Transit, TIFA and Bangladesh

Several heated discussions have been revolving around the issues of “Transit” and the TIFA for years. But there was never a concrete outcome. While many are not in favour of “Transit and TIFA”, saying these agreements will go against national interest, some came up with the rationale that these treaties will bring positive outcomes for Bangladesh. I strongly believe it is time for us to take objective and dispassionate decisions based on cost-benefit analysis, backed by hard facts and figures.

We have been discussing transit since 1980. The fear that always prevails is that India will take over Bangladesh.

From that anticipation, previous political governments could not take any decision and we lost the economic benefits of having a “Trans-Asian railways” or “Asian highways”. The critical point is that each time we have been holding back these decisions on account of the speculation that our national security will be at stake. Our government failed to come back with a detailed analysis on these concerns and compare them with an objective analysis of the potential economic benefit that we may gain.

We must acknowledge that things have changed in the era of globalisation and things have changed for the better. Now, countries do not fight against each other with guns and ammunition, rather countries outperform each other with economic bargaining power. We have to acknowledge this reality and change our outlook accordingly. We need to come forward and think objectively on how to benefit by leaguing up with others.

Let us look at how we lost out on economic opportunities by not stretching our hands towards friendship. From FY 2003 to 2007, Bangladesh received FDI of $43 million from India, whereas Nepal and Sri Lanka received FDI of $76 million and $358 million respectively. We lag behind out neighbouring countries because of our indecisiveness and failure to foresee the benefits of an economic tie-up.

Now come the issues of trade deficit. In FY 2008, India exported goods worth $3.4 billion to Bangladesh and imported products worth only $358 million. Informal trade between the two countries is much more. The fear is that our local industries will suffer if transit or a corridor is allowed. But we need to understand the extent to which we can reduce trade through informal channels? By allowing transit, we may be able to formalise a share of the informal trade.

Talks over transit cover several arenas. Firstly, export by India, Nepal or Bhutan to any third country, using Bangladeshi space and second, transportation of goods from one part of India to another. While the first is an issue of transit, the second is known as a corridor facility. Objections are greater against corridors than transit, as the latter involves other countries as well. But in terms of corridor, we have to realise that there are small-scale road, rail and water transportation links between various cities of India and Bangladesh. So the corridor facility will only help streamline the network and enable Bangladesh to earn more fees and custom duties.

Bangladesh signed transit treaties with Nepal in 1976 and with Bhutan in 1980. But Bangladesh does not have any treaty with India regarding transit or corridor. Due to a lack of any treaty, trade between the two countries is presently carried out by transhipment or by transporting goods from the cargo of one country to the cargo of another.

Again, goods that come to Bangladesh from Nepal or Bhutan by road have to travel through Indian territories. Exporters from Nepal and Bhutan have to face several challenges in terms of pre-designated time for shipment, customs related complications and changing transport at different border areas.