Messages

31

Law / Implications of LDC graduation for Bangladesh

« on: December 24, 2019, 08:48:34 PM »

As is well known, LDC graduation will result in Bangladesh losing the preferential market access facilities enjoyed by the LDCs thanks to the various unilateral, and bilateral, regional and global initiatives. While the EU has offered to extend the preferential market access for an additional three years following graduation (i.e. till 2027 in case of Bangladesh), there is no denying that future market access scenario for Bangladesh will undergo profound changes in the coming years.

In no sector will the implications of Bangladesh’s LDC graduation be felt more acutely, and in such impactful ways, as the RMG sector of the country. Not only because the sector accounts for more than four-fifths of Bangladesh’s total global export earnings, but also because apparels face tariff peaks in almost all key markets of Bangladesh. For example, tariffs facing Bangladesh’s apparels are, on average, about 12 percent in the EU and 16-18 percent in Canada. Accordingly, the depth of preference erosion will be significantly high in case of exports of RMG items from Bangladesh.

It is also to be noted that the rules of origin (RoO) for preferential access of apparels exported by the LDCs tend to be highly LDC-friendly (e.g. only a single stage conversion requirement in the EU and a flat 25 percent domestic value addition requirement in Canada). Graduation to non-LDC developing country status will also mean that the RoO are going to be more stringent. Thus, on both counts, LDC graduation will require the apparels sector to face new challenges. There will also be implications in the form of preference erosion currently enjoyed by Bangladesh as a member of regional trading arrangements such as the South Asia Free Trade Area (SAFTA), where India, for example, offers DF-QF market access to the four LDC members for all products including the apparels or the LDC scheme run by China. Indeed, apparels feature prominently in all the 40-odd preferential schemes from which Bangladesh currently benefits (excepting the US GSP scheme which does not include most of the apparels items exported by Bangladesh; however, in any case, US had withdrawn the GSP facility for Bangladesh following the Rana Plaza tragedy in 2013).

Estimates carried out at the Centre for Policy Dialogue (CPD) indicate that Bangladesh’s exports will face an additional tariff of about 6.7 percent, on average, once the current DF-QF market access is no longer available. The corresponding figures for the EU, non-EU and Canadian markets are 8.7 percent, 3.9 percent and 7.3 percent respectively. Thus, preference erosion and more stringent rules of origin will adversely, and significantly, impact the competitiveness of Bangladesh’s apparels exports to the global market. The market signals are quite clear: business as usual scenario is going to fundamentally change and business as usual mind-set will also have to change profoundly.

Some of the competitors of Bangladesh are going for aggressive regional trading arrangements (RTAs), with serious implications for our RMG sector. Mention may be made in this connection of the Vietnam-EU FTA which will allow a major competitor of Bangladesh (Vietnam) to access the European market on duty-free terms. This will eliminate the preferential margin that Bangladesh currently enjoys vis-à-vis Vietnam, a non-LDC developing country, in the EU market. Indeed, there may be a time, beyond 2027, when Vietnam’s apparels would have duty-free access to the EU market while apparels exported by Bangladesh would need to enter duty-paid (if the current scenario prevails). Aggressive foreign exchange policies pursued by competitors could bring new challenges for the RMG industry of Bangladesh.

RMG performance will also be impacted by indirect factors. For example, LDC graduation will have implications arising from stringent compliance requirements under the trade-related intellectual property rights (TRIPS) of the WTO, as also from changes in the support regime concerning the enhanced integrated framework (EIF) and the various special and differential treatment provisions of the WTO. In the past, the RMG sector has benefited from the technical assistance and capacity building support received by Bangladesh as an LDC; these will no longer be available.

Meanwhile, minimum wages in the RMG sector will, justifiably, continue to rise at a time when the sector will be facing the challenges mentioned above. Cost of borrowing by Bangladesh is rising already because of its recently acquired middle income status; competing development demands and prevailing domestic resource mobilisation performance could mean that fiscal space for the type of incentives that the RMG sector has been traditionally enjoying could shrink in future.

The upshot of the discussion is that, targeted policies and actions will need to be undertaken at macro, meso (sectoral) and micro (enterprise) levels to address the emerging challenges facing this flagship sector of the country.

Source: https://www.thedailystar.net/opinion/macro-mirror/ldc-graduation-what-it-means-bangladesh-1550542

32

Law / Are Trump’s tariffs legal under the WTO?

« on: December 24, 2019, 08:44:47 PM »

The World Trade Organisation to which most of the world belongs and to which the US has belonged since its inception and China since 2001, has as its most important principle that “countries cannot normally discriminate between their trading partners”.

It means that if tariffs are low, as they are in the United States, that low rate has to be applied to imports from all member countries, not to all but one. Exceptions are permitted only “under strict conditions”.

The General Agreement on Tariffs and Trade administered by the WTO offers a tiny out relating to national security, on which Trump appears to be relying. Article XXI states that the agreement

shall not prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests

Subsections clarify that a member country can invoke this section (i) relating to fissionable nuclear materials; (ii) relating to the traffic in arms, ammunition, and implements of war; and (iii) in times of war or other emergency in international relations.

It’s not obvious that that there is any such emergency. Trump is threatening tariffs on automobiles and auto parts from Japan, Germany and elsewhere in the name of national security and it’s difficult to see any justification there, as well.

In April this year the WTO dispute settlement panel issued a landmark ruling in a dispute between Russia and the Ukraine asserting that the panel, rather than the country imposing tariffs, had the power to determine whether or not there was an emergency.

The era of a rules-based trade is ending. The US has gone from underwriting the rules for the past 70 years to becoming their biggest threat.

The European Union and Canada are trying to get around the destruction of the body that enforces the rules by setting up their own multilateral investment court which will use the WTO rules and retired appellate body judges. Other nations might join in.

The United States and China — the world’s two largest economies — are engaged in a trade war that appears to be spiraling out of control, doing immense damage to the economies of each, and to worldwide GDP.

A worst-case outcome is an all-out global trade war that would undoubtedly lead to global recession. That did not seem a plausible scenario two years ago, but it is now.
Source: <http://theconversation.com/are-trumps-tariffs-legal-under-the-wto-it-seems-not-and-they-are-overturning-70-years-of-global-leadership-121425>

33

Law / Trade Sanctions in Wider WTO Sense

« on: December 24, 2019, 08:41:03 PM »

The term sanction means a restrictive or prohibitory measure imposed by the members of WTO to induce compliance with WTO laws. The trade policy community has increasingly referred the term sanction what the Article 22 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) authorizes. Accordingly, trade sanctions would mean the unilateral suspension of concession or any other obligations under WTO covered agreements. This language is based on a similar provision of GATT 1947 which states that, if contracting parties consider the circumstances are serious enough to justify such action they may authorize unilateral or multilateral suspension of concessions or other obligations which they consider appropriate.

34

Common Forum / The U.S. and China Rivalry: Geo-Political Context of Free Trade Agreements

« on: December 02, 2018, 06:08:25 PM »

                                                         The U.S. and China Rivalry: Geo-Political Context of Free Trade Agreements

International trade constitutes a vital lynchpin of the global governance architecture with a staggering $20 Trillion of annual trade. The global trade order consists of trade policies and systems – in particular free trade agreements ("FTAs") – which have played an increasingly crucial role in the infrastructure of global governance and substantially impacting international economic development and strategic affairs. The shifting sands of trade rules and policies both impacts upon, and is reflective of, the current great power rivalry.

Important questions arise from the current political and economic contexts and the transformative changes sweeping the global governance architecture.  For the current Chief Architect – the United States - do FTAs advance U.S. economic and national security interests and objectives? If so, which route is preferred - limited FTAs or expansive agreements?  Should FTAs be viewed as complementary or a replacement to the multilateral trade system of the WTO? On what basis should partners be selected or rejected?  Does the failure to sign on to the TPP reflect a temporary or specific policy as to the TPP or a long-term secular change that reflects a disengaged US?  How should trade policy be shaped in the context of China which is offering itself as a global leader on trade and globalization?FTAs are inextricably and increasingly linked to global strategy and the international political order and broad, geopolitical and global governance contexts and have always played a role in international investment and trade agreements. The U.S. trade policy has been dominated by the establishment of FTAs to both create new, and cement existing economic relationships, and a means of entrenching the presence of the U.S. in different regions. Indeed, the impetus for the (currently abandoned by the U.S.) TPP was the drive to retain the U.S. lead in rule making so that Washington, rather than Beijing, to create the foundation for "21st-century trade rules," including standards on trade, investment, data flows, and intellectual property.

For example, the U.S.-Jordan FTA was at least partly motivated to show U.S. appreciation of Jordan’s efforts in supporting the Mideast peace process and in combating international terrorism.  Such interests encompass other FTAs as well. The post-Jordan U.S. FTAs with Morocco, Bahrain and Oman represented a key element in a broader U.S. political and economic strategy. That strategy was designed to encourage economic development and democracy in the Middle East and North Africa, with most of the same political/security considerations that were material in the conclusion of the U.S-Jordan FTA.The geo-political context is particularly important in the emerging U.S.-China hegemonic rivalry.  Indeed, China recognizes the significance of trade agreements as a pillar of the global governance architecture and has embraced trade as means to grow its economy as well as to exert influence globally. Just as access to American markets and capital was once a key component of u.s. diplomacy, China is now employing its financial and trade muscle to win friends and influence. China has embraced trade as means to advance its global ambitions as the U.S. has done for decades. It is obvious that China's trade policy focuses on regional leadership.

Of course Chinese goals are in furtherance of the socialist model and it will be interesting whether the success of China and its emergence as a major architect of the governance architecture will influence nations to imitate the Chinese model.

Indeed, the importance of the strategic context is further illustrated by NAFTA. Prior to NAFTA, U.S.-Mexico relations were cool.  Mexican attitudes towards American investors have been described as antagonistic.  Yet NAFTA changed a former cool neighborly relationship into a significantly warmer friendship. In terms of both private sector and governmental relations, the U.S. and Mexico are on significantly better terms. NAFTA dramatically improved the dynamic of official and private relations.

The move towards imitating a U.S. economic/political model through NAFTA is clearly the opposite of the Chinese model of state capitalism and one party rule.  And, in the context of a rivalry for which model should be embraced globally, the economic effects should not be underestimated. In the U.S.-China rivalry, an economically unified North America is a vastly more powerful competitive platform than the United States alone in seeking to address global economic challenges including China.

Post Courtesy: <https://worldtradelaw.typepad.com/ielpblog/2018/11/guest-post-the-us-and-china-rivalry-geo-political-context-of-free-trade-agreements.html>

35

Common Forum / Call for Papers: Trade Law & Development

« on: December 02, 2018, 06:02:39 PM »

Call for Papers: Trade Law & Development
This is from the Managing Editor of the student-run journal Trade, Law and Development:

Founded in 2009, the philosophy of Trade, Law and Development has been to generate and sustain a constructive and democratic debate on emergent issues in international economic law and to serve as a forum for the discussion and distribution of ideas. In keeping with these ideals, the Board of Editors is pleased to announce Trade Facilitation as the theme for its next Special Issue (Vol. XI, No. 1).

Manuscripts may be submitted via e-mail, ExpressO, or through the TL&D website. For further information about the journal and submission guidelines, please visit www.tradelawdevelopment.com.

In case of any queries, please feel free to contact us at: editors[at]tradelawdevelopment[dot]com.

The last date for submissions is: 15TH FEBRUARY, 2019.

36

Common Forum / What the WTO is—and what Trump thinks of it

« on: November 18, 2018, 07:23:12 PM »

                                                          What the WTO is—and what Trump thinks of it
The World Trade Organization, or WTO, was established in 1995 as a means to ensure the smooth functioning of international trade. It was intended to be a forum for international trade negotiation, the resolution of trade disputes, and the distribution of support for developing countries.

It currently has 164 member countries, which represent 98% of the global GDP and 95% of all global trade.
Trump was openly critical of the organization on the campaign trail before his election, and has reportedly claimed that foreign countries use the WTO to “screw the United States.” He also reportedly advisors that he doesn’t know “why we’re in it.”

The “United States Fair and Reciprocal Tariff Act” essentially bestows Trump (or any future president) with the power to determine any current or future tariff rates with countries—outside of the jurisdiction of the WTO.

As Axios explains, it circumvents two of the fundamental principles of the WTO: that of the “Most Favored Nation” and “bound tariff rates.” The first blocks countries from setting different tariff rates for different countries to avoid favoritism. The second creates a tariff ceiling for all WTO countries—to which all of the countries have previously agreed.

37

Common Forum / What is a trade war? And why is Trump targeting China?

« on: November 18, 2018, 07:04:34 PM »

                                          What is a trade war? And why is Trump targeting China?

We know a possible trade war between the United States and China would rattle certain American businesses and force consumers to pay more for products such as electronics. But what exactly is a trade war and why is President Trump targeting China?

Essentially, a trade war is a back-and-forth dispute wherein a country imposes tariffs on certain imports in order to restrict trade, reports CNN. In response, the country or countries affected by those tariffs impose their own fees on imports. Put simply, tariffs are fees or taxes assessed on certain products when imported into a country.

In the case of the China-U.S. squabble, Trump imposed aluminum and steel tariffs in early March 2018 in order to protect those American industries. He then announced 25% tariffs on $50 billion to $60 billion in Chinese exports to the U.S., including aerospace, information and communication technology, and machinery. later, China placed fees on a wide range of U.S. products, including scrap aluminum, sparkling wine and apples. Trump then promised tariffs on about 1,300 Chinese products. Hours later, China came out with more tariffs, this time taking aim at Boeing planes. On Thursday, Trump was entertaining the idea of another $100 billion in tariffs.

his sounds like a trade war, but Trump insists it's not.

"We are not in a trade way with China, that way was lost many years ago by the foolish, or incompetent, people who represented the U.S.," the president tweeted. "Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 billion. We cannot let this continue!"

China has long been chided for its trade practices and the White House says the purpose of the tariffs is in response to Chinese cyber and intellectual property theft of U.S. technology. CNBC reports China has a reputation for making knockoffs of designer brands while borrowing technological breakthroughs.

The tariffs also aim to push back against China's demands for technology transfers from U.S. companies in return for access to China’s market.

Contributing: Paul Davidson and Greg Korte

38

Common Forum / Anti-dumping and Countervailing Duties Laws

« on: November 15, 2018, 06:19:28 PM »

                                                                Anti-dumping and Countervailing Duties Laws
The Finance Act of 1995 introduced regulations and procedures for examining dumping and subsidy complaints, by amending Section 18 of the Customs Act, 1969.  The legislation was passed to bring the provisions on anti-dumping and countervailing actions into conformity with the WTO Agreements on Implementation of Article VI of the GATT 1994 and on Subsidies and Countervailing Measures.  The Bangladesh Tariff Commission (BTC) conducts dumping and subsidies investigations.
An application for an investigation, whether for an anti-dumping or countervailing measure, must be made in writing to the BTC by or on behalf of a domestic industry.  The BTC must terminate the investigation within one year of issuing public notice, and submit its findings and recommendations to the Government.  Provisional anti-dumping or countervailing duties, no greater than the margin of dumping or of the subsidy rates, may be imposed within 60 days of initiation and applied for a period of six months, extendable by three months.
The final findings must be available within one year of the date of initiation.  Imposition of the final duty is made by notification in the Official Gazette.  Final measures may be taken for a period of five years from the date of imposition; however, the Government may renew the duty for a further five years, upon review, if it is believed that there would be continued injury.  If the initial five-year period expires while a review is in progress, the anti-dumping duty can be extended for a maximum of one year.
Appeals against an anti-dumping or countervailing duty can be made to the Customs, Excise and Appellate Tribunal, under Section 196 of the Customs Act, 1969, and must be filed within 90 days of the imposition of the duty.
No investigations have been initiated on anti-dumping or countervailing measures during the review period.  The previous TPR report noted that lack of technical expertise and financial resources both by the administration and industries, as well as lack of authenticated data essential for submission of an application, made it difficult to initiate investigations.  The authorities note that this is still the case.
The budget for the fiscal year 2015-2016 provided some protection to the domestic industries of Bangladesh. Although most of the local manufacturers and producers are not happy enough as they find that the protection measures mostly through tariffs are limited or inadequate.
It is undoubtedly difficult for the government to continue with such direct protection of the domestic industries for long during a time when the country has significantly liberalised its trade regime and is committed to do more in near future. An analysis prepared by the Policy research Institute reveals that in the Fiscal Year (FY) 2016 budget average nominal protection rate has declined to 25.8 percent from 26.7 percent in Fiscal Year 2015.
There is a safeguard mechanism since June 2010 when the government of Bangladesh appointed the chairman of the Bangladesh Tariff Commission (BTC) as the designated safeguard authority. The function of the safeguard authority is to investigate whether a surge in import of a particular product is hurting similar local product and recommend necessary remedial measures through imposition of safeguard duty.
Bangladesh has interesting experience with anti-dumping procedure following the imposition of anti-dumping duty by India on export of lead-acid batteries by the Bangladeshi Company, rahimafrooz, the Company took up the matter with the government. After a long delay of several years, Bangladesh government finally moved in January 2004 to the Dispute Settlement Body (DSB) of WTO to challenge the Indian Anti-dumping measure. WTO took the matter into cognizance and as part of WTO procedure DSB called India and Bangladesh for consultation. This is the first dispute involving an LDC Member as a principal party to a dispute. On 28 January 2004, Bangladesh requested consultations with India concerning a certain anti-dumping measure imposed by India on imports of lead acid batteries from Bangladesh. After the consultation stage, India unilaterally withdrew the antidumping duty in January 2005.

39

Common Forum / Investor-State/Investment treaty Arbitration

« on: November 15, 2018, 06:17:31 PM »

                                                                             Investor-State/Investment treaty Arbitration
Unlike commercial arbitration as discussed above, Investment treaty arbitration is not a purely private dispute settlement mechanism that is entirely subject to party autonomy and limited to its effects to the parties to the proceedings. Rather, it fulfils a public function in influencing the behaviour of foreign investors, states and civil society.  Thus, it works and operates as part of public system of investment protection. It is one of the most vibrant and fastest growing fields of international dispute settlement, while the total number of known treaty-based cases reached 608.  It is the result of both an unprecedented increase in foreign investment flows, in particular since the end of the Cold War, and an expansion of substantive and procedural protection for foreign investors under international law.
The number of International Investment Agreements existing today is more than 3000.  International Investment Agreements (IIAs) are treaties between two states thereby agreeing to protect the investments made by the investors of both states in each other’s territory, by undertaking certain obligations and restrictions in respect of the treatment and regulation of the investments made by the investor of the other state party.  IIAs impose a number of obligations and restrictions on the host states in order to protect the rights of a foreign investor. The obligations and the restrictions placed on the host states by the IIAs include obligations:- to create a favourable environment for investments; to provide most-favoured nation treatment to investors and investments of the other party; to provide fair and equitable treatment and full protection and security to foreign investors and their investments; to refrain from expropriating the investments of a foreign investor except for public purpose, without adequate compensation; to allow repatriation of the profits and returns on the investments; to refrain from discriminating the foreign investments against the investments made by the domestic investors; to allow the foreign investors access to justice through administrative or judicial tribunals; and most significantly, to allow individuals to bring cases against the host states for the breaches of the standards of treatment ensured by the IIAs (i.e. investor-state dispute settlement or investor-state arbitration). The basic rationale for the states accepting obligations and restrictions of the kind aforementioned lies in the assumption that the framework that is created by the IIAs leads to the increased flow of foreign investments.

40

Common Forum / MONETARY AND BANKING SYSTEM AND LAW

« on: November 15, 2018, 06:14:50 PM »

                                                      MONETARY AND BANKING SYSTEM AND LAW

Nationalism, socialism, democracy and secularism that inspired the people of Bangladesh in their heroic struggle of liberation war are the four fundamental principles of the Constitution. The post-independence planners were so influential in convincing the founder father “Bangabandhu” that Bangladesh would turn into a paragon of progress by simply following a full-scale model of massive nationalization. A bureaucracy-led business plan did not work in other parts of the world, nor did it function in Bangladesh. The theoretical utopia soon nosedived soon after its launching, sending growth prospects down and making Bangladesh a developmental guinea pig. Over the 1970s, Bangladesh’s average GDP growth was 1.5 percent. Coming out from the womb of socialist planning, a rapid march for privatization and market economy has been difficult for the beleaguered nation. Bangladeshi leadership took a risk in unleashing the potential of private enterprises. Steering Bangladesh’s policy in a diametrically opposite direction had truly been challenging. The liberalization policy graduated in three steps in the mid-1980s, early 1990s and mid-1990s, marking a wonderful journey to the pro-market move. Since the 1980s, Bangladesh’s decade-wise average growth shifted roughly one percentage point higher, starting from 3.5 percent to reach 6.5 percent in the 2010s.  The country is different in projecting 7 percent growth for the financial year 2016.
The financial system of Bangladesh is made up of three broad fragmented sectors, namely: Formal Sector, Semi-Formal Sector and Informal Sector. The formal sector includes all regulated institutions like Banks, Non-Bank Financial Institutions (FIs), Insurance Companies, Capital Market Intermediaries like Brokerage Houses, Merchant Banks etc., and Micro Finance Institutions (MFIs). The semi-formal sector includes those institutions which are regulated otherwise but do not fall under the jurisdiction of Central Bank, Insurance Authority, Securities and Exchange Commission or any other enacted financial regulator. This sector is mainly represented by Specialized Financial Institutions like House Building Finance Corporation (HBFC), Palli Karma Sahayak Foundation (PKSF), Samabay Bank, Grameen Bank and Non-Government Organization. The informal sector includes private intermediaries which are completely unregulated.
Bangladesh Bank is the central bank of Bangladesh and is designed to regulate and monitor these sectors with the help of legal instruments passed by the House of Nation time to time. In this paper the legal instruments that control the monetary and banking system of Bangladesh will be discussed. Especially the laws relating to foreign exchange system, movements of funds, banking system and restriction of foreign banks and financial institutions will be scrutinized.

41

Common Forum / Regulatory Guidelines for Mobile Financial Services (MFS) in Bangladesh

« on: November 15, 2018, 06:13:00 PM »

                                             Regulatory Guidelines for Mobile Financial Services (MFS) in Bangladesh
Bangladesh Bank has decided in principle to licence new banking companies in the private sector pursuant to section 31 of the Bangladesh Banking Companies Act, 1991 after considering the need and overall strategy congenial to effective monetary and financial sector policy for the country. Terms and conditions for establishment of the new bank are given in the website of Bangladesh bank.
The financial sector in Bangladesh has undergone tremendous growth in volume and complexity over the recent years. However despite impressive growth gains in capital base, income, return on equity and other areas, the financial sector remains lagging in reaching out with adequate financial services to large swathes of farm and non-farm economic activities of low income rural and urban population in Bangladesh. Rapid country-wide expansion of Mobile phone networks and Bangladesh Bank led modernization of the country’s Payments system and financial sector IT infrastructure have opened up opportunities for innovating mobile phone based cost efficient modes of off-branch financial service delivery to the underserved population segments. Bangladesh Bank (BB) is issuing these regulatory guidelines for Mobile phone based Financial Service (MFS) platforms in Bangladesh with a view to providing an orderly, enabling and competitive environment for utilizing this new window of opportunity of innovatively extending the outreach of financial services.
In Bangladesh about 25 million customers use mobile banking, of which not all are registered customers. It is important to mention that the number of customers and agents has been growing exponentially. Despite the rapid development of mobile finance services, around 60% of the populations, especially in rural areas, are yet to subscribe to mobile banking services.

42

Common Forum / Licence System and Rules of Origin

« on: November 15, 2018, 06:10:13 PM »

                                                                              Licence System and Rules of Origin

All industrial consumers (except enterprises located in EPZs) and commercial importers must register with the Chief Controller of Imports and Exports (CCIE) (in the Ministry of Commerce), who issues an import registration certificate (IRC).  Registration with IRC is required only for private importers exempting the public entities. An IRC is generally issued within ten (previously 15) days of receipt of the application.
After fulfilling the initial two requirements, importers are allowed to import with a letter of credit authorization (LCA) form.  Along with the LCA form, importers must submit a number of documents to the executing bank, including an L/C application form, an invoice, and an insurance cover note.  In addition, private sector importers must submit a membership certificate from the registered chamber of commerce and industry or any trade association; proof of IRC renewal payment; a declaration of income-tax; Tax Identification Number; and any other documents required by the Import Policy Order or other Public Notice.  Public sector importers are required to submit an attested photocopy of the allocation letter issued by the administrative ministry, division or authority.

Some other documents required for imports in Bangladesh include a bill of lading or airway bill, commercial invoice or packing list, and a certificate of origin. In case of importing restricted list product or controlled list products some other documentation may be required in accordance with the notification issued by the government. The restricted or controlled list is given in Annexure 1 of the Import Policy Order 2012-2015.

Import against an LCA form may be allowed without opening an L/C for:  (i) import of books, journals, magazines, and periodicals;  (ii) any permissible item for an amount not exceeding US$25,000 during each financial year against remittance made from Bangladesh;  (iii) import under commodity aid, grant or such other loans for which there are specific procurement procedures for imports of goods without opening an L/C;  and (iv) import of “international chemical references” through bank drafts by recognized pharmaceutical (allopathic) firms on approval of the Director, Drug Administration, for the purpose of quality control of their products. Moreover, an L/C is not required for imports of perishable goods valued between US$10,000 and US$15,000 (Tecknaf Customs Station) or between US$5,000 and US$7,500 (other land routes) per consignment, or for capital machinery and raw materials for industrial use
Rules of origin (RO) are the criteria that are used to define where a product was made. The origin of a product is important because it will determine how it is treated at the border of an importing country and the origin may impact the import duty payable and admissibility into the country. These are the criteria needed to determine the source of origin of a product for the purpose of determining what tariff, if any, applies to it. If the rules of origin are relaxed, it might erode competitiveness of the backward linkage industries of Bangladesh.

43

Common Forum / Custom Laws and Procedures

« on: November 15, 2018, 06:08:48 PM »

                                                                       Custom Laws and Procedures

The principle Act regulating Customs procedure in Bangladesh is The Customs Act, 1969 and the Act was amended several times after its adoption. It is pertinent to mention that Bangladesh is a founder member state of WTO and the organization adopted Custom Valuation Agreement  in 1995 as part of WTO multilateral Agreements which is known as Agreement on Implementation of Article vii of The General Agreement on Tariffs and Trade 1994.
The WTO agreement on customs valuation aims for a fair, uniform and neutral system for the valuation of goods for customs purposes — a system that conforms to commercial realities, and which outlaws the use of arbitrary or fictitious customs values. The Committee on Customs Valuation of the Council for Trade in Goods (CGT) carries out work in the WTO on customs valuation.
Bangladesh adopted the WTO Agreement on Customs Valuation in February 2000, as scheduled.  Section 25 of the Customs Act, 1969 was amended to reflect this change.  The Customs Act, 1969, was also amended in 2001 in line with the Revised Kyoto Convention in order to harmonize customs procedures.  Risk-based clearance has been introduced on a limited scale in customs houses through green, yellow and red channels.  In particular, customs clearance of passenger baggage in airports has been simplified, and more than 95% of passengers pass through the green channel without any intervention and delays by Customs. In addition to that Bangladesh Customs works under the umbrella of the National Board of Revenue (NBR), the apex body for direct and indirect tax revenue in Bangladesh and is part of the Internal Resources Division (IRD) under the Ministry of Finance.  The Customs wing of the NBR formulates policy concerning levy and collection of customs duty and customs-related taxes/charges, and administration. 
Since the beginning of 1990s Bangladesh emphasized on the simplified process for both export and import and the current Export Policy Order 2012-2015 and Import Policy Order 2012-2015 and 2015-2018 endeavoured to remove all possible barriers to international trade. NBR is performing key role in modernizing customs procedure of Bangladesh mainly to introduce speedy customs clearance through automation of the process; ensure transparency in the customs clearance process as well as in revenue collection activities; and extend the maximum possible facilities to the trade communities.   Significant progress in computerization of customs procedures has been made in recent times.  The latest version of ASYCUDA, i.e. ASYCUDA++, has been put in place in Dhaka Customs House, Chittagong Customs House (CCH), Benapole Customs House, Mongla Customs, and the Export Processing Zone.   
In countries like Bangladesh, regulatory issues and preparation of documents occupy most of the time for trading, while lack of infrastructure and operational inefficiency keeps the system weak. As per the World Bank Doing Business (DB) report 2016 a trader in Bangladesh required 35 days for import and 25 days for export costing US$ 1470 and US$ 1075 respectively whereas the East Asian average is 22 days (US$ 884) and 21 days (US$ 856) respectively.

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Common Forum / Indian Case Study and urge to draft a model BIT for Bangladesh

« on: November 15, 2018, 06:05:33 PM »

                               Indian Case Study and urge to draft a model BIT for Bangladesh   
The economic reforms unleashed in 1991 brought about a major change in India’s approach towards protection of foreign investment. By entering into more than 80 BITs, out of which 72 were enforced in this phase, India has shown growing acceptance of international investment treaties as legal instruments for the protection of foreign investment. As part of the overall strategy of economic liberalisation, India started entering into BITs with the clear objective of attracting foreign investment.
It is true that foreign direct investment (FDI) flows to India have increased in parallel with India signing BITs. For example, FDI flows to India increased massively from USD 4,029 million in 2000-2001 to $ 55457 million in 2015-16.53.
The first BIT was signed with the United Kingdom (UK) in 1994. This BIT served as the template to negotiate further BITs and also inspired the Indian Model BIT of 2003. India, being subject to multiple ISDS challenge, forced to redraft model BIT in 2016 to accommodate both investor’s and state’s interest together.

The article recommends that Bangladesh should immediately revisit all BITs and other agreements having chapter on investment and conclude a model BIT for future. The country may follow India, Srilanka and some other developing countries in this regard. It is necessary to ensure security and predictability for foreign investors as well as to accommodate policy choices of the host state. 

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Common Forum / Does Bangladesh Need a Model BIT

« on: November 15, 2018, 06:03:12 PM »

                                                                       Does Bangladesh Need a Model BIT

Bangladesh has signed 30 BITs in total, out of which 5 are not yet in force and BIT with Thailand had been terminated.  Apart from these BITs, Bangladesh is a party some other agreements which have chapter on investment protection laws.  It is unfortunate that investment agreements concluded at different times with different countries did not envision any longstanding policy objectives from Bangladesh perspective, rather these agreements seem to become plain vehicle of safeguarding investor’s interest only.
There are also conflict of obligation between BITs and WTO laws in some cases. Though, being a member of LDCs, Bangladesh does not need to provide patent protection to pharmaceutical products under WTO law, but investors may legally litigate TRIPs Doha flexibilities under BITs.  All the BITs of the county excluding the Bangladesh-German BIT,  expressly recognize intellectual property rights held by the investor as a form of investment. These BITs include pharmaceutical patent under definition of investment either as part of IPR rights or as part of patent right. Besides, most of the Bangladesh’s BITs contain broad assets based definition which cover every kinds of IPRs acquired in the country even if those are not specifically dealt with under TRIPS agreement.
There has been a proliferation of bilateral investment treaties (BITs), from 500 in 1990s to more than 3324 by the end of 2016. This proliferation of investment treaties has been described as constituting a regime of international investment. The rapid increase in the number of BITs has also been accompanied by skyrocketing of investor-State dispute settlement (ISDS) cases, from little more than 50 in 1996 to 767 as of 1 January 2017.Foreign investors, using the ISDS provisions in different BITs, have challenged a very wide array of host State’s regulatory measures.  Bangladesh has already attracted two BIT claim against it.  In spite of signing quite a large number of BIT, the country faced only two cases simply does not mean that the country should not be worried about the future disputes. LDC graduation of Bangladesh brings the urge of revisiting BITs in limelight. Indian case study also signifies that the country should immediately revisit all BITs and have a model BIT for future negotiation. It has become too long to have a model treaty to balance investor’s interests with national policy goals.