Revised trade deal gets nod in Bangladesh

PM_4_06_5522a7c4aa8f6.03.2015_Kallol PixThe Bangladeshi Cabinet has approved a revised trade deal, under which India and Bangladesh shall be able to use each other’s water and road routes to transport goods to a third country. The agreement has removed a long standing barrier between the two countries and is expected to boost regional trade as well (intra-regional trade in SAARC remains very low despite the SAFTA framework being in place). The deal also provides for automatic renewal after five years if neither country objects to it.

The decision was approved at a cabinet meeting chaired by Bangladesh’s Prime Minister Sheikh Hasina. The Commerce Minister Tofail Ahmed described it as “a milestone” in Bangladesh-India relations. The revised deal is expected to be signed either during Prime Minister Hasina’s trip to New Delhi or Mr Modi’s visit to Dhaka.

Speaking on this overnight development, Cabinet Secretary Musharraf Hossain Bhuiyan, said that this was a “huge achievement” for Bangladesh, since it would now be possible for Bangladesh to use Indian roads, railways and waterways in transshipment of goods to Bhutan and Nepal. India would also benefit by being able to transport goods to Myanmar through Bangladesh. Both countries would be paying the same fee and charges for transporting goods.

India and Bangladesh signed their original trade agreement in 1972 soon after the founding of independent Bangladesh. Both sides have taken several measures to increase bilateral trade, although the balance is heavily tilted in favor of India. Intra-regional trade, as a ratio of South Asia’s total foreign trade in 2008 was only 4.8%, much below similar groupings as ASEAN. The new deal is expected to bring momentum to the intraregional trade as well.

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