Assessment of Bangladesh-India Trade Potentiality Need for Cross-Border Transport Facilitation & Mutual Recognition of Standards

Assessment of Bangladesh-India Trade PotentialityNeed for Cross-Border Transport Facilitation & Mutual Recognition of

Standards

Dr K G MoazzemAdditional Research Director

Centre for Policy Dialogue (CPD)Bangladesh

Stakeholders’ Conference

Presentation by

Kolkata; 16 November, 2013

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Contents1. Ongoing Studies: Goals and Objectives2. Key findings from the first phase of the study3. Need and rationale for the second phase of the

study4. How to/why push the agenda for cross-border

transport facilitation and mutual recognition of standards

5. The Expected outcomes/benefits6. Outline of a model to quantify the benefits

accruing from cross-border trade facilitation

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1. Ongoing Studies: Goals and Objectives

Two studies are being carried out by CPD and CUTSStudy on “Addressing SPS issues and concerns in

Bangladesh-India Trade: Design of a Draft SPS Agreement”

Study on “Assessing Benefits of Trade Facilitation through Bangladesh India MVA”

Study on SPS Issues: Goals and ObjectivesIdentify SPS related concernsPrepare mechanism for SPS related dispute

settlementPrepare draft SPS agreementCome up with a framework for MRASuggest actions for enforcement of the agreement

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1. Ongoing Studies: Goals and Objectives

Study on “Assessing Benefits of Trade Facilitation through Bangladesh India MVA”: Goals and ObjectivesReview the proposed MVAAnalyse the current state of transport of goodsAnalysis the economic benefits of signing an

MVARecommend initiatives and actions for

operationalising the MVA

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2. Key Findings from the First Phase of the StudyBilateral Trade between Bangladesh and India Accelerated bilateral trade between Bangladesh and India over the years

Rising share of Bangladesh’s export to India; mixed trend in case of India’s export to Bangladesh

Volume of trade: US$5.5 billion in 2012; large flow of goods from India Bilateral trade between India and Bangladesh has experienced more

fluctuations vis-à-vis those of their global trade indicating lack of consistent demand

Opposite trends in India and Bangladesh in case of export concentration particularly since 2007 (SAFTA) Gradual deceleration in concentration in Bangladesh’s export and

further concentration in India’s export No. of Bangladesh’s exported products has significantly increased (from

145 in 2001 to 583 in 2012) 2001 2006 2010 2011 2012Bangladesh's export Bangladesh's export to India 64122 223813 357896 579125 567307Share of Bangladesh's export to world 1.91 1.79 2.20 2.14Share of top 10 products 86.0 57.1 57.6 65.9 65.2India's exportIndia's exports to Bangladesh 1063046 1667809 3016575 3405516 4936672Share of India's world export 2.42 1.38 1.37 1.13 1.70Share of top 10 products 15.6 13.2 30.7 32.1 37.8

Bangladesh-India Trade: 2001-2012

Source: UNCOMTRADE Database, 2013

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1. Key Findings from the First Phase of the StudyProducts Traded between Bangladesh and IndiaAgricultural products, raw materials and intermediate products

comprise a major share in Bangladesh’s export Jute, sacks & bags, nuts edible, fresh or dried, yarn of jute or of

other textile bast fibres, fish nes, fresh or chilled, light petroleum oils and preparatiols, waste and scrap, copper or copper alloy, mens/boys shirts, of cotton, cereal bran, anhydrous ammoni, portland cement, mens/boys trousers and shorts

Import from India comprises raw materials, intermediate products: Cotton, Telephones for cellular networks mobile telephones, Hot roll iron/steel nes, coil, Denim fabrics of cotton, Woven fabrics, Polyethylene terephthalate, Reactive dyes, Flat rolled prod,i/nas,plated or coated and Parts for diesel and semi-diesel engines

Northeast Indian states import about 12% of Bangladesh’s export to India and export about 2.6 % of Bangladesh’s import from India

Major Import Items Major Export ItemsRice, Coal, Agarbati, Bamboo, Natural slab, Fruit, Ginger, Spices, Motorcycle parts, Spare of tractor, Sanitary ware, Fabrics, Watch

RMG, Cement, Pharmaceuticals, Ceramic tiles, Hosiery, Food Products, Bleaching powder, Sari, Poly Fabric, Cotton waste, Glass sheet, Fish, Lichi, Brick, Furniture, Plastic products, Battery, Molasses.

Major Traded Products with North East India

Source: Rahman (2012)

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1. Key Findings from the First Phase of the Study

2001 2006 2010 2011 2012 Trade potentials2012'530310 Jute and other textile bast fibres, raw or retted 26.0 16.0 12.3 16.4 13.0 22'630510 Sacks & bags,for packg of goods,of jute or other textile bast fibres 29.1 6.7 12.1 10.0 12.1 3144'080290 Nuts edible, fresh or dried, whether or not shelled or peeled 0.2 2.5 5.6 7.4 10.4 51'530710 Yarn of jute or of other textile bast fibres, single 0.3 3.5 5.5 6.3 7.1 18'030269 Fish nes, fresh or chilled excl heading No 03.04, livers and roes 9.5 6.3 10.4 14.9 5.9 38'271011 Light petroleum oils and preparations 0.0 5.4 7.0 5.8 3.6 17200'740400 Waste and scrap, copper or copper alloy 0.0 0.7 3.5 2.8 3.4 25635'620520 Mens/boys shirts, of cotton, not knitted 0.6 0.1 0.2 0.3 3.3 18283'230240 Cereal bran, sharps and other residues nes, pelleted or not 0.0 0.0 0.6 0.6 3.2 0'281410 Anhydrous ammonia 17.9 16.0 0.4 1.4 2.9 6423'252329 Portland cement nes 0.0 0.5 6.0 3.4 2.8 1'620342 Mens/boys trousers and shorts, of cotton, not knitted 0.0 0.0 0.7 1.1 2.4 27803'720421 Waste and scrap, stainless steel 0.0 1.0 3.3 2.3 2.0 2525'251710 Pebbles, gravel, broken or crushed stone used for aggregates 0.0 1.1 2.4 1.8 1.7 0'151590 Veg fats&oils nes& their fractions, refind or not but not chemically mod 0.0 0.0 0.3 2.1 1.7 0'520841 Plain weave cotton fabric,>/=85%, not more than 100 g/m2, yarn dyed 0.0 0.0 0.0 0.1 1.6 191'531010 Woven fabrics of jute or of other textile bast fibres, unbleached 2.1 1.2 3.5 1.0 1.6 1515'999999 Commodities not elsewhere specified 0.2 0.5 0.0 0.8 1.2 118365'631010 Used or new rags of textile materials, sorted 0.0 0.2 0.7 0.3 1.1 1003'400121 Natural rubber in smoked sheets 0.0 0.0 0.2 0.9 1.0 122'560790 Twine, cordage, ropes and cables, of other materials 0.0 0.0 1.0 0.9 0.7 6711

• Bilateral Trade Potentials• Bangladesh possess significant export potentials to the Indian market.

• A number of existing exported products very less potentials to export (including jute, jute yarn, fish, cereal bran, port land cement, crushed stones, vegetable fats)

• Trade Potentiality is rather high in less traded non-traditional products (bicycles, footwear, plastic wastes, apparels, leather products, cargo vessels): Less of agricultural products

• India has significant export potentiality to Bangladesh’s market: a number of existing traded products have limited trade potentials

• About 1278 out of 3894 products have trade potentials of at least US$ 1 million

• A number of studies have examined trade potentiality between Bangladesh and India under different trade scenario (under SAFTA framework; RCA analysis): Mustafiz et al., 2010; De, Selim and Kathuria, 2012; World Bank, 2013)

Indicative Potentials of Export of Major Bangladeshi Products to India

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Product code Product label

Bangladesh’s

export potential in 2012

TOTAL All products 25924109

'999999 Commodities not elsewhere specified 118365

'871200Bicycles and other cycles (including delivery tricycles),not motorised 41601

'640399Footwear, outer soles of rubber/plastics uppers of leather, nes 41285

'391590 Plastics waste and scrap nes 40393

'640419Footwear o/t sports,w outer soles of rubber/plastics&uppers of tex mat 31393

'620342Mens/boys trousers and shorts, of cotton, not knitted 27803

'410799Leather "incl. parchment-dressed leather" of the portions, strips or s 26011

'740400 Waste and scrap, copper or copper alloy 25635

'240120Tobacco, unmanufactured, partly or wholly stemmed or stripped 24187

'300490 Medicaments nes, in dosage 23511

'631090 Used or new rags of textile materials, not sorted 22227

'890190Cargo vessels nes&oth vessels for the transport of both persons&goods 19488

'271019 Other petroleum oils and preparations 18669

'620520 Mens/boys shirts, of cotton, not knitted 18283

Potential in 2012

'271019 Other petroleum oils and preparations 1765942'520100 Cotton, not carded or combed 404958'999999 Commodities not elsewhere specified 271226

'851712Telephones for cellular networks mobile telephones or for other wirele 255964

'720839 Hot roll iron/steel nes, coil >600mm x <3mm 204304

'520942Denim fabrics of cotton,>/=85%, more than 200 g/m2 128171

'540752Woven fabrics,>/=85% of textured polyester filaments, dyed, nes 110236

'390760 Polyethylene terephthalate 108109'320416 Reactive dyes and preparations based thereon 105406

'721049Flat rolled prod,i/nas,plated or coated with zinc,>/=600mm wide, nes 104121

'840999 Parts for diesel and semi-diesel engines 99979

'851762Machines for the reception, conversion and transmission or regeneratio 94381

'550320 Staple fibres of polyesters, not carded or combed 91983

'720719Semi-fin prod, iron or non-alloy steel, cntg by wght <.25% carbon, nes 91754

'790111Zinc not alloyed unwrought containing by weight 99.99% or more of zinc 91646

'740311Copper cathodes and sections of cathodes unwrought 82049

'071320Chickpeas, dried, shelled, whether or not skinned or split 81364

'721070Flat rolled prod,i/nas,painted,varnished or plast coated,>/=600mm wide 80166

'711319Articles of jewellry&pt therof of/o prec met w/n platd/clad w prec met 79949

Bangladesh’s export potential in 2012India’s export potential in 2012

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Trade Costreporter partner year sector Trade costs

Bangladesh India 2005 Agriculture, hunting, forestry; fishing 130.1Bangladesh India 2006 Agriculture, hunting, forestry; fishing 129.0Bangladesh India 2007 Agriculture, hunting, forestry; fishing 121.5Bangladesh India 2005 Manufacturing 123.1Bangladesh India 2006 Manufacturing 120.9Bangladesh India 2007 Manufacturing 113.4Bangladesh India 2005 Total Goods 125.2Bangladesh India 2006 Total Goods 122.8Bangladesh India 2007 Total Goods 114.4

India’s export to Bangladesh, 2012Range of import

tariffNo of products % of total

products0 241 5.60.01-4.9 103 2.45.0-8.0 990 22.88.1-11.9 131 3.112.0-17.9 1037 2.918.0-22.1 65 1.522.2-24.6 820 18.925.0 750 17.3Unidentified 202 4.7Total 4339 100.0

2. Trade Cost in connection with Bangladesh-India Trade

• Trade costs between India and Bangladesh is still very high although it has declined

• Trade cost in countries outside the region particularly with key destinations is rather low

• Better trade connectivity through sea route

• Import tariff on Indian products is guided by SAFTA rules for products originating from developing countries

• 993 products under SAFTA sensitive list

• Moazzem- Kishore (2013) suggested a mechanism to prune the SAFTA sensitive list.

Source: World Bank, 2013

Source: UNCOMTRADE, 2013

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Bangladesh’s entrepreneurs often complain about beyond the border taxes/cess/levies inIndia. These duties include:

Additional Duty (Countervailing Duty) (CVD): This additional duty is levied under section 3 (1) of the Custom Tariff Act and is equal to excise duty levied on a like product manufactured or produced in India (generally ranging between 4% to 8% of assessed value).

Secondary and Higher Education Cess: 2% and 1% respectively on customs duties(CD+CVD).

Additional Excise Duty: 4%, paid at customs point but rebatable when VAT is paid.

Total tax incidence could vary between 8.3% to 12.7% (4.4% to 8.6% if additional exciseDuty is excluded).

However, it needs to be pointed out that Indian producers are also subject to these taxes It is unlikely that Bangladeshi exporters will receive more favourable taxes treatment than the Indian producers.

However, Bangladesh has a strong case for withdrawal of the additional excise duty which is eligible for duty drawback at the time of payment of VAT.

Bangladesh could argue for withdrawal of additional duties on the following grounds:– Importers tend to set price for items imported from Bangladesh by taking into cognisance the duties paid at the customs point, which make Bangladeshi goods less competitive.

A part of importers’ capital is stuck on account of duties paid.

2. Trade Cost in connection with Bangladesh-India Trade

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NTBs in Bilateral TradeA survey of NTBs reported

by SAARC member countries to the Committee of Experts (CoE) shows that most frequently imposed NTBs in the SAARC countries relate to SPS; TBT; Quotas;

Antidumping measures ; License requirements ; Countervailing measures

The overwhelming majority of NTBs indeed relate to compliance with SPS and TBT requirements.

Types of NTBs

% of total no. of NTBs

SPS, TBT, and Other Related Measures 86.3Tariff Quota 9.8Anti Dumping Measures 47.4License Requirement 5.3Countervailing Measures 1.2


Major NTBs in SAARC Region

Source: Mustafiz (2012)

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NTBs: Complaints and Responses Submitted at the Meeting of CoE

Type of NTB Response from India Detailed product information (all prepackaged goods) These are statutory requirement under the Consumer Protection Act. Bio-security and sanitary permit (Primary agricultural products)

Requirement has been set as per Articles 2 of the Agreement on Sanitary and Phyto Sanitary Measures (SPS) under WTO.

Compliance of Food Adulteration Act regarding shelf life of goods (processed food products)

Compliance of shelf life is mandatory for all processed food item but determination is not arbitrary. It is based on PFA Rules 1955.

Special labeling of country of origin (jute Special labeling of country of origin (jute bags/sacks)

The rationale is that the country of origin on product is to be mentioned because if there is any irregularity in the quality of the imported item, the source could be tracked.

License from Bureau of Indian Standards cement, gelatin, condensed milk, electrical appliances, mineral water, steel products, leather products] ray equipments, dry cell �battery, thermometers, helmets and gas cylinders) Requirement of laboratory testing (all products)

The following steps have been taken: 1) number of items for which certification is needed has been reduced from 109 to 68, 2) marking fees for BIS license has been reduced for SAARC countries, and 3) processing charge for SAARC countries has been abolished. 100% checks are done on only 14 high risk food items.

Requirement of chemical testing (leather and melamine)

The following steps have been taken; 1) mandatory license is required only for safety boots and shoes for minors, 2) license for safety boots and shoes for minors can be obtained from BIS, and 3) every consignment is not required to be checked by BIS consignment is not required to be checked by BIS.

Certificate of nonhalogenated hydrocarbon (jute products) Domestic producers face the same stipulation. Preshipment certificate about presence of no hazardous dyes ( textile and textile products) The provisions are also in effect for domestic industries. Registration of the drug with the Central Drug Standard Control Organization (pharmaceutical products)

No import license is required for import of pharmaceuticals. All import of bulk drugs are set as per the EXIM policy 2004]2009.

Requirement of import license (mostly consumer goods)

Requirement of import licenses are under exception clauses of Article XX and Article XXI of p GATT.

Exporting Country: Bangladesh; Responding Country: India


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Type of NTB Response from Bangladesh Ban on import (poultry related products)

To protect human and animal/health. In view of recent partial spread of Avian Influenza, Bangladesh needs to continue such measures.

Same name registration of drug in a developed country (drugs) 15% VAT (all goods)

Registration and Free Sale Certificate (FSC) duly signed in original by the Health Authority of the country of origin and at least one FSC from a developed country. 15% VAT is also imposed on domestic products. Therefore, imposition of VAT should not be treated as para tariff. �

Non-issue of Khamarbari �Certificate (Potatoes)

Potatoes are not allowed to be imported into Bangladesh from any country; (because of three serious pests, namely Black wart, Golden nematode and potato beetle) unless this is accompanied by Phytosanitary Certificate from the country of origin.

Allowed through land route only (Yarn)

This measure is not applicable for a specific country. The provision has been relaxed for yarn imported under back]to]back LC through land customs. � �

Non acceptance of cargo by road/rail/rover routes (all goods)

Currently, necessary equipments and physical infrastructure are not available to handle containerized cargoes. Thus, containerized cargoes via land, river and rail routes are not permitted.

L/C requirement (all products)

Bangladesh Bank feels that this instruction is necessary to ensure entry of imported materials/goods into the country against paidentry of imported materials/goods into the country against paid money and this has not been applied as a non]tariff barrier. �

Radioactivity test (directly consumable stuff)

All imports of food items require radioactivity test report. However, radioactivity test requirement has been relaxed for SAARC countries.

PSI certificate

Any exporter from any part of North East India can get the service of the PSI office in Shilong within 24 hours. Moreover, it must be noted that most of the products exported to Bangladesh from North East India are non]PSI items �India are non PSI items

Non payment of irrevocable �L/Cs by various banks in (all exports) The issue is being addressed by a joint group on Banking sector. Reluctance to open new trade routes and certain notified Land routes and certain notified Land Customs Stations

Teghamukh and Ramgarh are situated in remote areas where traveling and communication is very difficult Besides there are 4/5 traveling and communication is very difficult. Besides, there are 4/5 land customs stations close to these places, which can cover the trade with Mizoram.

Exporting Country: India; Responding Country: Bangladesh


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Standards and SPS related issues in case of export to India

2007/08 2008/09 2009/10Total number of Indian standards in force

18,470 18,592 18,592

% equivalent to international standards

.. .. 84

Indian Standards, 2007‑10

• Bureau of Indian Standards (BIS) is responsible for formulating and enforcing standards for 14 sectors.

• Production and general engineering; civil engineering (as of 1 January 2011); chemical (15 October 2010); electro-technical (1 July 2009); food and agriculture (9 June 2010); electronics and information technology (1 April 2010); mechanical engineering (1 April 2010); management and systems (1 Oct 2010); metallurgical engineering (6 July 2010); petroleum, coal, and related products (1 July 2010); transport engineering (1 January 2011); textile (1 April 2008); water resources (1 April 2010); and medical equipment and hospital planning (1 January 2011)


Source: WTO Trade Policy Review – India, 2012

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Sanitary and Phytosanitary Legislation, 20111. Key Findings from the First Phase of the Study

Legislation Description Implementing institutionPrevention of Food Adulteration Act 1954

Aims to protect consumers against the supply of adulterated food. It specifies minimum quality level standards for various food products. The Act is mandatory; infringement may lead to fines and imprisonment

Central Committee for Food Standards under the Directorate General of Health Services (Ministry of Health and Family Welfare)

Essential Commodities Act 1954 Regulates the manufacture, commerce, and distribution of essential commodities, including food. A number of control orders have been formulated under the provisions of this Act

Central and state government agencies

Fruit Products Order 1955 Regulates the manufacture and distribution of all fruit and vegetable products, sweetened aerated waters, and vinegar and synthetic syrups. The manufacture or re‑labelling of products require a licence from the Ministry for Food Processing Industries, which is granted when the quality of products, sanitation, personnel, machinery, and equipment and work area standards are satisfactory

Ministry for Food Processing Industries

Solvent Extracted Oils, De‑oiled Meal, and Edible Four Control Order 1967; Vegetable Products Control Order 1976

These orders control the production and distribution of solvent extracted oils, de‑oiled meal, edible flours, and hydrogenated vegetable oils (vanaspati). Production and distribution of the above‑mentioned products require a licence, which is granted when products conform to the specifications laid down in the schedules. The Directorate also regulates the price of vanaspati

Directorate of Vanaspati, Vegetable Oils, and Fats under the Department of Food and Public Distribution (Ministry of Consumer Affairs, Food, and Public Distribution)

Meat Products Control Order 1973

Regulates the manufacture, quality, and sales of all meat products Directorate of Marketing and Inspection under the Department of Agriculture and Cooperation (Ministry of Agriculture)

Milk and Milk Product Order 1992

Provides for setting up an advisory board to advise the Government on the production, sale, purchase, and distribution of milk powder. Units with installed capacity for handling milk of over 10,000 litres per day, or milk products containing milk solids in excess of 500 tonnes per year, are required to register with the Department of Animal Husbandry and Dairying

Department of Animal Husbandry Dairying, and Fisheries (Ministry of Agriculture)

Livestock Importation Act 1898 (amended in 2001)

Allows the Central Government to regulate, restricts, or prohibits import of animal and animal products into India

Department of Animal Husbandry, Dairying, and Fisheries (Ministry of Agriculture)

Destructive Insects and Pests Act 1914

Regulates import of plants to prevent introduction into and the transport from one State to another in India of any insects, fungus or other pest that is or may be destructive to crops

Directorate of Plant Protection, Quarantine and Storage (Ministry of Agriculture)

Plant Quarantine (Regulation of Import into India) Order 2003

It regulates the import of plants and plant materials Plant Quarantine Division in the Ministry of Agriculture

Standards on Weights and Measures (Packaged Commodities) Rules 1977

They lay down certain obligatory conditions for all commodities in packed form, with respect to declarations on quantities contained

Directorate of Weights and Measures under Department of Consumer Affairs (Ministry of Consumer Affairs, Food, and Public Distribution)

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In August 2006, the Central Government passed the Food Safety and Standards (FSS) Act of 2006 to consolidate separate laws, and to establish the Food Safety and Standards Authority of India (FSSAI). These laws include: the Prevention of Food Adulteration Act

1954; the Fruit Products Order 1955; the Meat Food Products Order 1973; the Vegetable Oil Products (Control) Order 1947; the Edible Oils Packaging (Regulation) Order 1988; the Solvent Extracted Oil, De-Oiled Meal and Edible Flour (Control) Order 1967; and the Milk and Milk Products Order 1992.

Imports of animal products into India require sanitary import permits issued by the Department of Animal Husbandry, Dairy and Fisheries; Permits must be obtained prior to shipping from the country of

origin. Imports of plants and plant materials are regulated under the

Destructive Insects and Pests Act 1914, the Plant Quarantine (PQ) (Regulation of Import into India) Order 2003, and international conventions. All plant and plant material consignments must be accompanied

by a phytosanitary certificate issued by the national plant protection organization of the exporting country and an import permit issued by the officer in charge of the plant quarantine station.

Plant Quarantine (Regulation of Import into India) Order 2003.

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Schedule No. Description

No. of products covered

IV List of plants/planting materials and countries from where imports are prohibited along with justifications 14

V List of plants and plant materials restricted: imports are permissible only with the recommendation of authorized institutions with additional declarations and special conditions

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VI List of plants/plant materials permitted to be imported with additional declarations and special conditions 628

VII List of plants/planting materials where imports are permissible on the basis of phytosanitary certificates issued by the exporting country, the inspection conducted by inspection authority, and fumigation, if required, including all other general conditions

288

VIII List of quarantine weed species 31IX Inspection fees n.a.X List of permit issuing authorities for imports of seeds, plants and plant products, and other articles n.a.

Plant Quarantaine, 2011

Source: Plant Quarantine (Regulation of Import into India) Order 2003.

• Sampling and testing of consignments to prevent the risk of exotic pests is undertaken

• According to the International Standards for Phytosanitary Measures Guidelines No. 23 and 31

• Imports of GM food, feed, and organisms, and living modified organisms for R&D, food, feed, processing in bulk, and environment release is governed by the Environment Protection Act 1986 and Rules 1989.

• Imports of products containing GM material for industrial production or environmental release are allowed only with the approval of the Genetic Engineering Approval Committee (GEAC).

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The main institutions are the Bangladesh Standards and Testing Institution (BSTI) and the Bangladesh Accreditation Board (BAB)

As of 2012, there were 3,498 standards in Bangladesh, of which 155 compulsory standards are in force. Testing and certification procedures for compulsory standards

are the same for domestic and imported products. BSTI develops national standards for products and services

As of today, international standards adopted by BSTI include 1368 International Standardisation Organisation (ISO) Standards and 163 International Electrotechnical Commission (IEC) standards. Bangladesh is a member of the ISO 1974, and in 2001 became

an affiliate member of IEC Bangladesh is upgrading its quality infrastructure to international

level by collaborative efforts with the newly operational Bangladesh Accreditation Board. Under the Bangladesh Accreditation Act (2006), the Bangladesh Accreditation Board (BAB) was established as an autonomous organization

3. Standards and SPS related issues in case of Export to Bangladesh

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1. Key Findings from the First Phase of the Study List of Imported Products brought under mandatory certification before Customs clearance

Sl. No Name of the products Standards NO.1 Milk Powder and Cream

PowderBDS/CAC 207:08

2 Fruit Cordiel BDS 508:20063 Biscuit BDS 383:20014 Sauce (Fruit & Vegetable) BDS 512:20075 Lozenges BDS 490:20076 Tomato Ketchup BDS/CAC 530:20027 Jams (Fruits Presurves) &

JellyBDS/CAC 79:2008

8 Marmalade BDS/CAC 80:20089 Infant Formula BDS CAC 72:200310 Soyabean Oil BDS 909: 200011 Soft Drink Powder BDS 1586:200712 Sugar BDS/CAC212:200613 Instant Noodles BDS 1552:200714 Fruit or vegetable Juice BDS 513:200215 Edible Sun Flower Oil BDS CAC 23: 200216 Chips/Crackers BDS

1556:1997;Amend1:200417 Toffies BDS 1000:200118 Honey BDS /CAC 12:200719 Processed Cerial based

Foods for Infants and young children’s

BDS 074: 2007

A. Food Products (18 Items): Sl. No Name of the products Standards NO.

1 Coconut Oil BDS 99:20072 Skin Cream BDS 1382:20063 Tooth Paste BDS 1216:20064 Skin Powder BDS 1337:20065 Shampoo, Synthetic Deter-gent

basedBDS 1269:2002

6 Lipstick BDS 1424:20067 Toilet Soap BDS 13:19948 After Shave Lotion BDS 1524:2006

B. Chemical Products (08 items)Sl. No

Name of the products

Standards NO.

1 Polyester blend Suiting

BDS 1175:2001

2 Polyester blend Shirting (Market Varieties)

BDS 1148:2003

C. Textile Product (2) Items

Sl. No Name of the products Standards NO.1 Primary Batteries: a) Part-1 General BDS IEC 60086 (Part-1):2005 b) Part-2 Physical and Electrical Specification BDS IEC 60086 (Part-2):2005 c) Part-3 Watch Battery BDS IEC 60086 (Part-3):2005 d) Part -4 Safety of Lithium batteries BDS IEC 60086 (Part-4):2005 e) Part-5 Safety of Batteries with Aqueous Electrolyte BDS IEC 60086 (Part-5):20052 Performance & Construction of Electric circulating Fans &

Regulators (Ceiling & dec head fans, pedestal fans & table/cabin fans with in-built regulators)

BDS 818:1998 (BDS 181: '98, Amend 1: 06)

3 Tublar & other switches for domestic & similar purposes (Push button, Piano etc.)

BDS 117:2005

4 Tubular Fluorescent Lamps BDS 292:20015 Ballast for Fluorescent Lamps Performance Requirements BDS /IEC 60921:056 Two-Pin Plugs & Socket-Outlets Reversible type for

domestic useBDS 102:2005

7 Three-Pin Plugs & Socket-Outlets BDS 115:2005

D. Electrical & Electronic Products (07) Items

Sl. No

Name of the products Standards NO.

1 Cement BDS EN 197-1:20032 Ceramic Tablewares BDS 485:20063 G P Sheet (Including Corrugated Sheet) BDS 1122: 20074 Ceramic Tiles- definitions, Classifications

characteristics & markingBDS/ISO 13006: 2006

E. Engineering Products (04) Items

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Proposed Road Map for Upgradation of BSTI Labs Indian Prime Minister has agreed to support the upgradation of the

Bangladesh Standard Testing Institute (BSTI) with a view to building capacity on certification.

According to the RoadmapBSTI is to send pre‐assessment reports and report on actions taken

and under process by BSTI to Norwegian Accreditation Authority (NAA) and Bureau of Indian Standards (BIS).

BIS resource persons will visit BSTI to provide technical assistance to address issues of accreditation. Additional trainings may be arranged.

If NAA gives a sensitive response, BSTI will immediately apply to the National Accreditation Board for Testing and Calibration laboratories (NABL) of India for accreditation of its food laboratory. There is a strong case for giving this route due priority.

After completion of all due processes, the BIS team may visit BSTI and make recommendations.

3. SPS related issues in case of Bangladesh

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BSTI had initially applied for accreditation of the product certification system to NABCB (National Accreditation Board for Certification Bodies), India incorporating 5 products namely i) Protein Rich Biscuit, ii) Wafer Biscuit, iii) Edible Gel, iv) Fruit Drinks & v) Chutney as the scope of accreditation.

NABCB has accorded accreditation of BSTI product certification system for a period of 3 years starting from 9 January 2012.


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1. Key Findings from the First Phase of the Study Sanitary and phytosanitary (SPS) standards Sanitary standards in Bangladesh are governed by the Pure Food

Ordinance 1959, as revised by Food Safety Ordinance 1994; and the Pure Food Rules.

Phytosanitary standards in Bangladesh are governed by the Destructive Insects and Pest Rules 1966 and the Plant Quarantine Act 2011. Formulation of rules under the Plant Quarantine Act, 2011 is

under way. Sanitary and phytosanitary standards are also governed by other

legal instruments Bangladesh Diseases of Animal Act, 2005 and Bangladesh

Diseases of Animal Rules, 2008, Bangladesh Animal and Animal Product Act, 2005, Bangladesh Fish and Animal Feed Act, 2010 and Bangladesh Animal Slaughter and Meat Quality Control Act 2011.

SPS measures in the fisheries sector for both the export market and for domestic consumption Fish and Fish Products (Inspection & Quality Control) ordinance,

1983; Fish and Fish Products (Inspection & Quality Control) Rules, 1997 (Amended in 2008); Fish Feed and Animal feed Act, 2010; Fish Feed Rules, 2011; Fish Hatchery Act, 2010; Fish Hatchery Rules, 2011

SPS matters are handled by the Ministries of Agriculture, Health, and Fisheries and Livestock.

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Ministry of Agriculture For the import of regulated articles: (a) issuance of Import

Permit which contains phytosanitary requirements for concerned commodities; (b) compliance with Destructive Insects and Pests Rules, 1966 amended up to July, 1989 and Plant Quarantine Act, 2012; (c) activities at the point of entry including: documentation check, verification of consignment integrity, phytosanitary inspection, sampling, testing and treatment (if required), detention of consignment.

Bangladesh has 26 plant quarantine stations/entry points, three of which are located in three international airports, two in seaports, one in a river port, one in an ICD (Inland Container Depot), and the other 19 quarantine stations are located in 19 border land ports.

Any plants or plant products whether meeting the Phytosanitary requirement or not must be inspected by the plant quarantine officials before release of the consignment.

24


Ministry of Health and Family Welfare (MOHFW) Bangladesh has adopted International Health Regulation (2005)

(IHR 2005) of the World Health Organization (WHO) regarding ship sanitation at ports of entry (POE). The procedures include environmental sanitation, ship inspection, and deratting at POE.

The Public Health Laboratory (PHL) is responsible for checking the quality of food in order to protect the consumer from unsafe, adulterated or contaminated food as per Pure Food Ordinance, 1959 and Pure Food Rules, 1967.

The Pure Food Ordinance and Pure Food Rules contain 107 items of notified food, specified in: (1) milk and milk products; (2) edible oils and oil products; (3) sweetening agents; (4) cereals and their products; (5) starchy foods; (6) non-alcoholic beverages; (7) spices; (8) fruits, vegetables, and miscellaneous products; (9) tea and coffee; (10) bakery and confectionary products; (11) iodized salts; and (12) canned food.

25


Ministry of Fisheries and Livestock (MFL) The Bangladesh Diseases of Animals Act, 2005, the Bangladesh Animal

and Animal Product Quarantine Act, 2005, and the Bangladesh Wildlife (Preservation) (Amendment) Act, 1974 are the three main legal instruments for keeping Bangladesh free from HPAI/H5N1 in animals and enables the control and eradication of the disease in case of an outbreak. Moreover, the Bangladesh Penal Code (BPC), Bangladesh Customs Act, 1969, and Imports and Exports (Control) Act, 1950 Section 3A, are used for quarantine and import bans.

For fish and fish products, SPS standards are governed by Fish and Fish Products (Inspection and Quality Control) Ordinance, 1983 and Fish and Fish Products (Inspection & Quality Control) Rules, 1997 (Amended in 2008).

Labelling requirements To protect the interests of the consumer and to maintain a standard

labelling system, the Government has promulgated The Bangladesh Standards of Weights & Measures (Packaged Commodities) Rules, 2007 under the Weights and Measures Ordinance, 1982.

Accordingly the following declarations have to be made on every package: name and address of the manufacturer and packer; common or generic name of the product with all ingredients; net weight; date of manufacture and date of expiry; retail price of the package.

26

The Agreement on the Establishment of the South Asia Regional Standards Organization (SARSO), was signed at 15th SAARC Summit held in Colombo, Sri Lanka on 2nd - 3rd August, 2008, by the Foreign Ministers of the SAARC Member States

The Agreement on establishment of SARSO has since been ratified by all Member States with Afghanistan ratifying the Agreement in May 2011.

The Agreement on establishment of SARSO has entered into force with effect from 25 August 2011 with issuance of Notification to this effect by the SAARC Secretariat.

SARSO is to be located in Dhaka, BangladeshOne of the major objectives of SARSO is to develop SAARC

standards on the products of regional/sub-regional interest


SARSO Agreement

27

The following products have been identified for harmonization/development of SAARC Standards:

Sugar Skimmed Milk Powder BiscuitsInstant Noodles Vegetable Ghee Electric

CablesTextile Fabric Jute CementSteel Tubes Structural Steel Toilet Soap

Sector based approach adopted for harmonization/ development of SAARC standards with setting up of Sectoral Technical Committees Food and Agricultural Products; Electrical, Electronics, Telecoms and ITJute, Textiles & Leather; Building MaterialsChemical and Chemical Product

• Draft SAARC Agreement on Implementation of Regional Standards: The objective of this agreement is to provide the framework as well as the guiding principles for implementation of the SAARC standards

• Draft SAARC Agreement on Multilateral Arrangement on Recognition of Conformity Assessment: The objective of this Agreement is to facilitate SAARC Member States to accept results of conformity assessment


Development of SAARC Standards

28

Current State of Domestic Physical Connectivity

Condition of Physical Infrastructure of Bangladesh 1991 2001 2011 2012Roads, paved (% of total roads) 7.2 9.53* 9.5** Roads, total network (km) 19540

9 207485*21269**

Rail lines (total route-km) 2746 2768 2835 Railways, goods transported (million ton-km) 718 908 710 Air transport, freight (million ton-km) 99.4 169.6 120.1 114.8Air transport, registered carrier departures worldwide 13800 6486 12182 20778Container port traffic (TEU: 20 foot equivalent unit) 486289

1433397

Note: * and ** indicate data for 2000 and 2010 respectively.Source: WDI Database, 2013


• Length of road has increased considerably• But the quality of road (e.g. paved road) remains a concern.

•In contrast, expansion of rail network was rather slow – indeed, in some instances rail-based transport network had experienced contraction.• Air transport network on the other hand has made significant progress particularly in case of freight transport, passenger and departure of carriers etc. • Containerisation as a mode of transport of goods has been on the rise globally.

• Only about 50% container passing though the Chittagong port is containerized, while less than 15% of containers moved inland, mainly by rail and only a few by road or by inland waters are containerised (World Bank, 2013)

29

1. Key Findings from the First Phase of the Study The road transport remains the predominant mode of transport in

Bangladesh accounting for four-fifths of total traffic moved. The conditions of internal roads in Bangladesh are not of the quality

that corresponds to the Asian Highway standard. The roads are usually classified as ‘primary’, ‘class I’, ‘class II’, ‘class

III’ and ‘below class III’. Standard primary roads in Bangladesh are limited in length unlike in neighbouring India and to some extent in Myanmar.

The condition of Bangladesh’s roads has improved over time – between 2004 and 2008, 93% of total roads were upgraded to class II level from class III and below class III levels which was only 24% in 2004.

Countries

Primary Class I Class II Class III Below Class III TotalKm Km Km Km Km Km

2004

2008

2010

2004

2008

2010

2004

2008 2010 2004

2008

2010

2004

2008 2010 2004 2008

2010

Myanmar 0 0 0 147 173 147 144 35 0 9831,58

51,79

81,72

91,21

61,06

43,00

33,00

93009

Bangladesh 0 0 0 20 92 68 441

1,648

1,574 476 0 32 868 25 83

1,805

1,765

1762

India 0 90 90 4844,06

94,06

9 01,67

51,67

510,8

695,69

95,69

9 105 117 11711,4

5811,8

101181

0Share (%)

Myanmar 0 0 0 4.9 5.7 4.89 4.8 1.2 0 32.7 52.759.7

5 57.6 40.435.3

6 100 100100

Bangladesh 0 0 0 1.1 5.2 3.86 24.4 93.4

89.33 26.4 0 1.82 48.1 1.4 4.71 100 100

100

India 0 0.80.7

6 4.2 34.534.4

5 0 14.214.1

8 94.9 48.348.2

6 0.9 1 0.99 100 100100

Condition of Roads: 2004-2010

30


Major part of road network of Bangladesh is not suitable to handle modern diversified vehicles (WDI, 2010).

The deficiency is more acutely felt in accommodating containers in Dhaka-Chittagong roads which constrain trading activities (BTILS, 2008).

Severe congestion is a prominent and permanent feature of highways from Dhaka to other districts.

In case of cross-border road connectivity, harmonization of standards signaling system and protocols need to be ensured through signing of Motor Vehicle Agreement.

31

Bangladesh in Asian Highway and Trans-Asian Railway


32

State of Cross Border-Related Physical Transport Infrastructure

Condition of Cross-border Roads The road transport remains the predominant mode of transport

accounting for four-fifths of total traffic moved Condition of roads has improved over time - 93% of total roads

were upgraded to class II level (only 24% in 2004) (see next slide)Major Weaknesses in Cross-border Road Two generic impediments are: a) lack of agreement on cross-border

movement of goods between Bangladesh and India causes transshipment and b) roads in Bangladesh side was not suitable to take loads over 8.2 axle.

Benapole point: limited working hours; no work during week-end; practice of limiting providing clearance for only 300 trucks per day; slow clearance at border points.

Brahmanbaria-Akhaura point: poor and narrow road; Banglabandh point: absence of permanent immigration and customs office; Tamabil point: absence of an appropriate agreement causes transshipment; Akhaura-Chittagong point: narrowness and poor condition of the road; Burimari-Mongla point: lack of proper warehousing facilities; Jamuna Bridge point, about 82 km roads are narrow


33

State of Cross Border-Related Physical Transport InfrastructureMajor Weaknesses in Railway TransportBroad gauge rail corridors between Bangladesh and India are

not active Non-utilisation of available capacity on the Indian side,

restriction on movement of commodity specific rolling stocks, inadequate infrastructural facilities for loops holding lines and axle road restriction at Jamuna

Mahishahon-Dhaka links: Different types of gauges require transshipment of goods. Rohanpur-Chittagong point: missing link between Akhaura and Agartala, metre gauge section, and capacity constraints in Chittagong port

Major Weaknesses in Inland waterwaysLack of sufficient number of port of calls; old vessels; poor

navigational aids; and outdated jetties. Lack of dredging and siltation; lack of appropriate equipments and skilled manpower


34

State of Cross Border-Related Physical Transport InfrastructureMajor Weaknesses in Maritime TransportChittagong Port: existing facilities in the port are inadequate; width,

curvature and draft of the Karnaphuli River limits the size of the vehicles to enter the port; bottlenecks within the road and rail traffic from the port to the capital city.

Mongla Port: Lacks the required container handling equipments; weak connectivity from other parts of the country; lack of economic activities

Major Weaknesses in Air TransportPoor infrastructure (runways, navigational facilities, ground services,

modern amenities etc.), lack of skilled manpower, poor management; inadequate warehouse facility


35

State of Customs and Trade FacilitationBangladesh is placed is just above the average of South Asia in

most of the indicators related to trade facilitation and customs processes (WB, 2013)Requirement of time and cost is significantly highBetter performance in timeliness; poor in terms of customs

Product-Specific Analysis of Customs and Logistics Condition at the Border Points

Import of raw materials from India (cotton fabrics): 10 days; US$415

Export of final products to India (garments): both through land and sea ports required four times more time and more than double costs

Business process followed with Bhutan and Nepal are lengthy and involve higher costs

Majority of operations (about 80% of the documents) involving cross-border trade in South Asia is still carried out through manual processes

Customs automation helped reduce the number of documents needed, time required and consignments to be inspected

Lack of standard documentary process in land based trade


36

6. State of Transport Administrations and Trade Facilitation

Indicators Duration( Days) Cost(USD)Banglade

shIndia Pakista

nSri

LankaBhuta

nNepal Banglade

shIndia Pakista

nSri

LankaBhuta

nNepa

lExport Procedure

Document Preparation

14 8 11 12 16 14 225 415 110 135 350 300

Customs Clearance and Technical Control

3 2 3 2 3 4 150 130 200 285 180 300

Ports and terminal handlings

5 3 3 3 6 4 450 225 150 185 350 275

Inland transportation and handling

3 3 4 3 13 19 200 350 200 115 1350 1100

Total 25 16 21 20 38 41 1025 1120 660 720 2230 1975Import procedure

Document preparation

22 8 11 12 17 14 370 400 155 190 250 270

Customs clearance and technical control

3 4 2 2 4 5 150 200 200 285 380 300

Ports and terminal handlingInland transportation and handlings

Total 25 12 13 14 21 19 420 600 355 475 630 570

Export and Import Procedures in Bangladesh vis-à-vis Selected Countries

Source: http://www.doingbusiness.org/data/exploreeconomies/

37

6. State of Transport Administrations and Trade Facilitation

Product Steps in Business Process (Use Case)

Number of Documents Required

Number of Actors Involved

Avg. Time (Days) Avg. Cost (USD/20 feet container)

ExportWoven garments (by land)

10 17 12 38* 935

Woven garments (by sea)

12 26 12 40 -

ImportCotton fabrics (by land)

7 10 8 10** 415

Business Process of Selected Products Traded between Bangladesh and India

Source: Hossain and Rahman, 2011; Note: * Excludes production time** Excludes time required by Indian exporter in completing the business process in India

Corridor Exporter Importer Products Procedures (No.) Time (Day)

Cost (US$/TEU) Exporter Importer Total

Corridor 1: Kakarvitta-Panitanki-Fulbari-Banglabandha

Nepal Bangladesh Lentil 18 13 31 23.40

791.8 Bangladesh Nepal LAA 12 16 28 29.26

1402.1 Corridor 2: Phuentsholing-Jaigaon-Hasimara-Changrabandha -Burimari

Bhutan Bangladesh Orange 18 14 32 18.60 569.8

Bangladesh Bhutan Fruit Juice 9 16 25 20.13 527.6

Business Processes: Requirement of Time and Cost

Source: De, 2013

38

3. Need and rationale for the second phase of the study Existing knowledge on practices of national standards, SPS related rules

and regulations, transport facilitation provides indication of concerns, challenges and scopes for undergoing detailed study on agreements on above-mentioned issues

A detailed analysis on those issues will provide Better understanding on concerns related to standards and SPS

related issues Detailed information about practice of SPS related standards followed

by India Understanding as regards differences between the two countries in

terms of following standards and SPS related requirements Mutual recognition agreements currently in practice /discussion in

other bilateral, sub-regional and regional trade agreements and major focus of those agreements

SPS agreements currently in practice in other bilateral, sub-regional and regional trade agreements and their major focus

Better understanding on MVAs currently in operation in other bilateral, sub-regional and regional agreements

A detailed analysis will help to understand Preparedness of both the countries in terms of requirement of

infrastructure, institutional set up, requirement of resources Assessment of resources, time, and institutional aspects necessary for

the improvement and changes in rules and regulations and its implementation

39

4.How to/why push the agenda for cross-border transport facilitation and mutual recognition of standards

Need to identify offensive and defensive interests in case of issues and concerns related to the possible agreements to be prepared Discussion with key stakeholders including BSTI, ministries and

departments monitoring the SPS standards, traders, border authorities, logistic providers

Discussion with key stakeholders with regard to MVAs including ministry of transport and communications, road transport authority, private transport organizations, border authorities, logistics providing agencies

Discussion with the experts on concerning issues To better understand contextual issues, in-depth understanding

technical issues Consult with similar agreements signed by other countries at bilateral,

regional and sub-regional levels To appreciate the framework issues, contents and concerns Challenges faced after signing such agreements (e.g. narcotics,

illegal movement) Interact with the counterpart institute (CUTS)

To get more information about rules and regulations related to standards, SPS and MVAs followed

Discussion with the official of ministries/departments involve in SPS, standards and MVA related issues To get their feedback regarding the possible issues and concerns to

be addressed in the agreements

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5. The Expected outcomes/benefitsA draft framework on SPS agreements based on the

information to be collected from different sources through interviews and FGDs to be carried out

A revised draft on MVA based on the analysis to be undertaken

Provide inputs for relevant policies of the government of Bangladesh through dialogues and policy influencing activities

Provide a plan of actions for enforcement of the agreement

41

6. Outline of a Model to Quantify the Benefits Accruing from Cross-border Transport Facilitation

Static benefitReduction of trade cost due to MVACUTS (2013): Potential savings in MVA

reformsDynamic benefit• ?

42

Thank you