Assignmenton:BENEFITSFROMTRANSITANDWTOSROLEREGARDINGIT Course:GLOBALIZATIONANDSTRATEGY Courseno:SIM503 Submittedby:MITHUNPRAVAKAR Serialnumber:208 StrategicandInternationalManagement DepartmentofManagementStudies UniversityofDhaka Submittedto:TAHMINAKHANAM Lecturer,DepartmentofManagementStudies UniversityofDhaka Dateofsubmission:9/4/2012

Historicalbackground EvenBangladeshisasmallcountry,itshares4094kilometersoflandborderwithIndiaonthree sides, the fourth side being open to the Bay of Bengal. Bangladesh lies astride the Indian mainland and its North Eastern Region (NER) comprising seven relatively small Indian states. PriortothepartitionofIndiain1947,thetradeandcommerceoftheNERwiththerestofIndia andtheoutsideworldusedtopassthroughtheterritoriesofwhatisnowBangladesh.Railand rivertransitacrosstheerstwhileEastPakistancontinuedtill1965when,asaconsequenceof theIndoPakwar,alltransittrafficweresuspended.Althoughrivertransitwasrestoredin1972, noprogresshasbeenmadeontheissueofroadandrailtransit/transshipment.FromtheIndian point of view, transit or transshipment across Bangladesh is important because it will greatly boost the economy of the NER. While Bangladesh could greatly benefit from transit fees and potentiallyhugeIndianinvestmentinthetransportationnetwork,therearedoubtsinvarious cornersinBangladeshregardingthesecurityimplicationsofsuchagreatdeal? Transit Transitisdefinedasapassagethroughoracross.Ininternationaltrade,itmeansthatgoods destined from one country to another country entail transit through a third country or more countries.Bytransitfacilityallowingsomeonetogetintoyourterritoryandthentodriveaway orflyouttoanotherdestinationusingone'sowncarorusingpublictransportsystemsuchas rail,busoranairplane.Similarly'transitfacility'forboatorshipmeansallowingthevesselto passthroughyourwaterways.Transitfacilityinvolvesacountry'sroadsandhighways,railways, airports and waterways. A functional transit procedure through Bangladesh that would allow seamlessmovementofgoodsbetweenwesternBengalandtheNorthEasternstatesofIndia, andfromBangladeshintoNepalandBhutan,throughIndia,withnosignificantwaitingtimeat the border or en route due to inspections or transloading for instance. Transit facility will create a common platform for economic benefits between Bangladesh, Bhutan, India and Nepal. IndiaBangladeshtransit Inland Water Transit: Inland Water Transit Protocol, 1980 signed under bilateral trade agreement 1980 to use each others waterways for commerce and keeping riverine routes navigable.Tworoutes:a.KolkataPanduandb.KolkataKarimganj.1999,2001,2007andMarch 2009 during April 2007 renewal, India asked for new ports of call: Paglaghat, Meghnaghat, NoaparaandAshuganj;BangladeshaskedforincreaseinservicefeesfromTk2croretoTk10 croreDuring2009renewal,IndiarepeatedrequestforinclusionofAshuganjasnewportofcall tofacilitatetransportationofheavymachineryfora1110MWpowerplantatAgartala.

Railtransit:Aspartofsubregionalmultimodaltransportstrategy,decisionforajointsurvey for ChittagongAkhauraAgartala rail link was taken during the last 4pary rule. This was reiterated in the Secretary level core group meeting in January 2009. Passenger rail link betweenDhakaKolkatahasbeenestablishedin2007. Landtransit:In1980tradeagreementtouseroad,railandwaterwaysoftransportgoodsfrom oneplacetoanotherformutualbenefit.Butitisnotstartyet.Possibleentryandexitpointsin BangladeshalonglandroutesfortransitofIndiangoods. WesternSide:BanapolePetrapoleBoder,RohanpurSindbadBorder,HilliBalurghat Border,BanglabandhPhulbariBorder. EasternSide:TamabilMeghalayaBorderAkhauraAgartalaBorder,ChittagongBelonia Border

Benefitsfromtransit(landtransit):
Both India and Bangladesh will be benefited by transit. It seems that India will be highly benefitedbytransitbutBangladeshcanalsobebenefitedfromtransit.Indiawillsave37%of thecostsifthegoodsaretransitedthroughBD.Thereisalsoasignificantsavingintimebecause maximumdistancewillbe650kilometers. BD may benefit directly by raising services exports to India in the form of transit fee, tollsandtransportrelatedservicecharges. Indirectbenefitsmayaccrueintheformofmodernizationanddevelopmentoftheroad infrastructure, increased opportunities for Indian investment, and growth of ancillary services(vehiclesrepair,roadsiderestaurantsetc.) Annualroyaltyisthemajorcomponentofbenefits.Theroyaltyamountcanbesettled by a dialogue with India. India now spends about Rs 100 billion every year in c/w transportationacrossShiliguri.IfIndiapartswithahalfofthisamount,bothcountries willgain.BDcouldearnRs50billionorBDT60billioneveryyear. BridgetollsandferrychargescouldearnBDT1billioneveryyear.Thesetwoheadscan earnaboutBDT61billionperyear. In addition, the cost of maintenance can be shared. Compensation for environmental damagecanbecharged.Therearealsoindirectbenefits.Thesearenotestimatedhere, however. ThatthetransitrouteisconstructedtothecurrentNationalRoadconstructionstandard in Bangladeshthat is a two lane highway with a crest width of 12.2 meters and a pavementwidthof5.5to7.3meters.Thiswillenhanceourcapabilitiesandqualityof makingmoreroads.

 Relationshipdevelopmentbetweenthetwoneighboringtwocountries. ItwillmakeoutacaseforIndiainvestingindeepseaportinBangladesh. By jointventure trucking company by investors from Bangladesh, India, Nepal and Bhutan. ThiscancreatemoreemploymentintheborderareasofBangladesh. Bangladesh can also get transit facility to Nepal and Bhutan or vice versa. Bangladesh hasalreadyprovidedtransitfacilitytoNepaltouseBangladeshportsbutNepalcannot use it because India is reportedly reluctant to provide Nepal transiting through Bangladesh.ThistransitwillhelpustoaccesstransitinNepalandBhutan. Transit access for neighbors opens up a whole host of political opportunities for addressinglongtermdifficultregionalissuesrelatingtoimmigration,watersharing,and securityissues.Thegainsarewinwinforallparties. TransitisapartofasensibleeconomicpolicythatseekstohelpBangladeshaccelerate economicgrowthandreducepoverty. Bangladesh is conveniently located as a bridge between Central/South Asia and East Asia. Through better land, air, sea connectivity Bangladesh can become an Asian commercialhub.Transitwillhelpstoutilizeofourmaximumresources. Bangladesh can maximize capacity its of ports (Chittagong and Mongla) by providing transit facilities. The present handling capacity of Chittagong port is 32,000 TEUs and storagecapacityis79,000metrictons.Some57%ofthecontainerholdingcapacityand 54 % of the cargo storage capacity are utilized daily on average. Therefore there is adequate unused holding and storage capacity to serve the needs of neighboring countries. In Mongla the present handling capacity is 65 lac metric tons of cargo and 50,000 containers per year. Clearly, there is large excess capacity. Cargo can be transportedinallseasonsfromtheportthroughroadandriverways. Transit can be used as a bold diplomatic drive and a bargaining chip to solve the unsettledissueswithIndia.Speciallysharingriverwater,borderkilling,pushinetc. TransitcanbeauniqueopportunityagaintoestablishourrelationshipwithIndiabased onfairness,equalityandjustice. Promotionofinvestmentthroughremovalofrestrictionsoninvestment. Easingtheenergyconstraintthroughtrade

WTOSrole: WTOhelpsintransitbyformulatingrulesandregulations,settingstandards,resolvingconflicts, imposingrestrictionsamongdifferentcountries.Rulesregardingtransitsare

It ensures freedom of transit through the territory of each contracting party via the routes most convenient for international transit, for traffic in transit to or from the territoryofothercontractingparties.Nodistinctionshallbemadewhichisbasedonthe flag of vessels, the place of origin, departure, entry, exit or destination, or any circumstances relating to the ownership of goods, of vessels or any other means of transport. Anycontractingpartymayrequirethattrafficintransitthroughitsterritorybeentered at the proper custom house, but, except in cases of failure to comply with applicable customslawsandregulations,suchtrafficcomingfromorgoingtotheterritoryofother contracting parties shall not be subject to any unnecessary delays or restrictions and shall be exempt from customs duties and from all transit duties or other charges imposedinrespectoftransit,exceptchargesfortransportationorthosecommensurate withadministrativeexpensesentailedbytransitorwiththecostofservicesrendered. WTOcanhelpinregardinganydamageininfrastructuretheseare: a)RoadDamagecosts:Roaddamageisbasicallycausedbyheavyvehiclesasthedamagetothe road pavement increases to the fourth power of the axle load. Therefore road damage costs should be proportional to the damaging power (measured in terms of Equivalent Standard Axles). Properly designed this should take care of road construction and maintenance costs. b)AccidentExternalities:Accidentexternalitiesarisewhenextravehiclesontheroadincrease the probability that the other road users will be involved in an accident. Accident probability dependstoalargeextentondistance,drivingtimeandthetypeoftheothertraffic. c)CongestionCost:Congestioncostsarisebecauseadditionalvehiclesreducethespeedofthe othervehiclesandhenceincreasetheirjourneytime. d) Environmental Costs: The road use of vehicles has various spillover effects on the environmentincludingemission,waterpollution,landuseeffects,andnoiseandvibrations. Principlesoftransitchargesforotherinfrastructure:Similarprinciplesapplytotransitcharges for use of rail infrastructure and waterways. It is important to distinguish the use of infrastructure from the use of services. Most often transit involves only use of infrastructure (roadnetwork,portfacilities,railnetworkandrivernetwork).Transitfeesmustdistinguishthe costofprovidingaccesstotheseinfrastructuresfromthecostoftransportservices.