Transcript NTBs Under NAMA Negotiations A South Asian Perspective

Trade Facilitation in South Asia: A
Study on Needs Assessment
By
Pranav Kumar
Chandan Mukherjee
CUTS International
Jaipur
E-mail: [email protected]
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Trade Facilitation: A Background
• Trade facilitation: Identified as one of issues for
multilateral agreement in 1996
• The Council for Goods in WTO was entrusted
with the task of studying the issue
• Serious differences persisted among WTO
members over its inclusion in the negotiating
agenda
• Finally, in July 2004, it became part of WTO
negotiating agenda with a limited mandate
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Trade Facilitation: A Complex
Agenda
• No multilaterally agreed definition of trade
facilitation
• Narrow or broad definition
• To deal with only border issues or behind the
border issues including standards etc.
• Cost implications are not too clear
• Benefit aspects have been more highlighted
• Greater realisation on the part of developing
countries of needs of trade facilitation
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Trade Facilitation: Why It is
Necessary?
• Growing competition putting pressure to cut
down transaction cost of trade
• The need is felt more by developing countries
• South Asian countries have opened their
economies only in the last decade
• Article 8 of SAFTA agreement makes provisions
for addressing issues related to trade
facilitation measures
• Landlocked countries like Nepal and Bhutan
always have to face problem of transit etc. 4
About the Study
• TF needs assessment in Eastern region of
Indian sub-continent
• Aimed at identifying major impediments to free
movement of goods within the region
• Involves field study in major transport corridors
in Bangladesh, Nepal, and West Bengal & N-E
states of India
• Following that a diagnostic survey was also
conducted
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Trade Facilitation: Prevailing
Situation
• Port efficiency and Infrastructure
• Transportation including roads and railways
• Customs procedures
• Standards and technical regulations
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Trade Facilitation: Prevailing Situation
Port Efficiency and Infrastructure
• South Asia has three types of maritime ports –
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transshipment hubs, regional hubs ports and regional
seaports
The port of Sri Lanka is the only transshipment hub in
South Asia
Nhava Sheva port, India’s largest port is considered as
regional hub port
Ports of Kolkata and Haldia in West Bengal and
Chittagong are regional ports – provides feeder
services to major ports
Congestion at regional hub ports and regional ports
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causes delay in delivery
Trade Facilitation: Prevailing Situation
• An important example is the Nhava Sheva port in
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2004, where continued problem of congestion lead to
estimated loss of around Rs. 800 crore a month
because of delayed shipments
Delays in regional seaport are longer. In contrast to
transshipment hubs and regional ports, regional
seaports do not operate on the fixed day of the week
schedule
• Excessive delays in moving cargoes through
the ports of Calcutta and Chittagong have
impacted negatively on trade.
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Trade Facilitation: Prevailing Situation
Transportation
• Lack of proper cross border transit points and road
connections across the region are major hindrances
to intra regional trade
• Lack of integrated transport networks in the region
clearly raises cargo-shipping cost
• Problem is more critical for the landlocked countries
like Nepal and Bhutan
• In addition labour problems cause delays in transit
and congestion in land transport network.
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Trade Facilitation: Prevailing Situation
• A number of road corridors in the region is not maintained and
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are of limited capacity
In India the percentage of paved roads at 56 percent is lower
that than in countries of East Asia, which averages 88 percent
The cost of road transport is also high. The average transport
costs on the Kolkata–Petrapole route between Bangladesh and
India is Rs 2543, 40% higher than other highways
It takes almost 15 days for a container from New Delhi to reach
Dhaka, because it comes by sea via Singapore, and the cost is as high
as US $ 2,500.
This would otherwise cost only $500 and take just 5 to 6 days. There
is no direct system of transportation between the two capitals. The
distance between Dhaka and Delhi by water is 7,162 kilometers while
it is only 2300 kilometers by road, which could be covered within 2-3
days by road.
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Trade Facilitation: Prevailing Situation
• There is also a train track between Raxaul in India,
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Rohanpur in Nepal and Rajshahi in Bangladesh.
However, the operation of the route requires bilateral
agreement among the three countries
There are train tracks from Bangladesh to
Northeastern states of India, but the system is not
operative, as Bangladesh does not provide the transit
facility to India
There have been a number of projects to upgrade
railway networks over the past decade. However,
problem is still persisting
The types of rail gauge also vary among countries and
regions.
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Trade Facilitation: Prevailing Situation
Border Crossing and Customs
• Border crossings mostly includes inter related infrastructure and
facilities such as customs clearance, check posts, truck waiting
areas, storage depots, rail yards and loading and unloading
areas at ports
• The border at Benapole is repeatedly one of the most
developed in the region with facilities for warehousing, and
other facilities
• Problem arises when customs clearance centers are located far
away from the border. Facilities such as sanitary and
phytosanitary testing laboratory in Kolkata is located 1000 kms
from the customs facility at Birgunj, Nepal
• Exporters pay additional fees for vehicle detention charges for
weeks while waiting for test results. This along with affecting
the cost affects the quality of the product
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Trade Facilitation: Prevailing Situation
• There are also delays in transaction in border
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crossings. Some of these delays are associated with
preparation of the customs documents and
inspections due to the lack of standard documents.
At the Indo-Bangladesh border a consignment needs
at least 22 documents, more than 55 signatures, and a
minimum 116 copies for the final approval (RIS, 2004).
Each country requires different documents such as
transit export and import declarations. Exporters must
prepare separate document at each side of the border
Further more the region uses different classification
systems for commodities. This leads to general lack of
transparency and problems in product classifications
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in trade
Trade Facilitation: Prevailing Situation
• Countries in South Asia too some extent have moved over the
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past decades to improve customs. Example includes India has
launched a modernization project in customs, which include
leveraging Electronic Data Interchange (EDI) technology, which
allows exchanging documents and forma electronically to
streamline clearance
In Bangladesh the steps required for export /import clearance of
fibers, fabric and garments have been reduced by 75 percent
Nepal is currently undertaking reforms under a 3-year Customs
Reforms and Modernization Action Plan. Reforms include
upgrading physical facilities, administrative structures and
automation of customs, and simplification and harmonization of
procedures.
The reforms resulted in a revenue increase by Rs. 900 million
in the first six months of 2004 from the same period in the
previous year. EDI systems are yet to be implemented
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Major Transport Corridors: ChittagongDhaka
• Chittagong-Dhaka provides potential sub-regional
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linkages to North-Eastern states of India and via
Jamuna bridge to West Bengal as well as Bhutan and
Nepal through India
Bangladesh because of its strategic location can play a
significant role in the sub-regional transportation
system by providing alternatives in terms of direct and
shorter transport links by rail, water and road.
Chittagong port can be the gateway to promote trade
in the region.
Chittagong Port has the potential to become a high
revenue generating port provided it is properly
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upgraded
Major Transport Corridors: ChittagongDhaka
Major Infrastructural Bottlenecks
• The rail line between Dhaka and Chittagong is primarily single
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lane, meter gauge track. The container traffic on this route has
grown substantially to more than 400,000 tonnes over the last
decade
Congestion is growing especially around Narayanganj and
Dhaka with transit times of 6-7 hours implying an average travel
speed of 35-40 km/h.
Despite the congestion and because the railways capacity is
limited, the road handles about 83% of the containerized cargo
moving between Dhaka and Chittagong
This corridor has an air route with frequent daily flights between
Dhaka and Chittagong and an inland water route from
Narayanganj down the Meghna and across the bay to
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Chittagong.
Major Transport Corridors: ChittagongDhaka
Chittagong Port Facility
• Shortage of manpower (almost 2500 posts are vacant); lack of
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training facilities to the workers; frequent strikes delay the work
process at the port.
Lack of the requisite container services from the port. Railway
service is very poor and container is not available every time.
The train handles only 10-11 percent of the total throughput of
containers handled at the Chittagong port.
Lack of modernization has made railway traffic movement even
slower. It takes 8 hours from Chittagong for a container to
travel to Dhaka, while roadways transport vehicle travel within
4.30 – 5.00 hours time.
Lack of proper inland distribution system of the cargoes from
the ports. There is one stop information facility at the port but
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it is not functioning well to provide all the information to the
Major Transport Corridors: ChittagongDhaka
• The main mother shipping vessels do not come to the
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Chittagong port. Goods are carried from the port in
feeder vessels to either Singapore (mostly) or
Colombo to load into the mother vessels.
The turn around time of container is also high and
that’s why different shipping agents do not agree to
send containers to Bangladesh.
Sometimes the feeder vessels do not reach the
Chittagong port directly due to congestion at the port.
The feeder vessels wait at the outer anchorage
maximum times for one or two days before reaching
the port (maximum waiting time is 72 hours).
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Major Transport Corridors: ChittagongDhaka
• Lack of computerization & automation in the port, so manual
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process makes the work slow and cumbers some.
Lack of computerization & automation makes the process slow
and cumbersome.
In Singapore, a vessel is cleared of the goods in six hours, and
the same takes about 72 hours in Chittagong due to lack of
modern scientific instruments.
Shipments from Kolkata to Chittagong come through the
Singapore port and it takes about 15 days and costs about US$
1800 for a container. The same shipment through Panipath
would take seven days and cost US$ 500 for the containers.
So using the shortest route to import would bring down the cost,
however there is requirement of building proper infrastructure to
support the same.
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Major Transport Corridors: ChittagongDhaka
Problems with Customs Procedure
• The customs procedure is complex. One stop service is not yet
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available to that extent. The export and import documents need
to be submitted at different points. Total signatures required to
process the document is almost 30.
Only the customs valuation, HS code verification and invoice
checking is carried out through the ASYCUDA++ module. All
other customs process and procedure are performed manually.
An import customs clearance process takes almost 13-16
steps. If it includes the process work of the Chittagong port
authority, then it takes about 21-22 steps. Almost 48 stamps
are put on the documents and average clearance time of the
import is three to five days.
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Major Transport Corridors: West
Bengal-Dhaka
• The West Bengal-Dhaka corridor includes a road route
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via Petrapole/Benapole and rail routes via Darsana,
Rohanpur, Benapole, and to a lesser extent Biral.
The Benapole land port in Bangladesh is the most
developed port among all the other land ports in the
country.
Almost 80 percent of the goods from India are
exported to Bangladesh through this land port.
This had been a major route for importing Indian fabric
yarn for the Bangladesh garment industry.
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Major Transport Corridors: West
Bengal-Dhaka
Customs Procedure
• The customs house at Benapole is equipped with the ASYCUDA++, making
the customs procedure fast and efficient. This is the only port in the country
where ASYCUDA ++system is fully implemented.
• With the introduction of the computerized system the number of signatures
required to process the documents has come down to 17/18.
• But there is no sample-testing centre near the port and the sample needs to
be carried to the Bangladesh Standards and Testing Institution (BSTI) in
Dhaka.
• The customs final inspection procedure for the outgoing trucks from
Benapole to the other cities in Dhaka is complicated. The trucks are forced
to stand near the check post for verification of documents from the truck
drivers (there is no representative of the importing party, sometimes the C &
F agents remain with the truck drivers), one after the other making the
process delayed and unscientific, which results in creating unnecessary
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congestion in the place.
Major Transport Corridors: West
Bengal-Dhaka
Road Infrastructure
• Benapole, the border of Bangladesh is almost seven hours drive from
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Dhaka. The other side of the border is Petrapole in India.
The river bridges on the way are narrow, allowing only one vehicle in
a particular direction to move at a time.
The traffic enroute is very busy and hinders the steady movement of
the goods. Even though there is railway line from Benapole to
Jessore but the railway facility is almost non-existence due to lack of
investment.
All vehicles in Dhaka-Benapole route have to cross the
conglomeration of the Padma and Jamuna rivers. There is no bridge
on the river yet so the vehicles cross the river through steamers.
Number of steamers is limited and only a small channel of the river is
fit for navigation, the remaining major portion is covered with silt.
There is limited initiative from the government to clear the silt due to
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shortage of resource.
Major Transport Corridors: West
Bengal-Dhaka
Land Port Facility – Benapole
• This land port is the only developed one among the various
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land ports in Bangladesh, and is the only port operated by
government.
There are government warehouse facilities near the port where
the goods from the Indian trucks get unloaded before they get
reloaded into Bangladeshi trucks.
However, the number of warehouses required in commensurate
with the increase in the volume of the import by the country is
much more.
The Benapole truck terminal for the Indian trucks has a
capacity of 600 trucks, which is in excess of capacity.
It takes on an average of two days to unload from Indian truck
and reload in a Bangladeshi truck in the warehouse.
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Bangladesh-N-E India Corridor
• Huge prospects and potentials for promoting trade and
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investment between Bangladesh and seven Northeast States of
India.
Despite rich in natural resources, this landlocked region is
distantly connected with the rest of India only through a narrow
Siliguri corridor of 22 km stretch.
The seven state capitals are at a distance varying from 1080
km to 1680 km from their nearest mainland port city of Kolkata.
On the contrary the distance of those cities from Dhaka and
Chittagong is much shorter than that of Kolkata
Moreover due to undulating topography and innate difficulties,
this region is underdeveloped with poor infrastructure,
transportation system and other logistic facilities.
As a result, transportation cost of goods to and from this region
to rest of India and within the region is exorbitantly higher than
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that of any strategic parts of Bangladesh.
Table: Distance of NEI State Capitals from Kolkata and
Important Cities of Bangladesh
Distance from Cities in Km.
Capital Cities
of NEI
Kolkata (India)
Dhaka
(Bangladesh)
Chittagong
(Seaport, B’desh)
Sylhet (An imp.
divisional city of
B’desh )
Agartala
(Tripura)
1680
186
248
238
Aizwal
(Mizoram)
1550
555
655
255
Guwahati
(Assam)
1080
580
675
236
Imphal
(Manipur)
1565
635
735
335
Shillong
(Meghalaya)
1180
480
575
136
Kohima
(Nagaland)
1420
780
880
480
Source: The Chittagong Chamber of Commerce and Industry
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Bangladesh-Nepal Corridor
• The phulbari Banglabandha transit route could not be properly
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operationalised, as the 45 km road that passes through India
does not have the adequate infrastructure for easy movement
of cargoes.
There is no proper customs facilities or testing laboratories in
this region. The transit facility is virtually non-existence. The
transit agreement is signed by India with Nepal only and not
with Bangladesh.
Though Bangladesh government has already set up an
immigration office in Banglabandha but India is yet to do so.
The borders are opened for 2 hours and the Indian border
security force escorts the trucks from Kakarvita to
Banglabandha. The border officials are reluctant to do unless
minimum 20 numbers of trucks are in queue.
The Indian government has also not developed the 2-kilometer
mud road between Nepal and Indian border. It becomes difficult
to run the unloaded vehicles on the two-kilometer mud road.27
Indo-Nepal Corridor
• Customs Problems at Raxaul in India
• Port/Customs facility at Kolkata, India
• Transport through rail/road to the port of
Kolkata
• Inland Container Depot facility in Nepal
• Standards related problems
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