The National Board of Revenue (NBR) is enacting new customs rules identical to those announced by the Indian government in September last year.
In response to how India checks Bangladeshi goods to examine rules of origin, the NBR proposed a draft of new rules.
These rules will be administered for all the tariff preferences given under various bilateral, regional, and multilateral pacts.
According to the proposed rules, an importer must submit a certificate of origin, date of issuance of the certificate, and originating criterion while claiming tariff preferences in Bangladesh.
This will allow customs officials to check imported goods from India and identify if the certificate of origin was issued from a third country.
The government plans to implement the new rules from the first day of the upcoming fiscal year 2021-22.
Upon implementing the new law, a designated customs official will deny tariff preference if the certificate of origin of goods is found inadequate, does not follow the conventional procedure of rules of origin, or if the certificate issuer is not qualified to tariff preference with the trade deal involved.
Also Read - NEEDED: Negotiation cell to deal with tariffs in post-LDC era
Granting tariff preference can be retained until the completion of the verification process.
Goods will be released following the verification procedure by obtaining a bank guarantee of the differences between standard duty rate and preferential duty rate.
If the designated authority of the exporting country does not reply within the specified time, and if, according to the information and documents provided by the exporting government, goods are found to be not designated to a duty preference, the concerned officials will be able to turn down duty waiver demand.
The importers have to save all the documents associated with the certificate of origin for five years and present them to the designated customs officials when solicited, as per the draft.
The importer also has to submit the documents within ten days.
If those are found not to be enough for yielding duty preferences, the customs officials will send a verification proposal to the focal point official of the exporting nation.
Earlier, India framed a new rule on determining the country of origin of a product, which was deemed detrimental to Bangladesh's exports to India and undermined efforts to decrease the massive trade imbalance between the two economies.
The Bangladesh Trade and Tariff Commission (BTTC) and the Export Promotion Bureau (EPB) concluded the new measure on origin (RoO) rules to be inconsistent with the trading agreements, particularly the treaty on the South Asian Free Trade Area (Safta).
The transit would affect Bangladesh's exports to India, which relished a $4.68 billion surplus, they said, strongly questioning the latter's new customs rules.
But at the same time, economists condemned formulating and applying such harsh rules to both economies as it makes the preferential deals unproductive.
Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh (PRI), told Dhaka Tribune that every country has the right to reciprocate restrictions, but moving from less-restrictive regime to a restrictive one undermines trade facilitation among trading nations.
Legal restrictions of such kind can also increase illegal trade, he also said.
He suggested cooperation of both nations in mutually coming to terms that benefit both economies.
Zaid Bakht, chairman of state-owned Agrani Bank and renowned economist, said: "We have been actively involved in reducing non-tariff barriers with India. But if a unilateral barrier is induced by one of our biggest trading partners, we have to retaliate."
Meanwhile, Distinguished Fellow of Centre for Policy Dialogue (CPD) Prof Mustafizur Rahman told Dhaka Tribune that the NBR's move to prepare the rules is constructive, as Bangladesh is going to sign a good number of preferential and free trade deals in the coming days.
"But we have to increase our capacity and mutually counter reciprocal barriers."
NBR officials could not be reached for a comment as of filing this report.
