Phrasing the transit question right

Tanim Ahmed*, NewAge, February 12, 2009

Clearly the question is not merely what Bangladesh has got to lose if India is given transit. The question must be what Bangladesh might gain besides the pittance in revenue for allowing India to use its infrastructure.

 THE government appears to be projecting bilateral agreements on trade and investment as purely political and devoid of political considerations. The commerce minister, Faruk Khan, has on several occasions over the last couple of weeks stated that the issue of transit facilities to India and a bilateral framework agreement on trade and investment is purely an economic issue, which is being politicised unnecessarily indicating the criticism of the main opposition in parliament. 


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The commerce minister, Faruk Khan, with the Indian external affairs minister, Pranab Mukherjee, during the latter’s recent visit to Dhaka. — New Age photo

It should be of little doubt that the recent high-profile visits by Indian and American diplomats were both political decisions of the respective establishments. It should also be of little doubt that their respective initiatives to revive pending bilateral negotiations were also a result of political consideration. It cannot be mere coincidence that two of the most influential players of the region chose to bring up thorny issues within a month of the new government taking office.
   

Since both matters, transit for India and bilateral trade and investment framework agreement with the United States, have seen strong resistance in the past, the interested parties were only being prudent by pushing these issues well within the honeymoon period of the new government. That the establishments were right in floating the bilateral issues was evident from the clear lack of criticism by different citizens’ platforms, non-governmental organisations and political parties compared to previous times.
   

Bilateral treaties and agreements in general almost necessarily have immense political significance, particularly when it relates to politically powerful and economically stronger parties, such as India and the United States. The issues that have featured strongly in the media and been discussed at different forums, although not very extensively, over the last couple of weeks are also of strong strategic importance. Thus, considering them as purely economic issues related to trade and commerce would be a folly. The commerce minister seems to be missing that point repeatedly.
   

Within this short span he has been contradicted twice by his own government. The first was when on January 18, Faruk Khan had commented that the Trading Corporation of Bangladesh would not be reactivated and he was contradicted by the prime minister when on January 20, Sheikh Hasina stated quite the opposite. The second time was when on February 3, Faruk claimed that the government was intent on striking deals with the United States and India at a public meeting and was contradicted the following day by Hasan Mahmud, who is perceived to be an influential figure in the current government despite his portfolio of a state minister for foreign affairs. Mahmud’s more tempered statement clarified that although the bilateral issues were surely under consideration, agreement with either party would still require more deliberation and that the government had not decided whether to make those deals at all in the first place. 
   

Ruling political regimes will understandably ‘politicise’ and ‘stigmatise’ certain issues and deals to serve their political end. But there appears to be a tendency of considering bilateral issues from clinically defensive point of view and without putting the matter into a historical context. Regarding the question of transit, for instance, the government’s argument appears to hinge on the fact that there is no harm in allowing it as long as Bangladesh does not suffer. Regarding the Trade and Investment Framework Agreement, on the other hand, the point seems to be that while this opens up the door to further negotiation there is no immediate problem since it does not have any binding obligations.
   

But if the context is considered and history of negotiations are considered, as a section of economists, academics and experts have deliberated upon recently, then the government’s position would certainly be a more pragmatic one. This consideration need not be limited to matters of trade and commerce but even it were, the reason for careful deliberation would be only too evident since thus far Bangladesh’s justified demands and entitlement have been, time and again, rebuffed.
   

With India it goes back to 1974, when the Bangladesh government, incidentally ruled by the same party as the present one, agreed to hand over a tract of sovereign Bangladesh land — known in the lexicon of border disputes as an ‘enclave’ — to India in good spirit expecting a reciprocal gesture. This initiative was part of an agreement for mutual exchange of enclaves that had fallen on the wrong side of the territorial borders. That reciprocal gesture has not come from India ever since. Although ratified by the Bangladesh government over three decades ago, that agreement is yet to be ratified in India. In the meantime Bangladeshis living in those enclaves inside India are forced to live without government services, amenities and even basic health services. Indians residing in such enclaves inside Bangladesh are not however subjected to similar treatment.
   

A few years later came the Farakka Barrage. The Indian government had then reportedly assured her smaller neighbour, also a lower riparian country that the barrage would be run on an experimental basis for a few weeks and thereafter its operations would be suspended. Now, not only does the Farakka deny Bangladesh of much needed water flow, India fails to meet obligations set out in water sharing deals of common rivers. To make matters worse, and to the grave consternation of a large section of the people even in India, New Delhi’s humongous river interlinking project continues to proceed. It would surely worsen water flow in the rivers flowing through India.
   

Several regional trade deals stipulate that as an advanced developing country, India should allow duty and quota free access to the least developed countries, which includes Bangladesh, so that the smaller countries may gain a small share of India’s affluence. But that has thus far not come about whether under the preferential trade agreement or the regional free trade agreement (SAPTA and SAFTA). Bangladesh products, investment and services often face harsh standard requirements, so much so that they are prohibitive. That much is evident from the trade volume between the two countries. It so happens that Bangladesh provides more business for Indian manufacturers and service providers than the Indian consumer. Bangladesh imports almost 10 times the amount it exports to India which is around over $3 billion worth of goods, excluding the unofficial border trade.
   

On the other hand, it would prove to be beneficial for Nepal, and perhaps also Bhutan if they were allowed to have transit facilities through India reaching Bangladeshi ports. It is not just a moral obligation but also a legally binding obligation under the World Trade Organisation since both Nepal and Bhutan are landlocked countries.
   

As far as trade and commerce is concerned India clearly has miles to go before it matches Bangladesh’s level of openness. As far as the South Asian free trade treaty is concerned, India’s bid to liberalise services in exchange for its reduction of tariffs for goods is becoming increasingly obvious. Reduction of tariff and non-tariff barriers for Bangladeshi goods entering Indian markets have also been linked with the provision of transit.
   

Clearly the question is not merely what Bangladesh has got to lose if India is given transit. But more importantly, the question must be what Bangladesh might gain besides the pittance in revenue for allowing India to use its infrastructure. Transit to Nepal, Bhutan and China under comparable terms that India would prefer for her own transit should be an acceptable offer. The Awami League government should not settle for anything less.

*Tanim Ahmed regularly writes for NewAge. Contact: tanimahmed@gmail.com

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