While South Asia’s lack of connectivity is a much talked about and agreed upon fact, a few decades earlier the situation was arguably just the opposite of what it is now. This is when natural complementarities decided the routes and amount of exchange and not political boundaries. So, the hilly terrains and the adjacent plains would complement each other for articles of everyday use and consumption. This meant regular trade and exchange between the communities across the region. It is in fact a well-known fact that some of the most ancient trade routes were in this part of the world. This however changed with changed political boundaries and realities. The present lack of connectivity and integration is one of the biggest contributors to the sub-optimal utilisation of the region’s economic potential and hence gains for the common consumers in all the countries.
To take the example of the countries of India and Bangladesh, there was and still remains, lot of natural complementarity in terms of producing and exchanging goods for everyday consumption. However, the new political boundaries and domestic regulations have created hurdles in terms of easy exchange and trade of goods across the borders. Given the present-day world and the nature of global trade regulatory framework, it is imperative for all countries to have domestic regulations that aim to address domestic concerns and interests. Quarantine and food safety regulations are good examples of such regulations wherein the need to ensure plant, animal and human health of a country leads to non-tariff barriers to trade between countries. While such food safety regulations are legitimate and required, it is also important to understand when such safeguards lead to situations wherein there are substantial cost to the very common consumers for which such safeguards are meant for.
It is in this context that it becomes important to weight domestic regulations against consumer gains and look at possible way outs to work around such regulations so that consumer gains can be maximized without threatening concerns for health and safety. Such an exercise requires research that can do a deep diving on quarantine and SPS measures of a country and understand how best to promote market access for items that can lead to substantial consumer gains across borders, while still addressing the domestic concerns.
To cite an example, Tripura, which is a state in North East India, shares almost 84 per cent of its borders with Bangladesh and is expected to gain substantially if trade and transit is facilitated between India and Bangladesh. As per data available with the Department of Agriculture, Government of Tripura, average procurement of paddy from outside the state is 100,000 metric tonnes. For potato alone, the deficit that Tripura had in 2013-14 was roughly 130,000 metric tonnes. With increasing population, this deficit is expected to increase in future with possible impact on food security. While the people of the state of Tripura are doing their best to enhance production, it is an imperative that Tripura has access to more of such products at low costs for meeting its requirement. With the rather long and difficult land route between Tripura and other states of India, the cost of procuring from them is quite high.
In contrast, if the same is procured from Bangladesh, it might result in much less cost given their geographical proximity. While it clearly makes economic sense to procure agricultural and other products across borders, issues like regulatory barriers (for example, quarantine regulations), non-harmonisation of standards and certification requirements across borders, lack of institutional and stakeholder capacity and infrastructure (roads, adequate testing facilities) and the likes pose hurdles to higher trans-boundary cooperation and exchange. The situation is similar for the other North Eastern states of India that have borders with Bangladesh, viz. Assam, Meghalaya and Mizoram. There are decided trade complementarities and particularly in agricultural products, which if explored, can lead to major gains for consumers in the region, across borders.
While formal cross-border trade becomes an expensive affair due to such non-tariff barriers, informal trade flourishes in those very products due to high demand across the borders. The high cost of the formal channel creates incentives for informal channels that, additionally, pose security concerns for both countries. So, the present arrangement leads to sub-optimal realisation of the trading potential between Bangladesh and North East India, higher prices and low access to agricultural produce for consumers across borders and also incentivises informal trading channels that additionally generates security concerns
Specific objectives of the project include:
- Identification of specific agricultural commodities (at least 2 commodities, which can be imported from Bangladesh to Tripura) that are high in demand across borders and stand to generate substantial consumer and producer gains across borders if trade in such items is facilitated
- Estimation of possible consumer and producer gains from trade in such items
- Generation of knowledge and understanding on the legal and regulatory framework (both domestic and international, particularly quarantine and sanitary and Phyto-sanitary related) for facilitating cross-border trade in such commodities
- Identification of solutions to promote market access for the identified agricultural commodities across borders, ultimately leading to consumer and producer gains
- Undertaking of appropriate advocacy through public-private dialogues to build understanding and consensus on the need to facilitate market access on the identified commodities and the consumer and producer gains that it will be generated
- Preparation of an Action Agenda to facilitate market access in identified commodities and facilitate specific actions by both private and public agencies
Activities and Methodology
Focused consultations and interviews with key informants including government officials, private players, associations and chambers in both sides of the borders to identify the specific agricultural commodities (at least 2 commodities) that are high in demand in Tripura without much local production and which can be supplied by Bangladesh. Ground level market assessments in Tripura and across the border in Bangladesh to understand the quantum of demand for and the possibility of supply of the identified agricultural commodities. This exercise includes interactions and interviews with ground level market players including traders, government officials, business associations, etc.
Domestic and international laws and regulations relevant to trade of those commodities to be analyses to understand the hurdles (particularly the quarantine and SPS related ones) for cross-border trade, the possible way out and also to identify the change agents.
Following this exercise, appropriate methods be used to estimate the possible consumer and producer gains from trade in these identified commodities.
Advocacy through public-private dialogue to be organised in Tripura to share knowledge on identified agricultural commodities, their projected demand and supply, and possible consumer and producer gains from trade across borders.
The project is expected to achieve the following outcomes:
- Identified list of agricultural commodities (at least two) for trade between Bangladesh and Tripura that can lead to substantial consumer and producer gains when traded across borders
- Comprehensive understanding of the legal framework, hurdles and possible solutions to cross-border trade in identified agricultural commodities
- Estimation of the quantum of consumer and producer gains that can result from cross-border trade of the identified agricultural commodities
- Better capacity of traders, working level officials and other relevant stakeholders to address the need for trade in these commodities their respective roles in facilitating trade of those agricultural commodities.
- An action agenda for facilitating trade in the identified agricultural commodities and specific action for each stakeholder categories to facilitate cross-border trade in those commodities
Dialogue Meeting on Trade Facilitation between Tripura and Bangladesh on specific Agriculture Commodities.Border Haats and their Socio-Economic Impact Guwahati, September 07, 2016
- A Case Study on Promoting Trade between Bangladesh and Tripura, India in Specific Agricultural Commodities