Opinion A statement is only a start

Issues of deepening bilateral economic cooperation constitute an important part of the joint communiqué. In recent years,with imports from India rising,the growing trade deficit with India had been a cause of concern in Bangladesh. Non-tariff barriers (NTBs) in India and a “negative list” of items still subject to tariffs — which included most items of export interest to Bangladesh — had fuelled these concerns. Of course,imports from India provide Bangladesh access to consumer goods,raw materials and inputs such as fabrics for export-oriented sectors,at competitive prices. Consumers,producers and exporters in Bangladesh benefit from these imports. Indeed,imports from India help Bangladesh sustain a trade surplus with the US that surpasses its bilateral deficit with India.

But the fact of the matter is that Bangladesh has not been able to access the growing Indian market to the degree it aspires to. True,in recent times,under the SAFTA accord and at India’s unilateral initiative,some of the barriers constraining Bangladesh’s exports have been reduced. The communiqué mentions reducing these barriers further: 47 items will be taken out of the negative list,and NTBs are to be reduced; India has agreed to assist in the strengthening of Bangladesh’s standardisation and testing institution (the BSTI). Political commitments must percolate to bureaucratic levels so that these are implemented in good faith and swiftly. This will,hopefully,be followed up through a framework agreement of mutual recognition of certifications issued by standards institutions of the two countries.

The issue of connectivity has historically constrained economic ties. Recently some positive,if tentative,moves have taken place to facilitate the movement of people through bus and rail connections. The water protocol had provided only a limited facility for movement of goods from India up to certain points of call in Bangladesh and vice versa. The two countries have now decided to undertake important initiatives to expand and deepen connectivity through road,rail and water transport,including using Chittagong and Khulna sea ports. An agreement allowing transit to Nepal through Rohanpur-Singabad broad gauge rail link has also been reached with a request for rail transit to Bhutan as well. These are initiatives which will contribute importantly to trade facilitation in the sub-region.

These could also potentially create opportunities for export of services by Bangladesh and help reduce the trade gap with India. Indeed,the vast hinterland of Chittagong and Khulna sea-ports could create opportunities for the emergence of these ports as regional hubs,provided that adequate infrastructure is built and appropriate protocols of transport and connectivity are developed. India’s announcement of a line of credit of $US 1bn to develop some of the required infrastructure will help. One hopes that the terms and conditions of this support including the rate of interest will be favourable from Bangladesh’s perspective. India’s agreement to supply 250 MW electricity from its grid to Bangladesh and the emphasis put on inter-grid connectivity opens a new chapter in this critical area of interest to Bangladesh,particularly in view of its energy availability situation. Whilst 250 MW may not make a big dent in Bangladesh’s formidable deficit,it is a good start.

Realising the full potentials of the various avenues that have been identified during this visit,a comprehensive follow-up effort,will be challenging. What would be the price of electricity? What would be the terms of the credit line? Where will the infrastructure be built? How will the NTBs be reduced? How can transit be operationalised? Each will need concrete answers. One hopes that the bureaucracy entasked with the job gets on with it in the spirit of the communiqué. A good foundation has been laid,a new horizon awaits. The challenge now is to build on it.

The writer is executive director of the Centre for Policy Dialogue,a Dhaka-based think-tank

express@expressindia.com