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Trade pact on cards during Khaleda`s visit

Business Standard, India

Trade pact on cards during Khaleda`s visit

By Monica Gupta, New Delhi

20 March 2006

New Delhi and Dhaka will sign a revised bilateral trade agreement during the three-day visit of Bangladesh Prime Minister Khaleda Zia from tomorrow. The present bilateral trade agreement expires on March 31.

Senior government officials said the revised trade agreement would be valid for three years. The existing agreement was signed in 1980 and had been renewed a number of times since then.

Officials say India is not expected to take up the issue of Free Trade Agreement in the wake of the operationalisation of the SAARC Free Trade Agreement (SAFTA) from January 1 this year. New Delhi had mooted an FTA with Bangladesh in 2002. Dhaka appointed a European consultant to examine the agreement’s feasibility but had not given any response.

Officials said minor changes had been included in the revised trade agreement. For instance, both countries have agreed to drop Article 9 of the earlier agreement, which stated that each government will grant merchant vessels of the other country the most favoured nation treatment while entering, putting off and lying at its ports, under the flag of any third country. It also stated that both countries would utilise to the maximum extent possible the vessels owned/chartered by the each other’s shipping organisations for cargos.

Officials said Dhaka was expected to take up the issue of its huge trade deficit of around $1.68 billion with India. “Bangladesh is expected to take up the issue of preferential access to its garments through a Tariff Rate Quota,” an official said. A TRQ allows a country to export to India at a lower tariff.

India has offered Bangladesh a TRQ for eight million pieces under SAFTA. Dhaka, however, was expected to seek a TRQ for an additional 2 million pieces, but without the condition that fabrics be sourced from India, officials said, adding that it was also expected to raise the issue of non-tariff barriers.

India, on its part, is likely to seek Dhaka’s cooperation in dismantling terror infrastructure in that country and in checking illegal migration.

Zia, on her first visit to India since she assumed power nine years ago, will have talks with Prime Minister Manmohan Singh on a wide range of issues on Tuesday. She will also call on President APJ Abdul Kalam and meet UPA Chairperson Sonia Gandhi and Leader of Opposition LK Advani.

Accompanied by Finance Minister Saifur Rehman and Foreign Minister Morshed Khan, she will also address Indian business leaders.

During the talks, India is expected to convey its concern over the existence of insurgents’ camps in Bangladesh. Dhaka has been denying the existence of such camps as well as the presence of insurgent leaders even though New Delhi has on numerous occasions furnished it with lists pin-pointing positions of terror camps across Bangladesh.

Other issues likely to figure in the talks relate to border problems, particularly the conclaves in “adverse possession" and disputes over sharing of water of common rivers.