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Bangladesh's readiness to reap TFA benefits

Ferdaus Ara Begum   | Published: October 06, 2019 21:01:21 | Updated: October 06, 2019 21:05:25


Trade facilitation (TF) is important because it can bring down trade transaction cost, clearing goods for import and export and reducing time for the entire process. Unfortunately, trade transaction cost in Bangladesh is one of the highest even after a number of steps and reforms that have been taken by the government to establish a transparent border transaction procedures.

The National Board of Revenue has implemented a number of projects in collaboration with donor organisations but improvement in this sector is still far away from the desired level. Global exports and imports are on the rise, but if Bangladesh cannot prepare and restructure, for example, its border trade infrastructures accordingly, it will eventually lose its share:

According to the World Trade Organisation (WTO, 2013), the Trade Facilitation Agreement could reduce business costs by and between $350 billion and $1.0 trillion and increase world trade by and between $33 billion and $100 billion in global exports per year and $67 billion in global GDP (gross domestic product).

These figures show that the WTO's trade facilitation agreement among members offers a huge potential for growth in trade and investment and Bangladesh can enjoy the benefits of transparent and simplified customs procedures if timely actions are taken.

TF was adopted at the WTO's 9th Ministerial Conference in Bali, Indonesia, in December 2013.  On November 27, 2014 the General Council of WTO formally agreed to open Trade Facilitation Agreement (TFA) for acceptance.  TFA entered into force on February 22, 2017 after two-thirds of the WTO members completed their ratification process.

Bangladesh ratified the agreement on September 27, 2016 as the 94th member of WTO and 12th LDC member. A total of 146 or 89 per cent of members of the WTO have ratified the TFA. The rate of implementation commitments to date is 63 per cent.

The Agreement has three specific sections that deal with different TF meanings and obligation (section I), responsibilities and capacity building needs (Section II) and institutional arrangement (Section III). Member countries can notify based on their needs and supports from donor organisations.

The countries will notify the WTO of the measures that they are prepared to implement within one year following the date of entry into force of the agreement (category A measures), the ones that they cannot implement without additional time (Category B) and the ones that they cannot implement without additional and external support (Category C).

Bangladesh needs to make the first notification no later than one year following entry into force of the agreement. The latest communication of Bangladesh was posted on February 14, 2019 to the committee on trade facilitation for its assistance and support for capacity building in keeping with the TF agreement.

As per WTO database, the rate of implementation commitments to date across the categories for Bangladesh  is 34.5 per cent (A). The rate applicable for the period between February 2020 and February 2022 without capacity building support is 38.2 per cent (B) and the rate upon receipt of capacity building support is 27.3 per cent (C).

The agreement was ratified on April 22, 2016, by India, a country which has a rate of implementation commitments to date across categories is 72.3 per cent (A). India's rate of implementation commitments by February 2022 without capacity building support is 27.7 per cent (B) and that for category C is zero. Sri Lanka ratified the agreement on May 31, 2016 and the country's rate of implementation commitments to date across categories is 29.8 per cent, while it is 1.7 per cent by December 2019 without capacity building support. However, Sr Lanka's rate of implementation commitments from December 2021 to December 2030 upon receipt of capacity building support is 68.5 per cent, shows the WTO database.

The database suggests that the member countries have made commitments under different categories within the stipulated timeframe.

Bangladesh needs to go a long way to implement TFA commitments. Recently, a team of experts of the World Bank Group assessed the country's alignment with the agreement and its improvement after the first assessment done in 2015.

Bangladesh's notification of February 2019 with indicative date suggest that definitive dates for implementations of category B and C are almost absent or "it is yet to be determined". Respective countries are supposed to establish enquiry points (EPs), something that has already been established in Bangladesh under technical assistance of the World Bank. But the EP needs support for legislation, consultation workshop, seminars and organising roundtables, training, capacity development and needs assessment.

On release and clearance of goods (Article 7), the NBR is currently working to implement the measure under the technical assistance of the USAID. Similar assistance is required for the EP. Risk management is another important issue applicable for customs clearance for exports and imports. The NBR is working on that aspect in cooperation with the USAID and the World Bank Group. Assistance is required as support for legislation, consultation, training, capacity development and needs assessment.

Some development has been made in the plant quarantine wing, which has received training. Capacity development of surveillance mechanism, establishment of pest risk analysis procedures, technical support on risk assessment and mitigation, documentary and awareness development programmes on the social media for moral and ethical responsibilities, preparation of SOPs etc. are the supports that are required for the country.

Bangladesh Standard and Testing Institute (BSTI) is also working for capacity development, and stabilisation of risk management system following international best practices. Bangladesh Atomic Energy Commission also needs support. However, no development organisation is working with the commission at the moment. On the other hand, the accreditation process for developing laboratory facilities is going on and the plant quarantine wing needs support in that respect. Automation process of import and export is also going on.

Post-clearance audit, as covered under the TF agreement, is another area for which Bangladesh needs additional time and assistance. The NBR is currently working in collaboration with the USAID and the Asian Development Bank for transaction-based audit and system-based audit respectively. Assistance is required for capacity building and training, and consultation with stakeholders.

Bangladesh is also working for trade facilitation measures for authorised operators (Art 7.7) in collaboration with the USAID and the ADB. In some other cases, like expedited shipments of perishable goods, Bangladesh needs support for capacity building and is working in that area.

Border agency cooperation is an important area and an ADB-supported programme on the South Asia Sub-regional Economic Cooperation (SASEC) for different South Asian countries is going on, to address cross-border agency cooperation issue. Bangladesh needs support for negotiation and consultation, capacity development, infrastructure and automation. The issue of movement of goods intended for import under customs control is an untouched area. No development partner has so far offered any assistance in the area of perishable goods for which Bangladesh needs training and capital development.

Plant quarantine authority needs a valid organogram and support for establishing e-phyto system. As a single window is one of the important activities, the NBR is currently implementing a project with the World Bank support. It needs support for legislation, regular consultation with stakeholders. ICT support capacity building for Bangladesh Council of Scientific & Industrial Research (BCSIR) is also important. On freedom of transit in which Bangladesh needs capacity building, no support is offered from donor organisation.

Bangladesh needs supports in a number of areas to establish international standard, in order to attain competitiveness in border management. The aforesaid activities are important in that respect. A number of projects have been initiated but the big question is their proper and timely implementation as inter-ministry coordination is limited.

There are a number of TFA benefits and they include availability of information and rules and procedures of other countries, availability of automation and e-services, disciplines for fees and penalties, harmonised procedures and standards, single window, consultation and appeal, assistance and implementation.

Bangladesh trade portal has been installed but information updating and proper maintenance of database are not up to the mark.

Implementation of TFA could add 2.7 per cent a year in global export growth and more than 0.5 per cent to the world GDP by 2030, according to the WTO. Bangladesh needs to fulfill its commitments and attain capacity building in different areas, some of which are new to the country while in some cases the process has already started. Institutional development, automation, and on-time service delivery are some other pre-conditions to be capable of gaining a good pie from enormous opportunities available in the global trade. Some project activities need to be taken proper care so that they are really helpful for capacity building.

Our neighbour country India is moving ahead at a much faster pace than Bangladesh in terms of meeting the WTO requirements. Bangladesh is going to be graduated as developing country by 2021, so institutional development and skills development are a must.

Cross-border trade is one of the primary areas that need improvement for the sake of our own development and investment. Unless we can match with the requirements of other trade partners, those countries might not be interested in doing better business with us and making investments in Bangladesh.

Ferdaus Ara Begum is the Chief Executive Officer at Business Initiative Leading Development (BUILD).

ceo@buildbd.org

 

 

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