Loading...
The Financial Express

Trade must enshrine good neighbourliness too

| Updated: July 15, 2020 21:53:04


Trade must enshrine good neighbourliness too

The customer is the king - an old saying in business. The corresponding Japanese proverb goes even a degree higher -- "the customer is god", a reflection of the very humbled Japanese culture.

United States is the second biggest export destination of Bangladesh after the European Union, with an annual export hovering around US$ 6 billion. Bangladesh also enjoys its second highest trade surplus with the U.S. In 2018, U.S.-based research organisation - Pew Research Centre revealed that the U.S. duty and tariffs on Bangladeshi export were equivalent to 15.2 per cent of the total value of the country's shipment. It was the highest average rate of duty among all the 232 countries, territories and other jurisdictions.

Despite this high tariff and stiff competition to get a tiny pie of the U.S. market (a fraction of 1 per cent of total import of U.S.), Bangladesh has always treated the U.S. as its king customer. Bangladesh has made great strides to address any concern of the U.S. stakeholders regarding export and its value chain. This has been equally applicable to Bangladesh's other large export markets.

Has Bangladesh got minimum due respect and courtesy from the countries from which it imports most?

Bangladesh's highest import comes from China. In 2018-19 FY, Bangladesh imported US$ 13.64 billion worth of goods from China, while Bangladesh's export to China was US$ 831 million during the same period. China enjoys a staggering US$ 12.81 billion of trade surplus with Bangladesh. China is also emerging as Bangladesh's largest infrastructure development partner. Growing number of Chinese professionals and workers are finding their livelihoods in Bangladesh.

Ironically, Bangladesh's globally acclaimed and much talked about remittance inflows accounted for US$ 16.4 billion during 2018-19 FY. Remittance from Saudi Arabia topped the list with US$ 3.1 billion. Bangladesh has always treated the Kingdom and other Gulf countries as its kings, with deep respect and gratitude for this enormous contribution to our people and the economy-- though, this remittance inflow takes a lot of diplomatic efforts and sweat and blood of millions of our people.

Has China shown the minimum respect and courtesy to Bangladesh, despite our annual contribution of US$ 12.81 billion in trade surplus alone? Chinese dealing of Rohingya issue could be a metaphorical answer.

India exported commodities worth of US$ 9.21 billion to Bangladesh in 2018-19 FY, around 17 per cent of Bangladesh's total imports. India enjoys its 2nd highest trade surplus with Bangladesh, after the United States, which stood at US$ 8.2 billion during the period.

In 2019, highest number of tourist arrival in India was from Bangladesh -- 2.26 million (out of 10.56 million), as reported by Indian Ministry of Tourism. Tourist arrival from the U.S. stood second with 1.46 million. However, large portion of the tourist arrival in India from countries like the U.S. and the U.K. are the Indian diaspora visiting their family and friends. Whereas, most of the Bangladeshi tourists visit India for seeking better treatment of critical ailments, which results in longer stay and higher financial spending. It would not be unsafe to estimate that Bangladesh contributes a large part to India's total tourism earning, which accounted for US$ 28.6 billion in 2019.

Many people think that essential food items dominate Bangladesh's import from India. No doubt, Bangladesh is heavily dependent on India to meet the shortages of some food items such as onions, spices, wheat, rice (not in recent years), coffee, sugar etc. But their financial value to the total import volume was around 10 per cent in 2018-19. Around 90 per cent of Bangladesh's import from India is commodities and some raw materials.

In September 2019, a poor harvest led to big shortage of onion supply in India. They declared an overnight ban on export, but without any intimation to its importers. Prime Minister Sheikh Hasina even flagged the issue of Indian onion export suspension without any intimation during her visit to Delhi in the following month. Bangladesh had to go through a hard time to find alternative supplier(s).

A supply chain, once established, is difficult to alter. But a country, if forced and / or with proper planning, can make an alternative supply chain even apparently under difficult scenario. Indian ban on cattle or beef export and subsequent thriving of Bangladesh's livestock industry could be an ideal example. Ambassadors from countries as far as Brazil and Argentina are now frequenting to offices of Bangladesh with their proposal of exporting beef.

Following the onion export suspension by India, the dumbfounded officials of Bangladesh, facing the reality of highest onion price in history (Tk. 300/kg), made one remarkable step. Agriculture and Commerce Ministry joined hands to declare an embargo on onion import during the harvesting period to ensure fair price, promote production and achieve self-sufficiency. Estimates suggest that Bangladesh has a demand of about 2.4 million tonnes of onion per year out of which around 0.6 million tonne is imported.

India recently publicised that the first Indian train carrying onion reached Bangladesh on May 09, 2020, defying the on-going lockdown. It also mentioned that a total of 100 trains (equivalent to 80 trucks each) carrying essential supplies including onion came from India to Bangladesh in June alone. As the lockdown had eased, import from India by road also resumed in full swing. Having no one from either country to talk about Bangladesh's export, the CNF agents of Bangladesh had to come forward to put an embargo on Indian import into Bangladesh. However, the Indian export (supplies of essentials as they put it) by railways continues despite this saga.

Unfortunately, this supply comes at a time when the retail market price of onion hit the bottom in Bangladesh at Tk. 20 / kg, a nightmare to the farmers. The farmers had demanded a ban on onion import owing to a bumper harvest. With the retail price of onion plummeting in India as well, it could only be explained as a move to maintain the supply chain and the result is Bangladesh's prolonged dependency on Indian onion. Technical investigation could reveal whether it mounts to dumping, to which India has been very much apprehensive of, as evident from its imposition of high countervailing duty on Bangladesh's jute export to India. 

Bangladesh has always tried to portray its bilateral relationship with India and China as excellent. But, some Indian politicians and their collaborative media in the recent years have humiliated Bangladesh and projected it as a destitute nation to gain political advantage. India's mass population, largely unaware of Bangladesh's economic success and growing self-esteem, are drawing further negative perception about the country, which appears to be the best friend at least in the neighbourhood. Kudos to their neighbourhood diplomacy or our perseverance?

A sustainable bilateral relationship needs a win-win partnership. Even if Bangladesh's claim for a larger pie of the bilateral partnerships from its two big neighbours remains at bay, the people of Bangladesh deserve to be respected and acknowledged as a big contributor to employment generation and economic development of both India and China, may be in varying degrees.

 Saiful Alam, PhD is a researcher in international affairs with interests in South Asian Politics

Share if you like