trade and investment through enhanced trade and wider connectivity has become a key instrument to reap higher economic benefits. However, even with this widely accepted notion, we have seen a reverse trend in the case of South Asian Association for Regional Cooperation (SAARC) countries. Growth of international trade in South Asian nations has been fraught with barriers which have lead to a surge in informal trade across borders. The removal of these barriers has become increasingly difficult due to the lack of effective commitments and political resilience along with deep rooted mindset issues. According to the World Trade Organization (WTO), statistics comparing global trade to SAARC intraregional trade was only around 5.11% in the last year while in 2005 it was around 5.84%. The signs are alarming and as such steps are being taken to remedy this situation to boost the connectivity between the countries of the region. Recently Bangladesh, Bhutan, India and Nepal (BBIN) inked a Motor Vehicle Agreement (MVA) which is regarded as a milestone.
The Federation of Bangladesh Chambers of Commerce & Industries (FBCCI), the apex body of trade and business in Bangladesh has formulated a proposal on South Asian Free Trade Agreement (SAPTA): Vision 2030. Their proposal for effective regional trade facilitations mechanisms highlights and discusses the issues of Non Tariff Barriers (NTB) and Non Tariff Measures (NTMs) in the region. The proposal comes in preparation for the meeting of the SAPTA (South Asia Free Trade Area) committee scheduled to be held in Kabul in January 2016.
Vision 2030 of FBCCI on SAPTA has proposed the following:
1. Introduction of multiple Visa to ensure hassle free travelling within the region.
2. Harmonization of cross border trade regulations.
3. Harmonized tariff nomenclature at 8digit level should be created based on the Harmonized Commodity Description and Coding System (HS) by an end date.
4. Simplification of customs procedures to reduce time and costs of each transaction at customs points.
5. Regional customs action plan should be implemented by an end date.
6. Transport and communication in port and warehouse facilities should be developed to benchmark levels within specified time frames.
7. SAARC trade infrastructure development fund should be created.
8. Online publications of designated focal points, respective tariff schedules, NTMs and regulations on Rule of origin.
9. Labeling requirements, customs clearances and appeal procedures should be set up by an end date.
10. Long term export and import contracts for public and private sector procurements should be encouraged and facilitated to expedite and sustain mutual trade support chain in the region.
11. Acceptance of certificates issued by respective preselected designated institutions should be ensured in all ports of entry as an interim measure.
12. MFN and national treatment should be accorded in respect of registration, packing and labeling and testing requirements along with charges and fees thereof.
13. Fees levied should only be on the cost of services rendered and shall not be used for fiscal purposes or as protection to domestic products.
14. Import licensing and banking services should also be ensured to make import and export transactions simpler and easier.
15. Ensure exchange of information on the prevention and repression of smuggling, trafficking of narcotics and psychotropic substances and other custom frauds.
16. Appropriate transport and transit protocol with regulations on fees and changes with harmonized and simplified custom procedure as prescribed in WCO annex-E should be operational.
17. SAARC connectivity through tourism, cultural exchange, and media exposure should be intensified in areas. This should be applied to investment policies, tourism development planning, human resources development and environment and cultural preservation to achieve continued and long term viability of the SAARC fraternity
18. The Governments should take effective steps to conclude a regional energy trade agreement among SAPTA members specially Bangladesh-India–Nepal-Bhutan (and Myanmar) to foster and facilitate regional energy and trade.
Billions of dollars worth of illegal trade are happening across borders just because official channels face tariff barriers, high transport costs, domestic policy distortions and so on. As such a report from the “Indian Council for Research on International Economic Relations” has mention that SAPTA could be effective in bringing about a shift in trade from the illegal channels to legal channels. The report also said that inadequate transport and transit systems that have been in existence between India and her neighboring countries have been a major constraint in enhancing trade through legal channels. If infrastructural development is not undertaken on an urgent basis, unofficial trade will continue to be more attractive.
The implementation of SAPTA agreements (since 2006) has been instrumental at promoting regional trade, and larger economic cooperation among the countries of the SAARC region. The key bilateral initiatives have taken the form of the Indo-Nepal and Indo-Bhutan Trade Agreements, India-Sri Lanka Free Trade Area, India-Singapore Comprehensive Economic Cooperation, BIMSTEC and the India-ASEAN Framework Agreement on Economic Cooperation.
With an eye to get benefits from SAPTA, the FBCCI have come up with the proposal for the government but it needs multilateral cooperation and an active role of the government to makes things work. Abdul Matlub Ahmad, President of the FBCCI spoke to IBT in this regard. He mentioned that Bangladesh has progressed more than other countries in a sense that we have reduced many of our tariffs. “If you look at SAPTA and what we are planning by 2020, then countries are supposed to reduce tariffs to zero on 95% of their commodity items. This idea has already been accepted. We are progressing into 2016 and already 60 to 70% of our tariff lines have been reduced to the level which was agreed upon. India has been cooperative in this regard with some LDC countries and Bangladesh has been one of the beneficiaries of this.” He opined that for SAARC nations it is the time to move forward and confidently said that the SAPTA agreement that has been forecasted by FBCCI will be successfully implemented which will hopefully appeal to other countries to follow.
