Trade Facilitation Measures in Bangladesh: Assessing Compliance with World Trade Organization (WTO) Standards

Introduction

Trade facilitation plays a pivotal role in enhancing the efficiency and competitiveness of a country's international trade operations. For Bangladesh, a developing economy heavily reliant on exports, implementing effective trade facilitation measures is essential for fostering economic growth and integration into the global trading system. The importance of trade facilitation has been widely discussed and recognized at the global, regional, and national levels. The Trade Facilitation Agreement (TFA), accomplished at the ninth World Trade Organization (WTO) Ministerial Conference in December 2013, is the first major global trade agreement to have been concluded since the establishment of WTO in 1995. The agreement provides evidence of a global consensus on the importance of trade facilitation for sustainable economic development as well as a narrow but concrete framework through which countries may simplify and enhance the transparency of their trade procedures. The importance of trade facilitation needs to be interpreted in the context of Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development adopted by world leaders in September 2015 at a historic UN Summit. In particular, the SDG 17.11 states that countries should “Significantly increase the exports of developing countries, in particular with a view to doubling the least developed countries’ share of global exports by 2020”. Trade facilitation is key to achieving this goal, as evidenced by the WTO research that implementation of the WTO Trade Facilitation Agreement—narrow trade facilitation—has the potential to increase global merchandise exports by up to $1 trillion per annum. This blog aims to assess Bangladesh's compliance with World Trade Organization (WTO) standards regarding trade facilitation measures, highlighting progress made, challenges faced, and future prospects.

I. Importance of Trade Facilitation:

Trade facilitation encompasses a range of measures aimed at streamlining customs procedures, reducing trade barriers, and enhancing the overall efficiency of cross-border trade. Efficient trade facilitation promotes faster clearance of goods, reduces transaction costs for traders, and facilitates the movement of goods across borders, thereby boosting trade volumes and economic development. The most recent and important is Bangladesh’s ratification of the WTO TFA on 27 September 2016 which aims to expedite the movement, release and clearance of goods, including goods in transit.

The Bangladesh Trade Portal was launched in March 2016, with the support from the World Bank Group, to facilitate the business community at home and abroad with a one-stop point of information on the country’s export and importable items. The Bangladesh National Board of Revenue (NBR) is implementing the NBR Modernization Plan 2011–2016 to develop a sound tax policy and law in line with international best practices and to incorporate the latest (information and communication) technology for better compliance in all its land, sea, and air ports. The board (NBR) is also implementing the Customs Modernization Strategic Action Plan 2014–2017 to promote a transparent, effective, robust, and accountable organizational structure and system that delivers business outcomes in line with international best practices and national socioeconomic and cultural environment. It is also intent on developing and implementing a whole-of-organization Risk Management Framework that drives a philosophy of a risk-based, intelligence-led approach and of adopting a needs-based, modern, and secure information and communication technology system. NBR has also developed a proposed revision of the current customs framework law—the Customs Act, 1969—to provide an appropriate legal basis for a modernized customs administration. The revision will take the form of a new law (draft titled the Customs Act, 2015) to replace the current regime.

II. Bangladesh's Commitment to Trade Facilitation:

A. WTO Membership: Bangladesh became a member of the WTO in 1995, signaling its commitment to abide by international trade rules and standards, including those related to trade facilitation.

B. Trade Facilitation Agreement (TFA): The WTO's Trade Facilitation Agreement (TFA), which entered into force in 2017, aims to simplify and expedite customs procedures, enhance transparency, and reduce administrative burdens. Bangladesh ratified the TFA in 2016, affirming its commitment to implementing trade facilitation measures in accordance with international standards.

III. Compliance with WTO Standards:

A. Customs Procedures and Documentation: Bangladesh has made significant strides in simplifying customs procedures and documentation requirements to facilitate trade. Electronic submission of customs declarations, pre-arrival processing of goods, and risk-based customs inspections are among the measures implemented to expedite clearance processes.

B. Automation and Single Window Systems: The introduction of automated customs systems, such as the Automated System for Customs Data (ASYCUDA), has enhanced the efficiency and transparency of customs operations in Bangladesh. The establishment of Single Window Systems (SWS) allows traders to submit documentation electronically, reducing redundant paperwork and processing times.

C. Border Infrastructure and Facilities: Investments in border infrastructure, including ports, airports, and land customs stations, have been prioritized to improve trade facilitation. Modernization and expansion projects aim to reduce congestion, enhance cargo handling capabilities, and ensure smoother transit of goods.

D. Trade Information and Transparency: Efforts to enhance trade information and transparency include the publication of customs procedures, tariff schedules, and trade-related regulations. Providing clear and accessible information to traders fosters predictability and compliance with customs requirements.

IV. Challenges and Areas for Improvement:

A. Capacity Building and Institutional Strengthening: Despite progress, capacity constraints and institutional weaknesses remain significant challenges. Enhancing the skills and capacity of customs officials, improving coordination among relevant agencies, and strengthening institutional frameworks are crucial for sustained trade facilitation efforts.

B. Trade Infrastructure and Connectivity: While investments in border infrastructure are underway, addressing infrastructure bottlenecks and improving connectivity remain priorities. Inadequate transport infrastructure, logistical inefficiencies, and delays at border crossings continue to impede trade facilitation efforts.

C. Customs Clearance Procedures: Simplifying customs clearance procedures further and reducing bureaucratic hurdles are essential for enhancing trade facilitation. Harmonizing customs processes, reducing documentation requirements, and streamlining inspection procedures can expedite clearance and reduce transaction costs for traders.

D. Information Technology (IT) Infrastructure and Cyber security: Ensuring the resilience and security of IT systems is paramount in an increasingly digitalized trading environment. Strengthening cyber security measures, safeguarding data integrity, and investing in IT infrastructure are critical for maintaining the reliability and efficiency of electronic customs systems.

V. Future Outlook and Conclusion:

Bangladesh has made commendable progress in implementing trade facilitation measures in line with WTO standards, reflecting its commitment to enhancing the efficiency and competitiveness of its trade operations. However, addressing remaining challenges and ensuring sustained compliance with international standards require continued efforts and investments. By prioritizing capacity building, infrastructure development, and institutional reforms, Bangladesh can further strengthen its trade facilitation capabilities, promote inclusive economic growth, and maximize the benefits of international trade integration. As Bangladesh continues its journey towards becoming a more efficient and competitive trading nation, ongoing assessment, adaptation, and collaboration with stakeholders will be key to achieving sustained success in trade facilitation.