Endnotes

¹People who are living on less than PPP US$ 1 a day. Taken from Table 2.2 of SAARC Regional Poverty Profile 2005 (SAARC Secretariat, 2006, p. 12). Corresponding figure for the whole world is 1092.7 million for the year 2001.

²The poverty rate of extremely poor people in Bangladesh is 32.8% of total population (2001), whereas the same for India is 35.5% (Table 2.3 of SAARC Regional Poverty Profile 2005 (SAARC Secretariat, 2006)

³Speech of Dr. Rajat Nag, Managing Director General, Asian Development Bank, Manila, delivered in New Delhi on 28 November 2006.

⁴Comparing sales by manufacturers of similar products, Hummels (1999) estimated that exporters with 1% lower shipping costs will enjoy a 5–8% higher market share. Limao and Venables (2001) found differences in infrastructure quality account for 40% of the variation in transport costs for coastal countries and up to 60% for landlocked countries. Fink et al. (2002) estimated that liberalizing the provision of port services and regulating the exercise of market power in shipping could reduce shipping costs by nearly a third.

⁵Ghosh and De (2000) and De and Ghosh (2003, 2005), using several infrastructure facilities across the South Asian countries over the last two decades, have shown that differential endowments of infrastructural facilities were responsible for rising regional disparity in South Asia.

⁶Several studies show that there is considerable informal trading in South Asia, which has evolved due to several geopolitical and commercial reasons. See, for example, Chaudhury, 1995; Taneja, 1999; Pohit and Taneja, 2000.

⁷This was an interim arrangement, which identified the commodities to be traded and fixed a monetary ceiling for the export/import of each commodity with a view to achieving balanced trade. This was replaced by a new agreement in July 1973. The new agreement was amended in December 1974 to include a clause that bilateral trade between the two countries would be conducted in convertible currency effective 1 January 1975. The current agreement was signed on 4 October 1980 and has been extended for successive periods of three years.

⁸The trade deficit between India and Bangladesh has widened from $0.96 billion in 1995–1996 to $1.77 billion in 2006–2007.

⁹For a detailed overview of informal trade between India and Bangladesh, refer to ICSSR-NERC (2005).

¹⁰For example, one can refer to De (2007).

¹¹Those countries that have removed the common barriers to trade have done well in raising per capita income by increasing trade. The removal of common borders between Germany and the Czech Republic and between the United States and Mexico has been noted to have had substantial effects on the predicted income per capita in the smaller countries. Income per capita in the Czech Republic and Mexico has gone up by 26% and 27%, respectively, presumably as a result of the economic integration (Redding and Venables, 2004).

¹²The National Highway Authority of India (NHAI), under the Ministry of Road Transport and Highways, Government of India, is implementing the National Highway Development Project (NHDP), comprising of the Golden Quadrilateral (5,846 km) and North–South and East–West Corridors (7,300 km), which entails expanding the existing two-lane highways to four/six lanes. In addition to the projects under the NHDP, the NHAI is also responsible for about 1,000 km of highways connecting major ports and on National Highways 8A, 24, 6, 45, and 27. About 2,093 km—consisting of the 1,408 km of Golden Quadrilateral (GQ), 557 km of North– South and East–West Corridors, 56 km of port connectivity and 153 km of other highway projects—have already been made into four lanes, and 5,133 km are under implementation. Financing the NHDP is based on funds from the Central Road Fund of Government of India; multilateral funding agencies such as the World Bank, Asian Development Bank, and Japan Bank for International Cooperation; and market borrowing and private sector contributions.

¹³Among South Asian countries, India’s progress in inland water transport is notable, though Bangladesh has also considerably progressed in this sector. India established the Inland Waterways Authority of India (IWAI) in 1986 by promulgating the Inland Waterways Authority of India Act in 1985 to regulate and develop inland waterways for shipping and navigation purposes. At present, the IWAI is responsible for developing and maintaining India’s three national waterways.

¹⁴See De (2003).

¹⁵For instance, P&O Ports (now taken over by Dubai Ports International), from its regional headquarters located in Mumbai, are running a couple of container terminals in India such as at the Jawarlal Nehru, Chennai, and Mundra ports (all in India). A few more terminals are run by noted private port companies like the Port of Singapore Authority, Maersk Sealand, and Dubai Port International (all in India).

¹⁶For example, while India and Bangladesh have an agreement in the IWT sector, the agreement is yet to be used to its full potential. In road and railway sectors, harmonization in standards is clearly absent, resulting in increased trade transaction costs between the two countries. Thus, a well-crafted coordinated approach by sharing each other’s experiences and pooling common resources would contribute to facilitating trade and transport between India and Bangladesh.

¹⁷According to Chief Commission, Central Excise and Customs, Government of India, Shillong, Meghalaya.

¹⁸Refer, for example, to RIS (2007).

¹⁹Known as South Asian Growth Quadrangle (SAGQ). See, for instance, Dubey et al. (1999) for the framework of SAGQ.

²⁰To some extent, this is covered under the Asian Highway project of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), to which most South Asian countries are signatories.

²¹The Sri Lankan broad gauge railway system, badly damaged by the 2004 tsunami, also needs a complete overhaul.

²²Countries in South Asia are signatories to UNESCAP’s Trans-Asian Railway system, which does not cover all the border customs points among South Asian countries.

²³Specifically, NW 2 links Ganga with Bramaputra through Bangladesh.

²⁴Coastal Express, a liner services operated by Seaways Shipping, was launched in June 2005 between Vizag Port (VCTPL) and Chittagong Port.

²⁵In general, trade facilitation has no official definition. According to the World Trade Organization, trade facilitation is the specification and harmonization of international trade procedures, where trade procedures are the activities, practices, and formalities involved in collecting, presenting, communicating, and processing data required for the movement of goods in international trade. These procedures are required for government agencies, importers, and exporters to monitor and control the movement of goods, performance of services, and the payment for such goods and services. Additionally, according to UNESCAP (2005), they also allow for the collection of statistics for policy formulation, market research, and operational purposes.

²⁶Improvements in customs procedures have truly reduced the amount of informal payments needed for clearing cargo. Even so, underhanded transactions at the border to clear exports remain high. The actual amount is negotiated between the shippers and the customs agent, with both agreeing on the amount per shipment that will be reimbursed without an invoice and is therefore available to pay customs officials for expediting cargo clearance.

²⁷This process reached a level of absurdity by requiring that for multimodal movements by ocean transport, both the forwarder’s house bill and the marine bill of lading must be negotiable. This implies that two documents of ownership for the same cargo exist.

²⁸The Government of India continues to give high priority to developing trade and exports in the NER. Following the announcement made by the Prime Minister as regards measures for developing exports from the NER in Shillong on 21–22 January 2000, an Export Development Fund has been set up with the objective of using the resources for the development of exports from the NER. An empowered committee has been set up under the chairmanship of the Additional Secretary, Infrastructure, Department of Commerce, Government of India for approving projects to be funded from the Export Development Fund. The funds are released to the Agricultural and Processed Food Products Export Development Authority, which has been nominated as the nodal agency for the scheme. Since adequate infrastructure is an essential requirement for sustained growth of trade, the Government of India has been helping the NER states create infrastructure under the Assistance to States for Development of Export Infrastructure and other activities scheme. In 2004–2005, an amount of Rs360 million, constituting 10% of the outlay under the scheme, has been allocated for the NER (Government of India, 2005). On the other hand, it is also true that paucity of funds restricts the state governments in the NER to invest in LCSs but very often they expose their inability to develop LCSs, indicating that bilateral trade is a subject of the central government according to the Indian Constitution.

²⁹It has been decided that the requirement of funds for developing infrastructure at 11 LCSs would be met from the central component of ASIDE. RITES Ltd. has been asked to conduct a study on the development of infrastructure at Borsorah and Agartala LCS in NER. An interministerial committee for developing LCSs has been constituted under the chairmanship of the Additional Secretary (Infrastructure), Department of Commerce, with representatives from the Ministry of External Affairs; Ministries of Home Affairs, Railways, Road Transport and Highways, Telecommunications; Department of Revenue; Reserve Bank of India; Central Warehousing Corporation; National Highways Authority of India; Border Roads Organization; and the concerned state governments. A coordination committee at each LCS has also been constituted under the Deputy Commissioner of Customs/Assistant Commissioner of Customs for deliberating on local issues connected with day-to-day functioning of the station (Government of India, 2005).

³⁰The Central Warehousing Corporation (CWC) has conducted studies on the requirement of infrastructure facilities at Moreh (Manipur), Dawki (Meghalaya), and Sutarkandi (Assam) for improving LCSs. The CWC is the appointed agency for the development of Moreh, Dawki, and Sutarkandi LCSs, whereas the Zokhawthar (Mizoram) LCS will be developed by the Borders Road Organisation (BRO) in cooperation with the Mizoram Government (Government of India, 2005).

³¹Measures are guided or regulated by the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) under the current multilateral trading system. The SPS Agreement encourages members to harmonize their SPS measures based on international standards, guidelines, and recommendations developed by the relevant international organizations, including the Codex Alimentarius Commission (Codex) for foodsafety- related issues; the International Office of Epizooties, for animal-health-related issues; and the International Plant Protection Convention. The SPS Agreement also permits (Article 3.3) members to adopt SPS measures that result in a higher level of SPS protection than would be achieved by measures based on the relevant international standards, guidelines, or recommendations, if there is a scientific justification.

³²Only those SPS measures which are not in line with the standards/recommendations/guidelines of the relevant international organizations, or in those areas where no standards/recommendations/guidelines exist, or which may have significant trade effect are subject to such notice. This is known as transparency obligation under the SPS Agreement.

³³Stated in The Hindu Businessline dated 17 March 2005.

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