India’s new customs rules to take toll on Bangladesh’s exports

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A fresh rule framed by India on deciding the country of origin of something will hurt Bangladesh's exports to India and undermine the efforts to narrow large trade imbalance between your two neighbours, according to two government agencies.

The views came following the Indian authority issued a notification termed Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 in August.

Following notification, the commerce ministry sought opinions from the Bangladesh Trade and Tariff Commission (BTTC) and the Export Promotion Bureau (EPB).

Both agencies find that the brand new measure on rules of origin (RoO) are inconsistent with the trading agreements, specially the treaty on the South Asian Free Trade Area (Safta).

The move would affect Bangladesh's exports to India, which enjoyed a $4.68 billion surplus, they said.

It comes at the same time when Bangladesh's exports to the bigger neighbour are gradually increasing.

Officials of the commerce ministry said the BTTC scrutinised the brand new rule in light of the Safta's RoO and the Operational Certification Procedures (OCP).

The BTTC discovered that a number of the provisions contradict with those with the Safta RoO and OCP.

The Safta, comprising eight members of the Saarc, arrived to force in January 2006 to increase intra-regional trade in South Asia, which makes up about about 5 per cent of the full total trade of the region.

Under the Safta, the majority of the exports from minimal developed countries, including Bangladesh, get duty-free entry to India predicated on a document referred to as the certificate of origin (CoO).

The certificate is issued by the state agencies of exporting countries confirming the united states of origin of the merchandise. Regarding Bangladesh, the EPB issues the CoO.

India's new measures on the RoO allow its customs authorities to seek information to examine the certificate issued by the state authority of the exporting country.

Officials of the commerce ministry said as the CoO is issued by a designated agency of the exporting country, such mechanism and rejection of the CoO not in favor of the trust.

"It is a matter of trust. It demonstrates there is a insufficient trust," said BTTC Member Mostafa Abid Khan.

The BTTC, citing another provision of India's new rules, said customs officials could deny the claim of a preferential rate of duty if a CoO is produced whose validity has expired.

However, the BTTC said you will find a provision in the Safta OCP that the certificate could still be accepted even following the expiry of the validity period when there is a cause that's beyond the control of exporters.

Another provision requires importers to have information supporting document of the RoO for five years. The BTTC said almost all of the information sought has already been in the CoO and the issuing authority of the exporting country and exporters own various other information and supporting documents.

The tariff commission said there exists a provision in the Safta RoO that requires the issuing authority to wthhold the application for CoO and all related documents for just two years.

"Neither the Safta RoO nor the OCP requires the exporters or the issuing authority to send these details to the importers," said the BTTC in its are accountable to the commerce ministry.

The tariff commission said the rule of the OCP provides for exchange of information after request by importers. And there is also a provision that seeks to make sure that the exchange will be confidential.

"Therefore, such a requirement is a complete departure from the Safta RoO and OCP," said the commission.

The requirement to own information of the exporters by the importers does not exist in any regional trade pacts, it said.

"Such a requirement will discourage exporters to avail the opportunity of preferential access and can constitute an extremely stringent trade-restrictive measure undermining the prime objective of the Safta."

There exists a provision in the new Indian rule that obliges the CoO issuing authority to furnish information as required.

The tariff commission said the provision extremely undermines the state authorities of exporting countries by denying the claim for preferential treatment using judgement on the evidence supplied by the issuing authority.

"Such provisions certainly are a gross violation of the Safta RoO and OCP," it said, adding the provisions are inconsistent with Safta RoO and OCP and aim at discouraging import beneath the Safta.

It suggested the federal government take initiatives to request India to withdraw the rules.

The EPB said the new rules empower customs authorities to cancel preferential tariff benefit for exporters and importers and can put exporters in uncertainty.

As a result, there is a risk that export to India might fall, it said, adding that importers will feel discouraged to import as you will find a threat of suspension of tariff benefit.

Bangladesh exported goods worth $1.09 billion to India and imported $5.77 billion worth of goods in the fiscal year 2019-20.

The trade gap might increase as a result of the new rules, the EPB said, calling for initiating diplomatic move and engaging the secretariat of the Saarc.

A senior official of the commerce ministry said the ministry would sit with stakeholders, particularly businesses to learn their views.

The new rules will apply to all countries, he said.

Asif Ibrahim, a director of the Bangladesh Garment Manufacturers and Exporters Association, said the measures enable you to raise cases of dumping against exports from Bangladesh.

Source: https://www.thedailystar.net

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