INDO-BANGLA TRADE TALKS
Chattogram port. — New Age
THE friendship between India and Bangladesh is officially claimed to have reached its peak during the governance of the prime minister Sheikh Hasina, as a result of which the bilateral trade between the two countries have improved and many impediments have been reduced. The most important component of global trade today is ‘logistics’ and the absence of an efficient logistics system can and do negatively affect the progress of a nation. Governments and multilateral agencies realise the economic benefits for connectivity and as such several connectivity programmes are under way or under serious considerations. In terms of bilateral trade of Bangladesh and India, both the countries share some common rivers and the focus is now given on water transport that is both cost-effective and environmentally-friendly.
The governments of both countries have undertaken major dredging projects for the almost dried-up common rivers, principally the Ganges/Padma and the Brahmaputra channels, to facilitate both external and internal trade and commerce of India. The seaports of Bangladesh will be used as gateways for the Indian external trade or the ports of Chittagong and Mongla and, perhaps in course of time, both Matarbari and Payra ports will be serving as transshipment ports, to be precise, and then the goods will move in transit through the river and or road networks of Bangladesh.
It all read well until an English daily newspaper quoted the shipping secretary who said that there would be no customs duties and transshipment charges on the Indian cargos in line with the General Agreement on Tariffs and Trade. There is a minor ignorance in the statement as customs duties do not apply to goods in transit. The fact of the matter is that transshipment and transit is a global phenomenon and the countries that allow its infrastructure to facilitate the trade and commerce are within their rights to impose transshipment and or transit fees for goods moving through their gateways and using their territorial surface or water transport. Even aircraft overflying the airspace of a country have to pay a fee to the country overflown.
The ports in Bangladesh that will be used as gateways for the transit of Indian goods need to recover their costs and expenses by imposing a levy to be able to sustain and continue to provide the services of a transshipment port. We also pay the same, ie transhipment fees, for our external liner trade via Singapore, Tanjung Palapas, Port Klang, Colombo, etc and so do others who have their external trade moving via a transshipment port. It is just a part and parcel of international commerce. Similarly, there is a fee for transit, ie for the use of the transport infrastructure of a country, including roads or rivers. There is a cost for developing and building such facilities as well as for the maintenance. So a transit fee for the use of the facility is again a part and parcel of international commerce and there is hardly any room to dispute the idea.
The payments of such fees, ie transshipment or transit or both, are universal and based on the ‘users’ pay’ concept. The fact of the matter is the services have a cost and if the users do not pay for the services provided to them, it defies the principles of economics. The burden, therefore, becomes uneconomical and has to be shouldered by the people of the country that allows its gateways as well as transport networks and infrastructure for the transshipment and transit trade of third countries. However, not a single country provides such services free simply because no country is that unwise to take the burden of the cost of trade and commerce of another at the cost of its own economy. The logic of our decision makers, thus, becomes questionable while they decide to offer free transshipment and transit facilities to Indian trade and commerce and puts the burden on its tax payers. However, we may consider shouldering such burden if it is for the cause of charity or humanity that we have shown for the humanitarian cause for the Rohingyas but trade and commerce are not a charity and while we discuss trade and commerce, it must be conducted on commercial terms and considerations.
Common sense also dictates that when issues relating to transshipment and transit are discussed and negotiated, such discussions and negotiations cannot fall on a single ministry and as it has a serious and substantial impact on revenue, the use of ports, roads, waterways and, maybe, railways in the long run as well as the security of the entire logistics network, the ministries concerned for the matters in question should also be included in the team for bilateral talks and negotiations with the ministry in charge of revenue to lead the team. After all, it is economics at the end of the day that rules. The shipping ministry is concerned with issues related to maritime and riverine matters but when it concerns revenue, it should be the jurisdiction of the finance ministry.
Bangladesh is most liberal in its attitude to its neighbours, particularly India, and we do remember their support for our struggle for independence but that should not be a bargaining chip in trade and commerce. Countries offer their gateways and transport networks to facilitate global trade and earn revenue for the services provided in the transshipment and transit of goods. It is in all practicality a matter of ‘quid pro quo’. Otherwise, why should any country open its ports and transport networks to third countries that have a cost to build and maintain as well as recuperate the damages such services cause to its infrastructures and environment? The landlocked Switzerland allows its surface transport infrastructure for the transit of neighbouring regions and when I visited Zurich some years ago, I was informed of the government policy on transit that provides the imposition of higher transit fee for containers carried by road haulers than the fee imposed on containers if transported by railway network. The reason is obvious: the road transport causes more damage to environment and is more expensive to maintain and generates higher pollution compared with the railway. The objective is to protect the environment and minimise pollution that trucks cause by giving the incentive of alternative. So in trade and commerce, there is no such thing as charity and users pay for the services they receive.
It, therefore, will not be a wise consideration to allow a free service and make precedence against the backdrop of our interest in the Comprehensive Integrated Multimodal Economic Corridor Network connectivity programmes, including the Bangladesh China India Myanmar Economic Corridor, or connectivity programmes under the auspices of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation and South Asia Sub-regional Cooperation. The stakes are very high and decisions must be taken prudently as as not to cause any regret later.
Friendship is one thing but business is another; and in reality, there is no permanent friend or a permanent enemy, only permanent interests. It is, therefore, foolhardy to consider sustaining damage in return for friendship and true friendship lies in protecting mutual interests and not unilateral agenda.
Khandaker R Zaman, a former fellow of the Chartered Institute of Logistics and Transport in Australia, is the chief executive officer Allseas Shipping Ltd.
Source: New Age.
