Bangladesh framing India-like rules to administer tariff preferences

Bangladesh is enacting new customs rules to manage all of the tariff preferences given under various bilateral, regional and multilateral pacts, officials have said.

The new rules being framed by the National Board of Revenue (NBR) will be identical to those the Indian government enacted last September. The latter have made the attainment of tariff preferences 'almost impossible' by the trading partners of India.

Bangladesh strongly protested the Indian new customs rules when those arrived to effect, saying those were severely hindering the Dhaka's export to Delhi under the preferential deals.

Economists also condemned formulating and applying such harsh rules by the regional powerhouse, which can eventually make the preferential deals unproductive.

The Customs wing of NBR has prepared draft of the new rules and delivered to the government and private sector stakeholders concerned, seeking their opinions.

The government is likely to make the brand new rules effective from the 1st day of the upcoming fiscal year, 2021-22.

In line with the draft, the guidelines will be named as - 'Customs duty preference rules under preferential or free trade agreements'. The rules will be applicable in the event of providing tariff waiver under bilateral, regional and multilateral deals, where Bangladesh is a celebration.

In line with the proposed rules, an importer, while claiming tariff preferences, has to submit certificate of origin, date of issuance of certificate, originating criterion, if accumulation or cumulation can be applied or not, if the certificate of origin was issued from a third country, and if the products were directly exported from sourcing country or not.

After the rules are enacted, a designated customs official should be able to refuse tariff preference, if the certificate of origin of goods is found incomplete or does not follow proper procedure of rules of origin or if the certificate issued isn't entitled for tariff preference beneath the trade deal concerned.

The importers have to preserve all of the documents associated with certificate of origin for five years, and also have to submit to the designated customs officials when sought, the draft said.

The customs officials will be empowered to seek the documents while releasing the goods and later, if it is believed that the guidelines of origin related conditions weren't met properly.

The importer must submit the documents within 10 days, and if those aren't found enough for granting duty preferences, the customs officials will be able to send verification proposal to the center point official of the exporting nation.

The proposed rules will empower the commissioner of customs to refuse duty preference without verification, if the submitted documents prove that the imported goods usually do not meet the conditions of the guidelines of origin.

The draft also mentioned that customs officials can propose visit to the factories/establishments in the exporting countries, if the available information is available incomplete. Granting tariff preference could be kept withheld before verification is completed.

Goods could be released through the verification procedure by realising bank guarantee at the quantity of the distinctions between normal duty rate and preferential duty rate.

If the designated authority of the exporting country does not reply within the stipulated time, and if, in line with the information and documents supplied by the exporting country, it really is discovered that the imported goods aren't designated to get duty preference, the state concerned should be able to ignore duty waiver demand.

The customs commissioner should be able to refuse the demand of preferential tariff for exactly the same goods of any importer without verification, when it does not meet rules of origin criteria.

Meanwhile, Research Director of Centre for Policy Dialogue (CPD) Dr Khondaker Golam Moazzem told the FE on Friday that the NBR's proceed to prepare the rules is constructive, as Bangladesh will probably sign a good number of preferential and free trade deals in the coming days.

"But the structure, followed in preparing the proposed rules, aims at containing duty evasion, which isn't supportive of the spirit of preferential trade deals."

Instead, Mr Moazzem suggested transforming the proposed rules in to the duty waiver framework.

"The proposed rules may pose barrier to any initiative for creation of preferential and free trade areas, unless changed properly."

The NBR must review the earnings structure of the countries, with which Bangladesh may sign trade deals in future, before incorporating such customs rules.

Otherwise, while signing trade deals in future, Bangladesh will have to change the customs rules repeatedly upon request form the counterpart nations, he added.

NBR Member Khondaker Muhammad Aminur Rahman told the FE on Friday that such rules are under formulation to check on exploitation of the tariff preference benefit, if any.

"India has prepared such rules. We are also following them."

Mr Rahman said just how India checked Bangladeshi goods in the name of examining rules of origin, Dhaka is currently preparing the similar checking instrument.

"We are advancing lawfully," he mentioned.