Transit Issue of Bangladesh: A comprehensive overview Submitted To: Submitted By PDF

Preview

Summary

1 Department of International Relations University of Chittagong Chittagong Assignment On Transit Issue of Bangladesh: A comprehensive overview Submitted To: Submitted By: Sujit Kumar Datta Asif Mohammed Fahad Assistant Professor & ID NO: 09406011 Tutorial advisor M.S.S Program Dept. of Internat...

Description

1

Department of International Relations University of Chittagong Chittagong

Assignment On

Transit Issue of Bangladesh: A comprehensive overview

Submitted To:

Submitted By:

Sujit Kumar Datta Assistant Professor

Asif Mohammed Fahad &

ID NO: 09406011

Tutorial advisor Dept. of International Relations

M.S.SProgram Dept. of International Relations

University of Chittagong

University of Chittagong

Chittagong

Chittagong

Submission Date: July 10, 2014

2 Table of Contents

NO

NAMEOF THE CONTENTS

Page Number

1.

Introduction

4

2.

Definitional settlement of issues related to transit a. Transit b. Transshipment c. Corridor

4

3.

Transit Issue of Bangladesh: Background and Contextualization

5

4.

Transit, Transshipment or Corridor?: The rational calculus of Profit & national interest

6

5.

Transit as Bilateral concern

8

6.

Putting Bangladesh in Regional context: The Asian deal

9

7.

Future Prospects

10

8.

Conclusion

11

9.

Bibliography

12

3

Acknowledgement

This paper is produced as a tutorial assignment instructed by Mr. Sujit Kumar Datta who is an assistant professor of Department of International Relations at university of Chittagong and also the advisor for tutorial group 1 of M.S.SProgram of the same department. Without his insightful instructions it was not possible to generate such a short but comprehensive overview on the issue of Transit of Bangladesh at present condition. I express humble gratitude to him for his intensified effort to inspire students to pursue academic excellence in various recent issues regarding Bangladesh. In this occasion I also want to thank every other teacher, specialist and classmate who provided me materials and instructions for doing the assignment. Last but not the least, the main body of this assignment contains 3000 words roughly and the whole work is original one of mine. I cited and mentioned references through Chicago method of style citation and referencing procedure where necessary.The list of Bibliograpy is quite comprehensive one which include present literature on transit issue of Bangladesh which has indirect implication in this writing. I hope this will be accepted as one of the most insightful paper to its readers. All the remaining errors are mine and I apologize if there is any after many revisions before its submission.

Asif Mohammed Fahad ID NO: 09406011 M.S.SProgram Dept. of International Relations University of Chittagong Chittagong

4 Introduction Transit is very important issue for Bangladesh because of its problematic geographical position of proximity toward Land Locked Neighbors like Nepal, Bhutan and Land Locked States of Seven sisters of India. Often various meanings are ascribed to transit and heated debates arise from those ascription. Thus it often incurs a lot of confusions among the general public and policy makers. Transit is also seen by many as “concessions to India” and by many as “loss of sovereignty” i.1 But it is not that simple equation. It is also assessed as one of the most sensitive bi-lateral and multi-lateral issue due to its implications in political, economic, environmental and legal spheres. Thus it requires complex reconnaissance from various angles. The aim of this paper is to provide a comprehensive overview regarding the issue of Transit of Bangladesh from historical continuum as well as recent developments in local, regional and global spheres. To do so definitional ambiguity will be clarified first. Then the issue of transit will be contextualized from the historical perspective in bi-lateral and multilateral concerns to probe the rational calculation and to tackle the problems and prospects of the issue. At last a bigger framework will be drawn to figure out the big Asian deal through fixing the possibility to connect the South and South East Asia to move forward toward unified Asia.

Definitional settlement of issues related to transit In the discussion of transit ambiguous use of transshipment and corridor are required to be clarified. To clarify, Transit is the action of passing through a second country to a third one or to the sea. For instance, Austria passes through Switzerland to Italy. Transshipment refers to the same process of transit where transfer of goods occurs via the transit givers vehicle to the destination of country while corridor is a strip of territory where the receiving state practice de-facto sovereignty and that runs through the another state dedicated to secure access to sea or some other points of the same country. In the corridor, a country gives some kind of rights or access on the land to the other country making it a de-facto of its territory, while in transit there is no question of rights involved in the land territory allowed for transit and it is provided under certain conditions and can be withdrawn.2 Transshipment refers to same inter country passage using the vehicles of transit giver. All these three can involve the land, rail, water or air route of the countries involved. Al three terms are related from lax to strong 1 2

Ahmed, Sadiq ed. Leading Issues in Bangladesh Development 61 Mothijheel C/ A, Dhaka-1100,UPL, 2012 p.142 Rashhid, Barrister Harun ur “Transit issue with India: A comprehensive approach” / Pdf file p.1

5 connectivity measures namely free trade area, economic union and customs union. In a free trade area, intra-area trade is freed but individual countries retain their autonomy in commercial policies with respect to third countries. A custom union requires that the members should be willing, not only to free intra-regional trade but to adopt a common regime of tariffs and quantitative controls with respect to extra regional countries. An economic union is a custom union plus freedom of capital and labor movements’ unrestricted by frontiers. 3So more liberalized policies like corridor or transit is required for the implementation of economic or custom union as European Union already did. And South Asia is now looking for a Custom Union in 2015 and an Economic Union within 2020.4Bangladesh as an important member of South Asian region is bound to decide about its transit issue. But before that it is required to examine the historical context of Bangladesh transit issue.

Transit Issue of Bangladesh: Background and Contextualization The transit issue of Bangladesh engulfed its policymakers even before it emerged as independent country. As East Pakistan it provided transit to India to increase connectivity with northeastern states of seven sisters which was rejected after the war of 1965. But in 1971 East Pakistan emerged as Bangladesh through the liberation war. It now contains 4096 km boundaries with India covering almost 29 of its districts in touch. Geographically it is surrounded by India from three sides which places Bangladesh in between its landlocked northeastern seven states as a natural transit space. Bangladesh also got proximity of two of the Land Locked Least Developed Countries namely Nepal and Bhutan who are always willing to have access in Bay of Bengal via India and Bangladesh to lower their transportation costs. In this given situation Bangladesh signed a trade agreement with India in March 28, 1972 which gradually turned to “Protocol on Inland water transport and trade” on October 4, 1980 and which was renewed in 1999, 2001, 2007 and 2009.5 In 1996 Bangladesh government provided transshipment under 1980’s agreement. Bangladesh on 31 May, 2010 signed an agreement to finalize the transshipment deal with India to allow Indian goods to be transported to the northeastern city of Tripura in the state of Assam through Bangladeshi territory.6 On the other hand Bangladesh does not have a trade agreement

3

Ahmed,Jaseem, ed. Regional co-operation for Development in South Asia 61,Mothijheel C/ A,Dhaka-1100,UPL, 2011 p.12 4 De,Prabir Khan,Abdur Rob and Chaturvedi, Sachin ed. Promoting Economic Co-operation in South Asia:Beyond SAFTA New Delhi,SAGE, 2010 p.139 5 Lbid,p 148 6 Dutta, Piyal “India-Bangladesh Relations” IPCSSpecial Report, No 97, September, 2010 p.3

6 with Nepal rather they have a transit agreement which was signed on April 2, 1976 and a protocol attached with this transit agreement. Beside these Bangladesh signed a bilateral trade agreement with Bhutan on 12 May, 2003. On a protocol attached with this agreement defined Burimari-ChangarabandhJaigaon-Phuentsholing as a transit route and India also approved it. Beside this bilateral management Bangladesh who was the founder of SAARC also have regional arrangement for the issue. The Ministers of SAARC countries first met at 2007 where they decided to undertake a study SAARC REGIONAL MULTIMODAL TRANSPORT STUDY (SRMTS) as well as to reach in a transit and transport agreement in 2008 along with a motor vehicle agreement. On the other hand South Asian Free Trade Agreement (SAFTA) which came in action in 2006 in its article 8 urged for adoption of trade facilitation measures including simplification and harmonization of custom clearance produces transit facilities for efficient intra-regional trade. 7Beside these UN and Its special agency like ECAFEhave been pursuing for necessary steps to contextualize regional transit arrangements. Article 5 of GATT and article 8 of SAFTA provided special preferences for the landlocked countries because of their relative disadvantage position in International sphere. Historically Bangladesh always remained committed for these provisions toward the transit issues with Bhutan and Nepal though the unwillingness of India impeded the process. Transit, Transshipment or Corridor? The rational calculus of Profit & national interest At present question raises whether Bangladesh should provide transit, transshipment or corridor to neighboring states mainly India. Existing status quo is transshipment. But it should be envisaged toward transit and corridor to implement the customs union and economic union as SAFTA targeted. The issue of transit is always a matter of concern for Bangladesh government irrespective of political orientation. India, Nepal and Bhutan always demanded inland and water transit via Bangladesh. Though Bangladesh was willing to provide transit to all of them except India it is matter of huge national interest and therefore require cautious deliberation. Transit is a vital issue for Bangladesh because of its low income, high poverty, lagging regions and vulnerability to shock of its main export sector. 8Bangladesh from its emergence did not follow liberal policy in its economy. Rather openness came in the decade of 90s through the trade liberalization policy and withdrawal of various tariff and non-tariff barriers. From 7

Kharel, Paras Briefing Paper on ‘Case for South Asian Transit Arrangement” Volume No 9,2011, SAWTEE, Kathmandu p.2 8 Ahmed, Sadiq ed. Leading Issues in Bangladesh Development 61 Mothijheel C/ A, Dhaka-1100,UPL, 2012 p.142143

7 economic consideration, Transit is an important part of trade policy of Bangladesh. It is evident that in south Asian countries intra-regional trade is quite low. Currently, about 2 percent of transit trade in eastern South Asia is conducted within the sub-region, while the remaining 98 percent is extra-subregional.9 This has serious implications for regional integration. The balance of payment does not remain in favor of involving countries like Bangladesh. It is evident in India and Bangladesh where the ratio is 20:1

10

This has impact on export diversification, industrial specialization and therefore the economic

growth of countries of a region. In a superficial view the pressing India-Bangladesh transit has only economic dimensions. But this is also related with a lot of other concerns regarding political, security environmental and other matters. The land locked seven sisters of India is a huge market for Bangladeshi goods. If transit is given to India Bangladesh will lose huge market and revenue due to that policy. The Balance of payment deficit will also increase in that perspective. Beside these there are also issues of consensus regarding transit fare. India’s proposed transit fee is quite low. Bangladesh should take a standard fare of 55.38$ per truck.11 Bangladesh can earn 500 crore to 4666 crore taka from various fees related to transit.12It is rationed under the GATT arrangement because there are depreciation costs involved to maintenance, infrastructure, market loss and other concerns.13 If it is evident that transit is mutually beneficial then it should be provided. India did not allow corridor to Bangladesh to trade via Nepal. Those3 issues should be considered before transit is given. Transit also has serious implications for physical and natural environment. The vehicles used in India is too much heavy than Bangladeshi vehicles. Therefore it can cause serious harm to the physical infrastructure of Bangladesh e.g. road, bridge etc. and can incur extra accident externalities and congestion costs. The polluting capability is also different and can cause serious harm to the natural environment through serious emission of carbon. There are also security and political considerations. If transit is once given to India it cannot be taken back easily. India will surely use it to repress the insurgency from its northeastern seven sisters. This will also be used in counter terrorism strategy of India where Bangladesh is already co-operating. Therefore 9

De,Prabir Khan,Abdur Rob and Chaturvedi, Sachin ed. Promoting Economic Co-operation in South Asia:Beyond SAFTA New Delhi,SAGE, 2010 p.145 10 Ahmed, Brig. Gen. Shakil Transit and Transhipment: Implications for Bangladesh/ Pdf file p.4 11 “Bangladesh: Transit fees for Indian Trucks” By CASTALIA to World Bank, December 30, 2010/ pdf file p.17 12 Dutta, Piyal “India-Bangladesh Relations” IPCSSpecial Report, No 97, September, 2010 p.4 13 UNECE, “Trade Facilitation Implementation Guide” last modified at July 10, 2014 available at http:/ / tfig.unece.org/ contents/ gatt-v.html

8 it incurs heavy burden on Bangladesh. There are also a lot of unsettled issues between India and Bangladesh. Those include Border killings of BSF, barb-wire fencing in Border, smuggling and enslavements settlement. There are also issues of river and water sharing. India being an upper riparian country often discriminates in water sharing of 54 shared rivers which has bad effects in irrigation and cultivation system of Bangladesh. Recent issue in this sphere is Teesta water treaty which was almost done between Bangladesh government and Indian central government but being rejected by Mamata Banerjee, west Bengal authority created a stalemate in this deal. Maritime Boundary between two countries also had not been settled which is now being considered at ITLOS. On the other hand, Bangladesh wants a preferential trade agreement with India but India is willing to provide Free Trade agreement only while it is already having preferential trading agreement with Nepal and Bhutan.14 Transit is the only issue which is under Bangladeshi control to provide the response of inequality existing in the issues mentioned above. Therefore deliberative considerations should be delivered while taking any decisions regarding transit because of the issues related to national interests.

Transit as Bilateral concern Transit is often seen as a bilateral matter of concern because of its immediate impact on bilateral relations. In case of Bangladesh’s transit India, Nepal, Bhutan and China’s considerations are emphasized, therefore those relations are required to be examined in brief Bangladesh-India Right now Bangladesh and India bilateral trade agreement is in action where both countries accepted each other’s MFN status under GATT role. Though there is no MFN transit available. Under GATT article five this is an exception because of issues of security and national interests of Bangladesh are involved. Bandladesh-India land boundary agreement is also not working and there is no official route. Bangladesh-Nepal At present Bangladesh and Nepal has trade and transit agreement and both countries accepted each other’s MFN trade and MFN transit status but main obstacle is Indian permission to use its territory 14

Hossain, Akmal “Bangladesh’s New Foreign Policy Direction in Southeast and East Asia: Perspective and Goals” Jounal of International Development and Co-operation,Vol 2, No1, 2005 p.6

9 which is now available for two hours trade which should be extended to eight hours. The main working route is Banglabandha (Bangladesh)-Phulbari (India)-Khakarbitta (Nepal). If regional arrangements are possible surely Nepal-Bangladesh trade will boost. Bangladesh-Bhutan Bangladesh and Bhutan has trade and transit agreement and both countries accepted each other’s MFN trade and MFN transit status but main obstacle is Indian permission to use its territory. The main route is Burimari (Bangladesh) - Changrabandha (India) - Jaigaon (India) -Phuentsholing (Bhutan). Bangladesh-China China has no direct transit link with Bangladesh but because of being largest trade partner of Bangladesh and because of being rival of India it is willing to have a good relation with Bangladesh which is a big political leverage of Bangladesh. It has interest to build deep sea port and expanding cooperation in Bangladesh. It also wants to strengthen road network through kouming initiative which will be via Myanmar and thoroughly advantageous for China.

Putting Bangladesh in Regional context: The Asian deal Bangladesh is conveniently located as a bridge between Central/ South and East Asia. Through better land, air and sea connectivity Bangladesh can become an Asian commercial hub.15 Due to political regime change Bangladesh initiated a ‘looking east’ policy at 2003 to build up better relation with ASEAN and other East Asian region including China and Myanmar. Consequent to new diplomacy some official and political level visits have been taken place between Bangladesh, Singapore, Vietnam and Indonesia in 2004.16 An envisioned plan to integrate South and Southeast Asia came in action. But there are a lot of barriers. These physical barriers or hindrances to cross-sub regional trade are located mainly in Myanmar, the only land bridge between these sub regions; India; and to a lesser extent in Bangladesh, Cambodia, the Lao PDR and Viet Nam.17 The main connection was linking all those countries to Asian Highway Network which was proposed in 1959 and adopted through an intergovernmental agreement 15

Ahmed, Sadiq ed. Leading Issues in Bangladesh Development 61 Mothijheel C/ A, Dhaka-1100,UPL, 2012 p.144 Hossain, Akmal “Bangladesh’s New Foreign Policy Direction in Southeast and East Asia: Perspective and Goals” Jounal of International Development and Co-operation,Vol 2, No1, 2005 p.1 17 Kawai, Mashahiro and Nag,Rajat Connecdting South Asia and Southeast Asia: Interim report Japan,Asian Development Bank Institute, 2013 p.16 16

10 in 2003. Four primary Asian Highway routes cross east to west connecting South and Southeast Asia: Asian Highway 1 and 2 linking India and Bangladesh with Myanmar and the rest of Southeast Asia,18 The BIMSTEC program has identified 14 road corridors, 4 rail corridors, 2 inland waterway corridors, 11 maritime gateways and 15 aviation gateways. Some of the road and railway corridors overlap with the Asian Highway and TAR routes most of which were not efficient enough mainly fall in category 3. Trans Asian Rail network was also envisioned by UNESCAPE but it is problematic because of the existence of different gauges. Seaports of Bangladesh in...