A government agency has suggested retaliation by issuing similar harsh rules unless India agrees to withdraw its newly-enacted customs rules, which are likely to make it tough for Bangladesh to get tariff preferences, officials said.
The Export Promotion Bureau (EPB) also suggested engaging the South Asian Association for Regional Cooperation (SAARC) and the Asia-Pacific Trade Agreement (APTA) secretariats in negotiations with India for the withdrawal of new rules, they added.
Diplomatic steps can be taken for the withdrawal of the rules, which will ultimately widen the bilateral trade gap further, with the Bangladesh's exports declining, the EPB noted.
The EPB's views came as the ministry of commerce sought its opinion on the Indian Customs Rules-2020, which came into force in September last and seem to have been prepared to deprive any country of tariff preferences in the Indian market.
The regulations, enacted for the administration of rules of origin under trade agreements, will ultimately govern all tariff preferences India offers to all its trade partners.
The EPB said while exporting goods, Bangladesh presently enjoys tariff preferences in the Indian market under three regional agreements. These are: SAARC Preferential Trading Agreement (SAPTA), South Asian Free Trade Area (SAFTA), and APTA.
The new customs rules of India will come as barrier to the duty preferences given under the regional deals, it said.
The bureau also suggested examining whether preferences given under multilateral pacts can be scrapped by enacting rules individually by a signatory country.
It said the rules of origin and other rules are enacted under each trade agreement for commercial cooperation and providing duty preferences. The EPB ensures the compliance of the rules of origin by issuing certificate of origin and it cooperates with the Indian authority in case any dispute arises.
"So, enacting new separate rules on this issue is not rational," the EPB said and added this will obstruct Bangladesh's export to India.
The sections (a) and (b) of rule-4 has asked the Indian importers to get origin-related information while claiming preferential rate of duty. These include the country of origin criteria, including the regional value content and the product-specific criteria specified in the rules of origin for five years.
The EPB said Bangladeshi exporters may not agree to provide this info to importers since those are related to production procedure and expenditure and are business secret. "These types of conditions are mainly non-tariff barrier, which will hinder Bangladesh's exports to India."
The sub rule (5) of rule-5 has empowered customs commissioner to disallow the claim of preferential rate of duty without verification, which will make things uncertain for exporters, the EPB said.
The bureau said since the rules 6 (1) (b) have kept the provision of keeping tariff preference withheld, the Indian importers may feel discouraged to import from Bangladesh.
The rules 7 also kept the provision that the authority will be able to decline tariff preferences of all goods of an exporter if his or her one item fails to meet originating criteria. This provision will put exporters always in uncertainty.
Research director of the Centre for Policy Dialogue Dr Khondaker Golam Moazzem had earlier told the FE Bangladeshi products are the recipients of maximum tariff preferences in India. Thus, the new rules apply mostly to those.
He said the 'country of origin' under the rules of origin criteria is the key focus of compliance under the new rules. It has made it specific about the provisions of 'third country' in case of preference benefits.
"Bangladeshi exporters may face various types of constraints and challenges in compliance with the documentation and following proper submission process," he said.
Mr Moazzem suggested that importers and exporters set the standard operating procedures (SoPs) in case of sourcing from Bangladesh.
The ministry of commerce should sit with the exporters to identify possible difficulties under the new rules and support them to take measures accordingly.
Otherwise, Mr Moazzem feared, Indian importers may scale down imports to avoid such complications, thus reducing Bangladesh's exports to India.
syful-islam@outlook.com