USAID- TRADE FACILITATION ACTIVITY (BTFA) STUDY ON NON-TARIFF BARRIERS IN BANGLADESH TO AGRICULTURAL IMPORTS AND EXPORTS

OCTOBER 2017 This report is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this report were prepared by IBI International under Task Order number AID-338-TO-13-00002; REQ-338-13-000041. The views expressed herein are the sole responsibility of IBI International and do not necessarily reflect the views of USAID or the United States Government. Cover Photos: 1. Focus Group Discussion for the NTB Study; 2. Poor state at the port; 3. Damaged gantry crane at the Chittagong port; and 4. Traffic congestion at the Dhaka-Chittagong highway.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 1

USAID-BANGLADESH TRADE FACILITATION ACTIVITY (BTFA)

STUDY ON NON-TARIFF BARRIERS IN BANGLADESH TO AGRICULTURAL IMPORTS AND EXPORTS

October 2017

2 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports TABLE OF CONTENTS Contents ACRONYMS ...... 4 EXECUTIVE SUMMARY ...... 6 SECTION 1: STUDY OBJECTIVE AND PROCEDURES ...... 12 1.1 INTRODUCTION ...... 12 1.2 SCOPE ...... 13 1.3 METHODS OF DATA COLLECTION...... 14 1.4 LIMITATIONS ...... 15 SECTION 2: NTBS THAT AFFECT BANGLADESH’S AGRICULTURAL TRADE ...... 16 2.1 INADEQUATE INFRASTRUCTURE AND CAPACITY CONSTRAINTS AT PORTS ...... 16 2.2 INFRASTRUCTURAL AND CAPACITY CONSTRAINTS IN STANDARDS AGENCIES ... 22 2.3 NTBS ARISING OUT OF PROCEDURAL OBSTACLES/ HURDLES (CUSTOMS & OGAs)27 2.4 OTHER NTBS ...... 30 SECTION 3: STEPS TAKEN TO IMPROVE THE SITUATION ...... 33 3.1 STEPS TAKEN BY CUSTOMS ...... 33 3.2 STEPS TAKEN BY THE SHIPPING MINISTRY ...... 34 3.3 STEPS TAKEN BY THE MINISTRY OF AGRICULTURE...... 36 3.4 STEPS TAKEN BY THE BSTI ...... 37 SECTION 4: CONCLUSIONS AND RECOMMENDATIONS ...... 38 4.1 NTBS THAT AFFECT AGRICULTURAL TRADE ...... 38 4.2 STEPS TAKEN TO IMPROVE THE SITUATION ...... 40 4.3 RECOMMENDATIONS ...... 41 APPENDICES: ...... 44 Annex1: Questionnaires ...... 44 Annex 2: List of Participants in the FGD ...... 57 Annex 3: Newspaper Clipping on Benapole Port ...... 58 Annex 4: Letter Issued by Ministry of Agriculture Regarding Issuance of IPs ...... 59 Annex 5: Specimen of CITES certificate ...... 60

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 3 ACRONYMS ADB Asian Development Bank ARO Assistant Revenue Officer ASYCUDA Automated System for Customs Data AW ASYCUDA World BCSIR Bangladesh Council for Science and Industrial Research BFVAPEA Bangladesh , Vegetables & Allied Products Exporters Association BGB Border Guard, Bangladesh BIMAN Biman Bangladesh Airlines BLPA Bangladesh Land Port Authority BR BSTI Bangladesh Standards and Testing Institution BTFA Bangladesh Trade Facilitation Activity BTMA Bangladesh Textile Mills Association CCF Chief Conservator of Forests CCI&E Office of the Chief Controller of Imports and Exports CCT Chittagong Container Terminal CCTV Close Circuit Television C&F Clearing and Forwarding CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora CM Certification of Marks COE Country of export (COE) COO Country of origin CPA Chittagong Port Authority DAE Department of Agricultural Extension DFO Divisional Forest Officer DLS Department of Livestock Services DPP Development Project Proforma ECNEC Executive Committee for National Economic Council EU European Union FGD Focus Group Discussion FIQC Fish Inspection and Quality Control FSAAI Food Safety and Standards Authority of FSC Free Sale Certificate FSS Free Sale Statement FtF Feed the Future GCB General Cargo Berth GCMS Gas Chromatography Mass Spectrometer GoB Government of Bangladesh HPLC High Performance Liquid Chromatography HS Harmonized System HSIA Hazrat Shahjalal International Airport

4 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports ICD Inland Container Depot ICT Information and Communication Technology ICP Integrated Customs Post IP Import Permit IPO Import Policy Order LC Letter of Credit LCL Loose Container Load LCS Land Customs Station MoC Ministry of Commerce MPA Mongla Port Authority MRL Maximum Residue Limit NBR National Board of Revenue NCT New Mooring Container Terminal NTB Non-tariff barrier NTM Non-tariff measure OCP Organochlorine Pesticide OGA Other Government Agency PCS Port Congestion Surcharge PRA Pest Risk Analysis SASEC South Asia Sub-regional Economic Cooperation SKU Stock Keeping Unit SPS Sanitary and Phytosanitary SRO Statutory Regulatory Order TBT Technical Barriers to Trade TEU Twenty-foot equivalent unit TFA Trade Facilitation Agreement UAE United Arab Emirates UNCTAD United Nations Conference on Trade and Development USAID United States Agency for International Development VTMIS Vessel Traffic Management Information System WCO World Customs Organization WTO World Trade Organization

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 5 EXECUTIVE SUMMARY USAID Bangladesh Trade Facilitation Activity (BTFA) undertook this Study to identify and review the Non- Tariff Barriers (NTBs), in Bangladesh, to agricultural imports and exports. Agricultural traders in Bangladesh face difficulties in getting their products to export/ import markets and in sourcing agricultural supplies/ inputs/ equipment. Identification of NTB’s, and their costs, would therefore allow meaningful lobbying for their removal. The NTBs are basically categorized into two main forms: the non-tariff measures (NTMs) that arise as intentional or unintentional consequences of pursuance of trade policies by governments (e.g. sanitary and phytosanitary measures and technical barriers to trade), and the procedural obstacles that originate from the existence of inefficiencies in trade or customs administration systems, other government institutions, cumbersome trade documentation requirements, inadequate port and transport infrastructure, etc. As examination of NTMs associated with WTO Sanitary and Phytosanitary (SPS) or Technical Barriers to Trade (TBT) are covered in other donor-funded studies, to avoid duplication of efforts this Study did not include issues specific to application of NTMs. Instead it limited its focus on the NTBs, procedural or otherwise, that affect clearance and processing at-the-borders and behind-the-borders. The focus is, therefore, on those NTBs faced in Bangladesh by Bangladeshi exporters and importers in relation to trade in agricultural products. The Study thus provided an in-depth analysis of NTBs in Bangladesh that inhibits the country’s agricultural imports and exports, and contributes to delays and increased costs in trade in vegetables, agricultural and agro-processed products and foods. It also provided an examination of the initiatives undertaken by relevant government agencies aimed at removing or reducing some of those barriers or hurdles. As the methodology for conducting the review the Study adopted a qualitative research design. It used relevant information from both primary and secondary data. Desk research was conducted, using secondary documents/ publications for a basic understanding of relevant NTBs in Bangladesh. However, the main focus was on primary data, and for this the USAID BTFA used four data collection techniques, which included Survey, Interview with key Informants, Focus group discussion (FGD), and Open forum meeting. The main features of the BTFA Study that include identification of NTBs that affect agricultural trade, examination of steps taken by the Government of Bangladesh (GoB) to improve the situation, and recommending specific action programs that the GoB needs to undertake in order to remove or reduce those NTBs are briefly highlighted below. A. NTBS THAT AFFECT AGRICULTURAL TRADE Section 2 outlined the NTBs that affect agricultural trade. It reveals that there are indeed a large number of procedural obstacles that originate from inefficiencies in trade and Customs processing systems. In addition, there are also inefficiencies in standards and certification agencies, such as the BSTI, Quarantine, etc., that contribute to delays in ensuring standards and health and food safety obligations in relation to agricultural products in Bangladesh. A summarized version of the major findings in this regard is produced below. 1. Inadequate Infrastructure and Capacity Constraints at Ports: The Study found that capacity constraints and lack of operational efficiency at the Chittagong Port act as NTBs for traders, including those involved in agricultural trade. This is one of the main reasons for the recent severe congestion of cargo vessels and containers at the Chittagong Port. The port also lacks necessary equipment, such as gantry cranes and container handling equipment. The delay in transshipment of goods to private ICDs from the Chittagong Port has also been viewed as an NTB. While the standard time for such transshipment from Chittagong port to private ICDs is 24 hours, it actually takes 4 to 5 days, and in some cases even 10 days. At land ports, there is inadequate storage capacity, which forces importers of vegetables and agricultural products to take delivery of their cargoes on a truck-to-truck basis. They also do not have cool chain

6 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports facilities. Most of the land ports also suffer from the lack of equipment and absence of open yards. The lack of separate roads for entry-exit of trucks and the existence of narrow entry-exit passage at most land ports also affect agricultural imports and exports. Most land ports suffer from capacity constraints, though Benapole being the largest LCS suffers less in terms of capacity. Lack of BR engines at Rohanpur and other railway LCSs often cause delays for the carriage of imported goods (racks) from railway LCSs to different destinations within Bangladesh. Lack of cold storage, cool-chain facilities, and LCL sheds inhibits exports of vegetables and other agro- processed products and foods at the HSIA. In particular, the cargo handling situation is very unsatisfactory due to the shortage of ground handling staff in the cargo village at the HSIA and lack of required equipment and scanning machines. Careless handling of export-bound agricultural products at the HSIA is another barrier to trade. II. Infrastructural and Capacity Constraints in Standards Agencies: The Study found that the lack of BSTI offices in required places is a major constraint to facilitate clearance of mainly imported goods that require BSTI certifications. For example, the BSTI does not have any office in Benapole and Mongla. The absence of a BSTI office in LCSs results in increased time and costs in obtaining BSTI certificates. Trade also suffers due to the lack of capacity constraints at BSTI, which does not have adequate capacity to test agro-processed products. For example, the BSTI Chittagong office cannot issue certificate for sunflower oil, and the BSTI office does not have the capacity to test tiles. For these products, importers have to obtain BSTI certificates from Dhaka. Again, higher costs of conducting tests, especially the microbiological tests, for exports of agro-processed products, such as juice, drinks, energy drinks, mineral water, soft drinks etc., and the time the BSTI takes to conduct tests negatively impact trade by enhancing trade transaction costs. Inadequate infrastructure, such as lack of testing equipment, accessories and chemicals, as well as the dearth of trained manpower in the Plant Quarantine Wing of the DAE, is an additional NTB that creates disadvantages for exporters and importers of agricultural products. In many LCSs, the Plant Quarantine offices lack capacity to conduct some tests, such as the Organochlorine and Organophosphate tests. Again, MRL testing facility is not available in most of the quarantine offices. Importers of plant and plant parts face delay as the Import Permit is not issued from regional offices, and they need to travel to the Plant Quarantine office in Dhaka to get the permit. The significant delay in getting a CITES certificate to export agar and aatar is a major problem for the producers/ exporters of agar and aatar. Requirement of NoC from the Department of Livestock Services for clearance of animal feeds is another barrier, since it is not mandated by the Import Policy Order, 2015- 18. Lack of a designated authority for issuing a Free Sales Certificate, non-issuance of a fire certificate in case of fire, absence of a radiation testing facility at land ports, and duplication of tests to determine fit for human consumption are some of the other examples of infrastructural and capacity constraints that could be treated as NTBs and affect Bangladesh’s international trade. III. NTBs Arising Out of Procedural Obstacles (Customs and OGAs): The Study findings suggest that processing of import export clearance activities in Customs are often delayed mainly due to the following reasons: (i) frequent problems with the ASYCUDA World server due mostly to internet connectivity issues; (ii) the lack of dedicated sheds for physical examination; (iii) the lack of skills (e.g. tariff classification and valuation); and

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 7 (iv) the lack of equipment (e.g. Pangaon Customs has no scanner) and incomplete submission of declaration (e.g. lack of necessary documents with the goods declaration). Despite significant improvements made by the NBR in assessment and clearance through automation, there are often delays in Customs assessments and examinations, mainly due to the lack of risk management in the selection process, resulting in high rates of intervention. The practice at Chittagong of scanning all direct delivery containers before their departure from the port area was viewed as unnecessary, since most of them are also intervened for physical examination prior-or-post-delivery. A related issue is the existence of tariff dispersion and the presence of multiple tariffs and duty rates on products having similar descriptions (e.g. HS Headings 73.04, 73.05, and 73.06), which creates a perception of risk to customs, such as manipulations/ mis-declarations by customs agents/ importers. Frequent power outages, especially in LCSs such as Burimari, also create a major problem, as these stations do not have adequate back-up electricity generation, thus causing delays in automated Customs assessment and clearance processes. The Study considered the current acute shortage of manpower within the Customs department a major constraint in quick Customs processing. The Customs department is understaffed by about 40 percent, as it is running its operations with only 60 percent of its approved manpower position in most of its stations. In some stations such as Pangaon customs station, the shortage is even higher. A lack of adequate space was said to be a major problem in LCSs, other than Benapole which is now a Custom House. Customs offices in all other LCSs, particularly Bhomra, Sonamosjid, and Hili, suffer from a lack of space, adequate modern office buildings and warehouses. The lack of synchronized office hours between Indian and Bangladesh Customs creates delays and traffic congestion for trucks carrying import and export goods. This is a significant problem, as the delay results in time lost and damages to cargo resulting in increased costs, especially for perishable agriculture products. The current requirement to clear goods at the border, rather than at another customs clearance locations, also contributes to congestion. The introduction of domestic transit would allow importers to move goods (subject to Customs conditions) to locations nearer their business centers, and reduce border congestion. This facility is recommended by the WCO, and required under the WTO TFA. An additional problem at border crossing points is multiple inspections and examinations by different government agencies, the absence of a proper risk management system in the examination processes among different agencies, and duplication of activities by different agencies IV. Other NTBs: The Study also found that a lack of awareness among traders of the regulatory requirements, laws, rules, procedures, standards, certifications, and packaging requirements in export destinations, act as an important barrier to agricultural exports. In the case of imports, the trading community, at times, submits incomplete declarations due to lack of knowledge of documentary requirements, and suffer from the subsequent delays. Distrust among agencies, due to the submission of fake certificates at land ports was also viewed as a problem. The suspicion results in increased verifications, creating delays even for consignments with genuine documents/ certificates. There are also unnecessary requirements under the IPO, such as requiring letters of credit for all commercial imports including those in agricultural products, when a large percentage of international trade is currently conducted on the basis of alternative mechanisms.

B. STEPS TAKEN TO IMPROVE THE SITUATION Examinations made by the Study revealed, in Section 3, that government agencies, including Customs and OGAs, recognized that there are NTBs that inhibit Bangladesh’s trade in agricultural products, and

8 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports undertook various steps in order to remove such obstacles. This is reflective of the agencies’ sincere efforts to improve trade processing and facilitate trade. Customs assessment and clearance processes have undergone significant changes over the years with the introduction of ASYCUDA in the mid-1990s, culminating with the implementation of ASYCUDA World (AW) in the Customs Houses in July 2013. Since the introduction of web based AW, the submission of declarations has become easier. The recent establishment of connectivity between the LC system (e-LC), and the AW system (from 25 January 2015, under a joint initiative of the Bangladesh Bank and the NBR) has enabled Customs officials to verify the LCs submitted by importers with their respective banks online. The NBR also took an initiative to implement ‘e-EXP’ through the use of AW system. In order to address the acute shortage of officers, the NBR has recruited 1,321 AROs since 2011, as well staff/ employees in lower level positions. The Ministry of Shipping and its affiliated organizations have undertaken many initiatives to address issues related to inadequate infrastructural constraints at different land and sea ports that affect international trade. For example, the CPA has taken the initiative to construct new jetties. Further, it has procured and installed a Mobile Vehicle Scanner to help meet demand for non-intrusive examinations. In order to increase the capacity of the port, the CPA has procured 171 pieces of cargo handling equipment of different types during the last three years. It has also taken steps to procure additional gantry cranes, mobile cranes, forklift trucks, variable reach trucks, straddle carriers, mobile harbor cranes, etc. for the port. In the case of initiatives undertaken by the BLPA, the Study found that in order to improve the infrastructure at the Benapole and Burimari land ports, the SASEC Road Connectivity Project is currently being implemented. Other on-going projects of the BLPA include- the ‘Bangladesh Regional Connectivity Project: Development of Sheola, Bhomra, and Ramgarh land ports’, and the ‘Security and CCTV at Benapole port’. Furthermore, the BLPA has concreted 3,500 square meters of land, constructed a 2,325 square meters transshipment shed at the Burimari land port, and procured 11 forklifts (having a capacity of 2.5-10 tons each). The Tamabil Land Port Development Project is being carried out with 75 percent physical progress made so far. In addition, the BLPA undertook initiatives for the development of the Belonia Land port, Dhanua-Kamalpur land port, Tamabil land port and land port (under Bhurunggamari upazilla of ). The Study also learned that the BLPA is in the process of acquiring new lands at the Benapole port to further increase the port’s capacity. The Ministry of Agriculture and the DAE have undertaken several initiatives to address the issues of capacity constraints at the Plant Quarantine Wing. For example, the Plant Quarantine Department has procured inspection equipment, a microscope, inspection table, GCMS, injector and HPLC during the last 4-5 years. The Quarantine office located in Chittagong can now conduct necessary tests and inspections, as well as issue the release order within a day (except tests that require more time, such as germination test). Further, a packing center was built in Dhaka’s Shyampur area by the DAE. The new facility went into operation in May 2017, strengthening the country's phytosanitary capacity. Six new office buildings and seven post-entry quarantine stations (in limited scale) have been established in locations, such as Mongla, Chittagong, Sonamosjid, Hili, Burimari, and Nurerbagh (Gazipur). The Bangladesh Standards and Testing Institution (BSTI) has significantly streamlined and automated its operations. The Certification of Marks (CM) system of the BSTI has been automated, and a software program by Synesis IT has been installed with the assistance of World Bank Group to issue CMs on-line.

C. RECOMMENDATIONS The concluding section recommended a number of activities that the Government may undertake in order to overcome infrastructural and capacity constraints at ports and in standards agencies (e.g. plant quarantine, BSTI, and BCSIR), remove or reduce procedural obstacles in Customs and other government agencies, and address other non-tariff barriers related to trade in agricultural products. The activities proposed by the Study, which are divided into short, medium and long-term considering the likelihood of time to be taken for their implementation are highlighted below:

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 9 I. Short term priorities: 1. To enhance the performance of the Bhomra land port, the local port authority under the BLPA needs to activate the port sheds/ warehouses (it has 2 warehouses) by taking warehouse keeper license from the Customs authority, and allowing importers to store their goods. 2. The current placement of the weighbridge at Benapole is not suitable for trade, as it is located deep inside the truck terminal (about 200 meters inside from the entry point). Therefore, it must be moved to the planned (new) truck terminal to be constructed on the one acre of land acquired for this purpose. 3. The unnecessary practice at Chittagong of scanning all direct delivery containers before their departure from the port area needs to be reviewed, as most of these containers are also intervened for physical examination prior-or-post-delivery. 4. In order to reduce the frequency of testing, the BSTI must consider the adoption of risk-based testing. This will not only address the issue of higher costs for tests but also reduce the clearance time by reducing the number of consignments subject to testing, and will therefore be an important trade facilitation measure. 5. For the same reason mentioned in paragraph (3) above, the Plant Quarantine Wing under the DAE must consider adopting the risk-based inspection processes in selecting imported agricultural and plant-based consignments to ensure the fulfilment of quarantine requirements. 6. The Government should consider establishing a dedicated traffic control unit at Benapole. As the Benapole-Jessore road remains occupied with trucks in a haphazard manner creating a serious traffic jam, a dedicated traffic unit with adequate police personnel will significantly improve the traffic situation at Benapole. 7. The Government should consider allowing the issuance of the CITES certificates for agar agar (aator) products regionally, from Moulvibazar. Currently, exporters of agar, aator, agarwood and agar-oil need to wait more than a month to obtain a CITES certificate from the Chief Conservator of Forest office in Dhaka. II. Medium term priorities: 1. The port operator or the NBR should install a digital weighing machine/ bridge at Bhomra LCS, at the point of entry. In addition, a mechanized system for loading and unloading should be introduced to avoid delay and reduce costs. 2. The NBR needs to improve the Customs laboratory at the Benapole Custom House. The lab, established about 2 years ago, is still non-functional, with only one chemist, who cannot cover all areas. It requires improvements including, the necessary testing equipment and the qualified manpower to operate the laboratory effectively. 3. The NBR has to consider activating the currently non-functional LCSs, especially at those places that assumed greater relevance as trade routes in recent years. This will assist traders in avoiding the current congestions in specific locations, such as Benapole and Bhomra. 4. The Government should consider moving the Khulna Plant Quarantine office inside or near the Mongla port to facilitate quick clearance of import and export consignments of agricultural products. The plant is currently located in Khulna city, 50 kilometers away from the port of Mongla. 5. In order to promote exports of food and other agricultural items, an authority needs to be designated to issue Free Sales Certificates. The Ministry of Health, the BSTI or any other authority may be designated to issue the FSCs. Detailed procedures for issuing such certificates should also be developed and published.

10 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 6. The Government needs to consider introducing the land customs station-based domestic transit system, as the current requirement to clear goods at the border, rather than at another customs clearance locations, contributes to congestion. 7. The Indian Embassy in Bangladesh should consider further simplifying the Indian visa issuance procedure for Bangladeshi business community, as it would ease inter country trade. This would require a constructive dialogue between two governments. III. Long term priorities: 1. As part of the future National Single Window concept, the Government should require border agencies to develop a Coordinated Border Management approach (as recommended by the WCO) with defined roles, responsibilities, procedures, coordinated examinations, shared approaches to risk/ selectivity and shared facilities such as laboratories. 2. Port operations at land ports, especially at Benapole and Bhomra, need to be automated. Currently, land port activities at Benapole and Bhomra are conducted manually. Therefore, even though the Customs operations are automated, port users do not enjoy the full benefits of such automation, as it is not extended to land port operations. 3. The Government need to increase and improve quickly the efficiency and capacity of the Chittagong Port. To that end, new jetties, terminals need to be constructed. Equipment, such as gantry cranes, fork lifts, etc., need to be procured to ensure seamless operation at the port. The port’s turnaround time also need to be significantly reduced (from 7-10 days’ to 1-2 days) through development of physical infrastructure and enhancement of the efficiency of its staff. 4. The Government has to consider facilitating the private sector in establishing and operating cold storage and cool-chain facilities at least at the HSIA and the Benapole Port. This will be of great assistance to exporters of vegetables, fruits and flowers. A key informant from the Benapole Port urged for a ‘sandwich-type’ cold room at Benapole. 5. The BSTI should consider setting up a testing lab at Benapole. Currently, it takes at least a month to get the BSTI report/ certificate from the BSTI Khulna office after the collection of samples. Further, the BSTI should be required to adopt a risk based approach to the sampling/ testing of imported goods. 6. For the same reason mentioned in paragraph (5) above, the BCSIR needs to consider setting up a testing facility at the Benapole port in order to facilitate quick clearance of agro-processed and food products that require tests from the BCSIR, as an alternative to BSTI. 7. The Government and private sector port operators must create provisions for modern office complexes at land ports, which provide suitable space for necessary stakeholders. For example, Bhomra, Sonamasjid, and Hili Customs do not have adequate space to run its activities smoothly, and operate their activities from cramped offices; the Customs office at Bhomra is often inundated during heavy rainfall, causing damage to important official documents. 8. The construction of a deep-sea port in Bangladesh, whether at Paira in Patuakhali district or Sonadia in Coxes Bazar district, is an urgent requirement in order to cater to the growing needs of trade including facilitation of the entry of mother vessels, and reduce the time and costs of transportation.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 11 SECTION 1: STUDY OBJECTIVE AND PROCEDURES

1.1 INTRODUCTION USAID Bangladesh awarded IBI International a 5-year contract to implement the Bangladesh Trade Facilitation Activity (BTFA). This activity has been designed to bolster economic growth by increasing the efficiency of cross-border trade. During the World Trade Organization (WTO) Doha round, and more recently with the signing of the new WTO Trade Facilitation Agreement (TFA) in Bali in December 2013, trade facilitation has gained currency in discussions and research, both at the government and academic levels. Trade facilitation, as a development initiative, has gained wider recognition from various corners due to its role in reducing inefficiency in trade and enhancing competitiveness in the global market. Today in Bangladesh there is a broad acknowledgement that the country’s trade competiveness can only grow if the price of its exportable goods and the cost of necessary imports for exports are reduced. The trade facilitation measures outlined in the BTFA are expected to have a large impact on cross-border trade through improved access to trade information, simplification and harmonization of Bangladesh’s trade processes, and expedited clearance of import/export cargoes. One important trade facilitation initiative under the BTFA is to identify and review the Non-Tariff Barriers (NTBs), in Bangladesh, to agricultural imports and exports. Agricultural traders in Bangladesh face difficulties in getting their products to export/ import markets and in sourcing agricultural supplies/ inputs/ equipment. Identification of NTB’s, and their costs, would therefore allow meaningful lobbying for their removal. An NTB is any obstacle to international trade that is not a tariff, and appears in the form of a rule, procedure, regulation or law that has a negative impact on trade. The NTBs are basically categorized into two main forms. The first category includes barriers, more popularly known as non-tariff measures1 (NTMs), that arise as intentional or unintentional consequences of pursuance of trade policies by governments. These include sanitary and phytosanitary (SPS) measures and other technical barriers to trade (TBT) when implemented by countries in a trade restrictive manner. The second category includes those NTBs or procedural obstacles that originate from the existence of inefficiencies in trade or customs administration systems, other government institutions, cumbersome trade documentation requirements, inadequate port and transport infrastructure, etc. Both categories of NTBs, NTMs and procedural obstacles, affect the trade competitiveness of the country. The SPS and TBT measures and other NTMs implemented by countries in a trade restrictive manner affect trade. Businesses can suffer from indirect costs such as those arising from waiting time, procedural delays, lost business opportunities, and a lack of predictability in trade regulations (e.g. Customs and administrative entry procedures, clearance formalities at ports of entry etc.). Agricultural products are often subjected to NTBs in general, and NTMs in particular, due to the existence of various standards and certification requirements imposed by countries with the intention of ensuring food safety. These measures contribute to delays and increased costs, and may hinder importation and exportation of agricultural products.

The BTFA Team consisting of Dr. Md. Khairuzzaman Mozumder and Dr. Mohammad Abu Yusuf conducted this study to review and identify the NTBs faced by Bangladeshi exporters and importers in relation to their exports and imports of agricultural products and agro-processed items. The immediate objective of the activity was to facilitate trade by creating awareness of NTBs, with a long term development objective of improving food security in the country.

1 The United Nations Conference on Trade and Development (UNCTAD) describes NTMs as policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing quantities traded, prices, or both.

12 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 1.2 SCOPE The BTFA limited the focus of this Study on those NTBs faced in Bangladesh by Bangladeshi exporters and importers in relation to trade in agricultural products2. To avoid duplication of efforts, the Study limited its focus on NTBs, procedural or otherwise, that affect clearance and processing at-the-borders and behind- the-borders. Therefore, it did not include issues specific to application of NTMs associated with WTO Sanitary and Phytosanitary (SPS) or Technical Barriers to Trade (TBT)3. To identify various NTBs in agricultural trade, the Study considered all agricultural and agro-processed products and food products classified under the World Customs Organization (WCO) Harmonized System (HS) Chapters 1 to 24, currently imported into, or exported from, Bangladesh. Table 1.1 below highlights products covered by the study, and key stakeholders who were interviewed for data collection. Table 1.1: Tradeable Agricultural Products in Bangladesh, and Key Stakeholders for Data Collection Sl. No Import/Export Products Key Stakeholders

1 Import:  Agricultural Products: wheat, maize, lentils, rice  Importers. etc.  Associations and trade bodies  Vegetables: onions, garlics, ginger, turmeric, etc. related to agricultural and agro-  Fruits & Juices: apples, fresh oranges, grapes, etc. processed foods and products.  Donor-funded relevant projects. 2 Export:  Clearing and Forwarding (C&F)  Agricultural Products: Agents. o citrus (lemons),  Shipping Agents & Freight o vegetables (potato, stolon of colocassia4, Forwarders. taro, plantain)  Customs. o cut flower and foliage,  Standards Agencies, mainly o betel leaf, Bangladesh Standards and o mango, Testing Institution (BSTI), o sesame (locally known as ‘teel’) Bangladesh Council for Science o tea, etc. and Industrial Research (BCSIR),  Agro-processed Foods/Products: Plant Quarantine Wing under o papadum, chips, aloo poori, potato crackers, the Department of Agricultural snacks, puffed rice, mango bar, etc. Extension (DAE). o fruit juices, mainly mango juice.  Port Authorities (Land, Sea, Air o vegetable chips, vegetable spring roll, etc.) vegetable samosa, etc. o pickles.  Vegetables (mostly frozen): o taro root (kachur mukhi), o amaranth and Amaranth leaf (data and data shak), o bitter gourd (karola), o citrus macroptera (shatkora),

2 A similar initiative has been undertaken by the USAID BTFA to conduct a Study in India to identify and review NTBs faced in India by Indian agricultural traders, in relation to their exports to, and imports from, Bangladesh. 3 Examination of such NTMs are covered in other donor-funded studies, such as – (i) The Non-Tariff Barriers to Trade in Bangladesh: National Action Plan by USAID AMEG in 2017, (ii) The Non-Tariff Measures (NTMs) Business Survey in Bangladesh (2014-2015) by ITC Geneva in 2015. 4 Locally, it is known as ‘Loti’.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 13 o Okra (lady’s finger), o Long bean, flat bean, o pointed gourd (potol), o coriander leaf, o ribbed gourd (jhinga), o spiny gourd (kakrol), o long beans (barboti), o radish

1.3 METHODS OF DATA COLLECTION A. Qualitative Research Design: As the methodology for conducting the review, the Study adopted a qualitative research design. It used relevant information from both primary and secondary data. Desk research was conducted, using secondary documents/ publications for a basic understanding of relevant NTBs in Bangladesh. However, the main focus was on primary data, and for this the USAID BTFA used four data collection techniques, which included Survey, Interview with key Informants, Focus group discussion (FGD), and Open forum meeting. (i) Survey: A survey with 20 key informants was conducted, for which the BTFA used pre-set, unstructured questionnaires (attached as Annex I.I to Annex I.V). However, the surveys sent through the mail did not generate adequate data due to non-response from target firms. (ii) Interview with key informants: In order to obtain reliable data on hurdles/barriers associated with regulatory and other processes and practices, 35 in-depth interviews were conducted with key informants: regulators (plant quarantine wing under the DAE, BSTI, sea port and land port officials, Office of the Chief Controller of Imports and Exports - CCI&E under the Ministry of Commerce), private actors (exporters, importers, officials from Bangladesh Fruits, Vegetables & Allied Products Exporters Association –BFVAPEA), customs brokers/ agents, truck owners, truck drivers, etc. (iii) Focus Group Discussion (FGD): A FGD with selected stakeholders was conducted at the Benapole Customs House in March 2017, which was attended by Benapole-based officials from both the public and private sectors. A further FGD with key public and private sector stakeholders was organized on 24 September 2017 in Dhaka. Thirty participants from different government agencies and the private sector took part in the FGD (List of participants is attached as Annex 2). The BTFA team presented the initial findings from the field survey before the audience for their feedback and validation. While appreciating the findings, participants identified some additional barriers and recommended Figure 1.1 A participant providing her opinion at the FGD their incorporation into the report.

(iv) Open forum meeting: An open- forum meeting consisting of relevant stakeholders was held at Hili Land Customs Station (LCS). Importers, C&F Agents, representative of Hili Port Link Limited (port operator), the mayor of Hakimpur Pourashaba and journalists took part in the meeting, sharing information on barriers existing at the Hili LCS.

14 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports To document land port, sea port or airport-specific hurdles, and find customized solutions, the BTFA conducted on-site visits to three Custom Houses (Chittagong, Mongla, and Benapole), and four land ports (Bhomra LCS, Sona Masjid LCS, Burimari LCS and Hili LCS). The BTFA team also visited the Air Freight Unit of Dhaka Custom House, and observed the import and export procedures through which vegetables are exported to the European Union (EU), the Middle East, and other countries, gaining specific understanding of physical infrastructure related impediments in exporting vegetables.

B. Composition of Stakeholders: Primary data on non-tariff barriers were collected from two groups of stakeholders:  Public sector  Private sector Figure 1.2 below reveals that the Study was conducted in close partnership with key stakeholders from both the groups. As also shown in Table 1.1 above, interviews of selected officials from all of these key stakeholder groups in both the public and private sectors were conducted. Figure 1.2 Stakeholder Sources

Sources

Public sector Private sector

Trade Plant MOC/ Bodies/Donor Customs Bank/Bangladesh Port Authoirty BSTI Firms funded C&F Agents Quarantine Bank Hortex Wing /DAE EPB projects

Railway (in Rohanpur LCS)

1.4 LIMITATIONS It was not possible to contact or interview all key officials in relevant stakeholder groups, therefore, key informant interviews were determined by the availability of appropriate interviewees. Generally the BTFA research team was successful in locating the right interviewees, and obtaining necessary documents. One of the limitations in our data collection efforts was that only a few survey forms were filled in and returned by the firms to whom survey questionnaires were sent. This was mitigated through other data collection methods, namely key informant interviews, FGDs, open forum meetings, and on-site visits. A further limitation was that the study was confined to reviews of NTBs faced by agricultural traders in Bangladesh only, however, the USAID BTFA has undertaken a ‘mirror’ Study to review NTBs faced by agricultural traders inside India, in relation to their imports from, and exports to, Bangladesh. The BTFA will conclude the Indian NTBs Study in mid-2018.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 15 SECTION 2: NTBS THAT AFFECT BANGLADESH’S AGRICULTURAL TRADE This section presents an analysis of NTBs inhibiting Bangladesh’s trade in agricultural products with the rest of the world in general, and its agricultural exports to, and imports from, India in particular. The analysis is based on the findings from all primary and secondary data collected as part of the Study. It also includes input, in the form of opinions and feedback, collected from private sector leaders and Government of Bangladesh (GoB) officials through surveys, interviews, FGDs and open forum meetings. As will be evident from the following presentation, in addition to identifying NTBs associated with procedural obstacles in customs clearance and processing, Section 2 also highlights hurdles traders face due to the existence of inadequate infrastructure and capacity constraints associated with other government agencies (OGAs). Such OGAs include the BSTI, CCI&E, BCSIR, Plant Quarantine Wing under the DAE, various port authorities including Chittagong Port Authority (CPA), Mongla Port Authority (MPA), Bangladesh Land Port Authority (BLPA), etc. 2.1 INADEQUATE INFRASTRUCTURE AND CAPACITY CONSTRAINTS AT PORTS (I) Capacity constraints and lack of efficiency at the Chittagong Port: The capacity constraint and lack of efficiency at the Chittagong Port act as NTBs for traders, including those involved in agricultural trade. Port users remarked during the interviewing that vessels, especially container laden, need to wait at outer anchorage for longer periods than usual, due to severe port congestion and lack of berth space. Time taken for an import-cargo/ container laden vessel to get berth at Chittagong Port from the outer anchorage is shown in Table 2.1 below. Table 2.1: Time Taken to Get Berthing at Chittagong Port Type of Berthing Activity for Vessels at Chittagong Port Time Taken 1 From outer anchorage to General Cargo Berth (GCB) 3-4 days 2 From outer anchorage to Chittagong Container Terminal (CCT) 5-7 days 3 From outer anchorage to New Mooring Container Terminal (NCT) 7-10 days (Source: Interview with port users, 2017) Table 2.1 reflects the general trend in recent times, however, it can take even more time for ships to unload import consignments and load export cargoes. For instance, a recent report in the Daily Prothom Alo (2017) revealed that on average, non-containerized vessels had to wait for two weeks at the outer anchorage. Most of these vessels carry inputs/ raw materials and capital machinery for manufacturing export goods. The inordinate delay in getting berth and unloading goods results in increased costs of doing business. The export-import business in the country also incurs huge losses as the shipping companies charge more for overstay at the outer anchorage of the Chittagong Port and delayed port operations. The grave situation was echoed in the words of a leader of Chittagong C&F Agents Association: “Chittagong Port has been facing huge vessel congestion in the last 2-3 months, delaying berthing schedules to many ships waiting at the outer anchorage. This congestion is largely due to the lack of adequate infrastructure at the port.” (25 July 2017 in an interview) During the past few years, the cargo and container handling at the Chittagong Port grew by 16 percent to 17 percent; however’ no new jetties were constructed during the last nine years. This is one of the main reasons for the said congestion5. An importer mentioned that on average, 12 to 15 container vessels now have to wait every day at the outer anchorage to get the schedule for berthing in the jetties. The average stay time for a container vessel at the outer anchorage should not be more than two days under normal

5 The delay in getting containers out of the port, and the poor control that the port has over the forklift and crane drivers with unions exerting undue control are also often cited as important reasons for such congestion.

16 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports circumstances, as is the case in Singapore. This raises question on the efficiency of the Chittagong Port. The actual scenario at the Port was described by a director of Chittagong Chamber of Commerce & Industry,

“Container vessels now have to stay 7-10 days while the cargo vessels have to stay 25-30 days at the outer anchorage of Chittagong Port.” (Daily Dhaka Tribune, 20 July 2017, “Chittagong port congestion may result in huge losses for businesses”) Moreover, Chittagong Port lacks necessary equipment such as gantry cranes and container handling equipment. The port is now running with a capacity of only 30-40 percent of the needed equipment (Daily Bonik Barta, 24 October 2017, p. 2). The port has four The port has four gantry cranes against the gantry cranes against the need for at least 26. Two of need for at least 26. Two of the cranes the cranes were damaged on 25 June 2017, being hit were damaged on 25 June, being hit by an by an Egyptian flagged container vessel, Xpress Suez6, Xpress and remain non-functional. Similarly, the number of Egyptian flagged container vessel, container loading and unloading equipment currently Suez, and remain non-functional. in use at the port is only one-third of the actual requirement. There is also a serious shortage of container terminals, depots, berthing spaces (The Daily Financial Express, 8 August 2017) and physical examination bays for Customs. The lack of efficiency at the Chittagong Port can be gauged from the time taken to clear containers from the ship by cranes. According to international standards, 33-35 containers can be cleared (unloaded) per hour from the ship using a crane. At the Chittagong port, about 10 containers can be unloaded/cleared from the ship per hour. As a result, it takes three days to unload/clear a container loaded ship at the Port (Daily Bonik Barta, 24 October 2017, p. 1-2). (II) Delay in transshipment of goods to private Inland Container Depot (ICDs) from the Chittagong Port: At the moment, there are 18 private ICDs that are operational to receive 37 primarily low duty types of goods from Chittagong Port. While the standard time to carry these goods in in-bound trailers (loaded with containers) from the Chittagong Port to private ICDs is 24 hours, it takes 4 to 5 days, in some cases even 10 days, due to the lack of container handling equipment, lack of workers and lack of trailers in the private ICDs. Poor road conditions for accessing the ICDs also lead to this delay (A C&F agent, in an interview on 25 July 2017). (III) Inadequate storage capacity and open yards at land ports: An on-site visit to the Benapole Land Port revealed that a good number of vegetables and agricultural products, such as onion, garlic, ginger, turmeric, capsicum, cabbage, tomato, medicinal and leaves, betel leaf, oil cakes, cherry, koromcha ( carandas), rice, pulses, wheat, maize (seed and grain), nuts (including peanuts and cashew nuts), green chili, dried chili, flowers, flower sapling, egg, fish scale, sugar, molasses, tea/coffee, rice bran, etc. are imported through the port. However there is no separate warehouse to store vegetables, fruits, seeds, spices, etc., and therefore, all agricultural products are delivered on a truck-to-truck basis. The storage capacity in Benapole Customs House was also found to be limited compared to actual needs. The warehouses at Benapole Port are in a dilapidated condition (see Figure 2.1), with staff in port warehouses/ offices ‘suffocated’ due to a lack of adequate fans. Poor or non-existent toilet facilities and generally shabby condition result in a non-congenial work atmosphere. Further, inadequate infrastructure results in frequent traffic jams and to make matters worse, there is no truck stand and traffic unit at the port (Beanpole Police Station performs temporary traffic control functions).

6 Dwaipayan Barua (2017), “Crane accident hampers container handling at Chittagong port”, The Daily Star, June 30.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 17

Figure 2.1 Dilapidated condition at Benapole Port A similar visit to the Bhomra Land Port revealed that there is no cold storage facility at the port to store perishable goods. The Customs office at Bhomra LCS is regularly inundated with water during heavy rainfall. These infrastructural limitations cause delay in the clearance of goods, lead to damage, and increase costs to traders. Our visit to the revealed that there is a lack of adequate open yards at the Hili LCS, with the existing open yard infrastructure only capable of handling 12 trucks. (Representative of Panama Hili Port Link, 13 September 2017). During times of excessive rainfall or situations when trucks cannot be cleared from the yard during holidays, inadequate existing capacity results in queues of more than 50 to 60 trucks. An importer complained that due to weekly holidays or rainfall, he could not clear his consignments of onions in good time, resulting in an imported consignment of 70-80 trucks of onions suffering huge damage on 09 August 2017 (as onion is a perishable product). [An interviewee (importer of agricultural products, e.g. onion, green chili, rice)]. Another infrastructure issue relates to green chilies, which cannot be unloaded under the sun or open sky for fear of quality deterioration.

The jetty area inside the Sonamasjid Port is not developed enough for uninterrupted operation. The port jetty area is still “soft-shoulder” (made of soil; fully kutcha road) condition, with not even a single paved/ cement concrete road inside the port jetty area (as shown in Figures 2.2 and 2.3). As The port area inside Sonamasjid Land Port is not a result, during rainfall, Customs ‘concrete paved’ (it is made of ‘soft solder’). As such, officials cannot enter the jetty area the port becomes unusable and muddy/slippery if there with their vehicles to perform is rainfall. Customs office and port is often inundated physical inspection of imported goods. Moreover, the lack of with rainwater resulting in suspension of operations. paved port jetty results in the deterioration and damage of perishable items like onion, garlic, etc. During the summer (dry) season, the Sonamasjid area experiences huge dust-storms that worsen the working condition there (Interview with a Customs official at Sonamosjid on 21 August 2017).

18 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports

Figure 2.2 Sonamasjid Port Area (Not paved; soft Figure 2.3 Poor state of Jetty area inside Sonamasjid LCS shoulder)

One trader (engaged in imports-exports of food products) indicated that the lack of storage facilities, and poor road infrastructure were prevalent, especially in Benapole, Akhaura, Burimari, and Sheola, where imported goods clearance was delayed and goods got damaged while awaiting customs clearance. (IV) Lack of separate roads for entry-exit of trucks, and narrow entry-exit passage at land ports: Interview findings reveal that there is only one road for entry and exit of trucks at the Hili port, and therefore import and export goods are carried through a single route. Empty trucks also use the same route for exit. This causes long queues resulting in hours of delay in clearance with imported goods in queue for 2 to 6 hours on occasion to exit the port. The port operator (Panama Hili Port Link) at the Hili LCS reported to the BTFA that they also wanted to construct a separate exit road from the Hili port, but “the authority could not construct a separate exit route from the port due to pending court case with individual land owners”. A similar situation was found at the Sonamasjid Port where import and export consignments are carried through a single route. The situation in Sonamasjid is compounded by the fact that the sole entry-exit gate is very narrow, negatively affecting the smooth flow of trade traffic. In the words of importers and exporters, “The entry-exit passage at zero point between Bangladesh and India (the India- Bangladesh gateway) is so narrow that two trucks cannot move at a time side by side. When an outgoing truck/ vehicle is on the move, the incoming truck has to remain standstill, only due to narrowness of the gateway”. This causes delay in getting trucks loaded with perishable products, such as onion, ginger, tomato, apple, orange, plant and plant parts (herbal items, flowers), and other agricultural products into Bangladesh. (Discussion with an importer, and a Customs official in Sonamasjid on 21 August 2017)7. (V) Capacity constraints at land ports: The Study found that the Benapole Land Port, which handles the bulk of land border trade between India and Bangladesh and is the largest LCS (the Benapole Custom House), suffers less in terms of capacity constraints compared to other land ports, but a lack of functioning cranes and forklifts does cause delay in

7 The Exporters’ Association of Malda district in West , India in a letter (23 August 2016) addressed to the Indian complained the narrowness of the India-Bangladesh gateway and asked for widening of the gateway. (Ref no. MEA/16/63 date 23 Aug 2016)

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 19 the loading and unloading of goods (M.S. Reja, 2017, “Traders unhappy over additional charges at Benapole port”, Daily Dhaka Tribune, 11 August 2017)). At other land ports, such as Sonamasjid, Hili, Burimari, etc., there is a severe shortage of space (building), fork-lift trucks, cranes and other port operating equipment. At Sonamasjid Port it has been found that although the port operator, Panama Port Link, was under contractual obligation to create necessary facilities (as highlighted in Table 2.2 below) within eight years starting from the signing of Concessions Agreement in 2006, they have not complied; as a result, the port is running in a non-conducive condition.

Table 2.2: Current Situation at the Sonamasjid Land Port in terms of Infrastructure and Capacity Serial Description Infrastructure to be Actual condition/state Remarks no made available (Under Concessions Agreement with GoB in 2006-2007) 1 Admin building 12400 sft. Not yet completed - 12,400 sft. 2 One steel 16000 sft. Not yet completed Lack of storage facilities structure godown in block D 3 One steel for 16,000 sft. near Under process of - structure godown gate no 04 (Specialized procurement addition) 4 One steel For 10000 sft. near Not yet built (Panama Panama Port Link claimed structure gate no 3 Port Link claimed that that they built a 6000-sft transshipment they completed 50%) transshipment yard shed 5 Equipment Procurement of various Procurement under Importers and C&F types of equipment as process Agents interviewed per Concession claimed that nothing has Agreement been done so far 6 Forklift 1 Procurement under Nothing has been done process so far (Panama Port Link however claimed that they procured 1 forklift of 3000 lb capacity) 7 Mobile crane 1 Procurement under Do process 8 Truck mounted 1 Procurement under Do crane process 9 Trolleys 2 Procurement under Do process (Source: Mr. Kabirur Rahman Khan, Interviewed on 21 August 2017)

(VI) Careless handling of export-bound agricultural products at Hazrat Shahjalal International Airport: The BTFA observed a somewhat chaotic situation in terms of the handling of export-bound agricultural and vegetable products at the export village of Hazrat Shahjalal International Airport (HSIA) in Dhaka. In the words of a vegetable exporter, “Exportable agricultural products are thrown away by the porter without any care. This results in significant amount of handling losses. We get 5, 10 or even 20 percent loss claim from our buyers”. Such handling loss creates a big burden on exporters (an official of the BFVAPEA,

20 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports interviewed on 02 August 2017). Another vegetables exporter observed- “Loading is not at all good in the HSIA. Handling of exportable goods are rough at the Cargo village and there is no care of vegetables destined for export. As a result cartons/ pallets of vegetables are damaged and lose their original shape before the same are boarded into the aircraft”. (VII) Lack of ground staff and handling facilities at HSIA: Lack of adequate ground staff and “cargo loaders” at the HSIA causes delays in the loading and unloading of agricultural products, such as spiny gourd/ teasel gourd (kakrol), hot capsicum (naga morich), snake gourd (chichinga), zara lemon, plantain (kacha kola), taro (mukhi kachu), arum (kochu), bottle gourd (lao), potato (aloo), pointed gourd (patol), and stolon of colocasia (loti). It is observed by a respondent that although Biman Bangladesh Airlines (BIMAN) is solely responsible for ground handling at the HSIA, it does not have adequate ground handling staff in the cargo village, which is compounded by a lack of required equipment and scanning machines. The respondent underscored the need for installation of at least two more scanning machines in the export village to enable quick scanning of agricultural products for exports. A number of respondents mentioned that due to huge pressure from readymade garments exporters, consignments of agricultural products/ vegetables are put on queue inside the shed in the export village at the HSIA. As a perishable item, vegetables should be prioritized in entering into the export village (one exporter and two C&F Agents interviewed on 02 August 2017). (VIII) Lack of cold storage, cool-chain facilities and Loose Container Load (LCL) sheds at the HSIA and land ports: A majority of respondents indicated that the lack of storage facilities especially cold storage/ cool chain in Customs ports and land customs stations (e.g. the HSIA, Mongla Sea Port, and Benapole, Bhomra, Hili, Burimari and Sonamasjid land ports) is a major constraint in the storing of agricultural items and products. Key informants (i.e. importers/ exporters) made it clear that a temperature control system is needed from the time of receiving vegetables/ fruits at the HSIA until the time of shipment. This lack of equipment in the supply chain results in exports of vegetables from Bangladesh through the HSIA to countries, such as Saudi Arabia, UAE, Kuwait, Malaysia, Singapore, suffering greatly. Insufficient cargo space on aircrafts is another major barrier for exporters of fresh produce/ vegetables. At times vegetables and other agricultural items are offloaded from aircraft due to flight cancellation or a lack of space in the aircraft. These off-loaded agricultural products often deteriorate, with their quality suffering due to the lack of temperature controlled facilities at the HSIA, resulting in their disposal at a very low price in the local market. It is also found that there is a lack of cold storage (with controlled temperature) in regional centers where vegetables are produced extensively. This is a major constraint in maintaining freshness and quality. Similarly, due to the lack of cold storage (including cool chain) to transport or preserve export of fresh flowers, a large quantity of flowers perish in the field or market. As such, despite immense potential for exporting of flowers through the Benapole port, Bangladesh is yet to export flowers produced/ marketed in Godkhali8 under Jhikorgacha upazilla of through this port. Other highly perishable items, such as yeast, butter, gelatin capsule (empty) (HS 9602.00.10) and chocolate9 imports from India, are also disadvantaged, and require additional expenditures to maintain their quality due to the absence of a cold storage in Benapole [General Secretary, Benapole C&F Agents Association, interviewed on 02 October 2017]. For example, gelatin capsules10 are imported by renowned Bangladeshi pharmaceutical firms in air-conditioned vans. In the absence of any cool chain facility in Benapole, imported gelatin capsule consignments are kept in

8 Godkhali accounts for nearly 70 percent of the entire flower supply in Bangladesh. Flowers of different varieties including rose, gerbera, gladiolus, tuberose and marigold are cultivated and produced in the Jessore district. 9 As chocolate starts to change consistency and starts to melt in 28-29 degree Centigrade temperature (70 degree Fahrenheit), it can also be considered a perishable item. 10 Gelatin capsule is a basic raw material for medicines and is made of cow bones. Bangladesh exports cow bones (a non-traditional item) to India through the Benapole Port.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 21 Indian air-conditioned vans until these are transhipped into Bangladeshi air-conditioned vans for onward transportation to Dhaka. As Bangladeshi importers bear this additional cost, it enhances their trade costs. (Mr. Matiar Rahman, a C&F Agent and business leader from Benapole, interviewed in 02 October, 2017).

In the case of the Mongla Port, the lack of Loose Container Load (LCL) sheds is a serious hindrance for import and export trade, with no LCL cargo currently imported through this port. Imports through the Mongla Port could see a significant increase if LCL sheds are established there. (IX) Inadequate railway infrastructure: Currently there is no railway warehouse at the Rohanpur Railway Port. Therefore no imported product is unloaded there, and importers need to take their goods to different destinations in Shirajganj, Ullapara, Pabna, Nouwapara (Jessore), etc. for unloading. There are only three railway tracks in Rohanpur, which cause delay in the customs clearance of goods-laden trains. For example, if a passenger train is already there on the main track in the station, the goods-laden train arriving from India needs to wait for a long time to give way to the passenger train. This is because the Bangladesh bound goods-laden train coming from India (Singabad station on the Indian side) has to stop at the main track of the Rohanpur railway station to facilitate an engine from the Bangladesh Railway (BR) (known as “Power”) to be connected with the goods- laden train so as to carry the Indian wagons (42 wagons constitute a rack) to different destinations within Bangladesh (a respondent from Bangladesh Railway at Rohanpur on 22 August 2017). The shortage of rail engines in Rohanpur is another major problem, as it significantly delays the carrying of Indian wagons from Rohanpur. Due to the lack of immediate availability of Bangladeshi engines (‘Power’), Indian racks cannot be rebooked and the goods have to wait at Rohanpur. Importers get 12- hours of time at no charge, but after the first 12 hours, importers have to pay a detention charge11 of BDT 3,780/- or US$ 47.2512 per hour (i.e. BDT 90,000 or US$ 1,125 per day) for each hour of stay of rack in Rohanpur, Chapainawabganj. Bangladesh Railway has to pay part of the detention charge to Indian Railway authority depending on the delay/ extended stay of Indian wagons in Bangladesh (a Customs agent interviewed on 22 August 2017). The delay and detention charges increase cost of doing business. The imposition of restrictions in taking rack (of railway wagons) to destination stations, such as Bangabondhu Bridge West (BBW) by Bangladesh Railway on different occasions also acts as a barrier. For example, during Eid-ul-Fitr and Eid-ul-Azha, the BR imposes restrictions on some destination stations including BBW to facilitate movement of passenger trains. During these restricted periods, imported goods cannot be carried to BBW and other restricted destinations (Importers and customs agents at Rohanpur interviewed on 22 August 2017). 2.2 INFRASTRUCTURAL AND CAPACITY CONSTRAINTS IN STANDARDS AGENCIES (I) Lack of adequate BSTI offices, and capacity constraints at BSTI: Interview findings reveal that there is no BSTI office in Benapole [Newspaper clipping in Annex 3]. Absence of a BSTI office in Benapole Similarly, there is no BSTI office at the Mongla port results in increased time and costs in in Bagherhat district. obtaining BSTI certificates. It currently Key informants indicated that had there been an takes approximately 15 to 20 days to obtain office of BSTI at Mongla port, it could reduce their a certificate (from the Khulna-based BSTI time and costs of obtaining BSTI reports. Similarly, a office) and this delay affects the quality of member of the trading community in Benapole imported and exported goods.

11 Detention charge applies if imported rack cannot be rebooked with the BR within 12 hours from the time of their arrival at Rohanpur Railway station. Customs clearance (i.e. payment of duties and release order) has to be completed before rebooking of rack with the BR by importers (or their agents). 12 For simplicity of understanding, the exchange rate used throughout the Report is 1 BDT = 80 US$.

22 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports observed that the absence of a BSTI office in Benapole results in increased time and costs in obtaining BSTI certificates. It currently takes approximately 15 to 20 days to obtain a certificate (from the Khulna-based BSTI office) and this delay affects the quality of imported and exported goods. The business community also indicated that their trade suffers due to capacity constraints at the BSTI. For instance, the BSTI Chittagong office cannot issue certificates for sunflower oil, and therefore it takes 7 to 10 days to obtain the certificate from Dhaka (Interview findings); the Khulna BSTI office does not have the capacity to test tiles, hence, tiles importers have to obtain BSTI certificates for tiles from Dhaka. Moreover, the BSTI office for the entire southern region of the country is located in Khulna city (which is about 95 km away from Benapole), with increased time and costs for the trading community to collect these certificates from Khulna, this affects imports-exports through the Mongla Sea Port, and Benapole and Bhomra land ports, and can also significantly reduce the shelf life of food/ agricultural/ agro-processed products. (II) Higher costs for tests and longer time at BSTI: Interview findings suggest that the time and cost for conducting microbiological tests of agro-processed food products for export, such as juice, drinks (water fruit drinks, non-fruit drinks, energy drinks), mineral water, carbonated soft drinks) is higher (for the first test) in Dhaka BSTI than that in India. For example, it takes 10 to 21 days in BSTI, and costs BDT 11,000 or US$ 137.5 per test, while the same microbiological test in India (Calcutta and Agartola) takes only 7 days and BDT 3,000 or US$ 37.5 per test. The large number of export consignments and the limited capacity of the BSTI results in delays for the exporters (Interview with an official of an agro-processed food producer, 8 August 2017). It is to be noted that this time increases at the BSTI when a product is manufactured for the first time. In subsequent tests, the BSTI takes less time (about two weeks). The private sector expects that their competitiveness will be enhanced if the time required for testing at the BSTI can be reduced. The adoption of risk-based testing13 instead of the current practice at the BSTI of testing all consignments would be a great opportunity to improve trade facilitation between the two countries. (III) Non-acceptance of Bangladesh BSTI test report: One representative from a leading agro-processed food producer and exporter mentioned that India does not accept BSTI’s test report (commonly known as health certificate), and therefore, health certificate emerged as an NTB for Bangladeshi exports14. According to him: “In processing import documents/ declarations of our export products, such as food items/ any agro-processed items to India, Indian Customs (in particular North-East Indian Customs) located in Agartola [Akhaura-Agartola], Monu [Chatlapur-Monu], Shutarkandi [Sheula-Sutarkandi] and Daouki [Tamabil-Daouki] draws samples and sends the same to Food Safety and Standards Authority of India (FSSAI) (located in Gouhati in Assam) for testing. It takes 15 to 20 days, at times even a month, to get this test done instead of needed five days. On receipt of the report from the FSAAI, Indian Customs releases the goods from the Customs bond (warehouse). Such delay is very harmful for perishable food itemswhich has a limited shelf life. Delay in clearance of goods by Indian Customs results in deterioration in quality and reduced shelf life for Bangladesh goods. The situation

13 Application of the risk-management approach implies using a selectivity criteria for the purpose of testing import consignments so that instead of all imported consignments only a certain number of them (which could be 1 to 10% of total consignments) may be selected/ chosen. 14 It was not clear whether this was due to a federal legal requirement on the Indian side, or because different states in India apply different laws. The separate Indian NTBs study undertaken by the USAID BTFA will aim to examine that issue, among others.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 23 is, however, much better in Petrapole15 [Benapole-] Customs where it takes 5 to 7 days only “(Interviewed on 17 July 2017). In this regard, it is worth mentioning that authorities in , Bhutan, and Myanmar accept Bangladesh’s BSTI report for agro-processed items. Once health certificate from the BSTI is submitted, they do not require further health certificate for products of the same ‘Stock Keeping Unit (SKU)’16(Same respondent). (IV) Lack of a designated authority for issuing Free Sales Certificate: A member of the business community stated that there is no system and designated authority in Bangladesh to issue a Free Sale Certificate (FSC) or a Free Sale Statement (FSS). An FSC certifies that the product is fit for human consumption. This certificate is often required for exports to developed country markets of food products manufactured in Bangladesh. This is also necessary for toiletries and other first moving consumer goods and products. The FSC17 certificate is also required to legally market medical devices in the EU market. The GoB needs to designate an authority (the Health Ministry or the BSTI or the City Corporations or any other designated authority, such as the Food Safety Authority, for issuing the FSC. (V) Non-issuance of fire certificates: Importers and Customs agents when interviewed at land ports voiced another concern that relates to the issuance of certificates after a fire incident. Importers complained that the Benapole port authority does not issue certificates in the event of damage caused by fire. They commented that without a proper certificate from the port authority in Benapole regarding the fire damage, importers cannot effectively claim compensation from an insurance company and consequently have to bear financial losses. (VI) Absence of BCSIR testing facility at land ports: A majority of interviewees in Benapole mentioned that due to the lack of any testing facility of the Bangladesh Council for Science and Industrial Research (BCSIR) in Benapole, it takes time to collect test certificates from BCSIR Dhaka for agro-processed and food products. From the date of receipt of samples by the BCSIR, it takes a minimum of 3-weeks to get the test report from the BCSIR. As a result, the quality of perishable agricultural products deteriorates quickly. At times, the expiry date is reduced to two-thirds of the original expiry time. As a result, the shelf life of food/ agricultural/ agro-processed items is significantly reduced. Similar problems exist at other land ports. (VII) Duplication of tests to determine fit for human consumption: Food items imported from SAARC countries and Southeast Asia are exempted from the radioactivity test in Bangladesh if a certificate is submitted that is issued by the proper government agency of the exporting country that specifying that the items are ‘fit for human consumption’ and that there is no harmful pests/ germ in the items. However, in accordance with provisions under paragraph 16(16) to 16(25) of the Import Policy Order (IPO) 2015-18, food consignments are often sent again to the BSTI or Bangladesh Council of Scientific and Industrial research (BCSIR). This contradiction in the IPO provisions creates confusion and delay in the clearance of imported food products (e.g. rice, wheat, corn, etc.), and hampers their quick clearance. One respondent from the trade community asked for the withdrawal of the requirement in paragraph 16(16) to 16(25) of the IPO so that they can release their goods on the basis of certificates issued by the concerned authority of the exporting country.

15 Petrapole is the Indian Land Customs Stations (LCS) that corresponds to the Bangladeshi LCS of Benapole. 16 When the ingredients and packaging of goods of two different consignments is the same, then the goods are called SKU. For example, if Fruto mango drinks of a consignment is packaged in Can or Tetrapack and the Fruto mango drinks in another consignment is packaged in PET bottle, then it will be a different SKU. 17 Some importing country require both FSC and Health Certificate; FSC for the Customs department and the Health Certificate for Health department.

24 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports (VIII) Inadequate infrastructure at Plant Quarantine: A key respondent from Hortex Foundation18 observed that quarantine facilities are inadequate in most of the 26 LCSs through which vegetables are imported into Bangladesh, with quarantine test facilities/ kits, instruments and trained officials often not available. An official from the Plant Quarantine Wing under the DAE agreed that they have a shortage of manpower adequately trained in pest identification, pest risk analysis (PRA), and inspection sampling. Sampling needs to be done in accordance with international standards, such as ISPM (International Standards for Phytosanitary Measures), however quarantine officials lack the specialized training to conduct proper sampling as per ISPM (an official of the Plant Quarantine Wing at the FGD on 24 September 2017). Some quarantine laboratories lack sufficient testing accessories and chemicals. For example, the DAE Chittagong lab lacks waterbath, acitonitryne, etc. (An official from DAE Chittagong interviewed on 19 September 2017). Although the Agrabad office of the Plant Quarantine in Chittagong is equipped with necessary testing and inspection equipment, inspection tables, and microscopes, it lacks the following instrument and accessories: (a) Chemicals such as HPLC grade methanol, sodium sulfate, chloroform, chemical standard of Aflatoxin; (b) Instrument such as Universal Vibration Shaker (500 ml Volumetric Flask), blender, drier (30-200 degree Celsius), Rotary Vacuum Evaporator (500 ml), Reagent fridge19 (12 CFT), PDA detector; and (c) Glassware such as volume flask, round bottom flask, pipette stand, etc. In many LCSs, the plant quarantine offices lack capacity to conduct some tests, such as the Organochlorine and Organophosphate tests. Organochlorine pesticides (OCPs) is used in agriculture. An Organochlorine test is necessary for an assessment of Organochlorine Pesticide Residues in tomatoes20. A Maximum Residue Limit (MRL) testing facility is not available in most quarantine offices. MRL (of pesticides) tests must be conducted according to the requirements of the customer. In exporting agricultural products to the EU, exporters need to show that their products comply with the MRL, as per the Codex Alimentarius Commission which sets international standards for MRL. According to a horticultural expert, in the 26 Plant Quarantine stations in Bangladesh, there is a lack of manpower to conduct MRL tests, resulting in Bangladeshi exporters facing additional hurdles in exporting agricultural produce to the EU. (Interview with an official of the DAE on 24 July 2017). (IX) Import Permit from the Plant Quarantine Wing not issued in regions: Import Permit (IP) for import of betel leaves, onion, and flowers is not issued by the Plant Quarantine office at the Benapole Port, only from their offices in Dhaka and Chittagong. A few respondents from the trade community commented that the volume of trade in agricultural products would have seen significant increases had there been provision for issuance of quarantine IP from Benapole and other regions. One Plant Quarantine official mentioned at the FGD discussion that the Ministry of Agriculture had issued a letter permitting issue of quarantine IPs from Chittagong and Mongla ports. [Copy attached at Annex 4]

18 The Hortex Export Development Foundation, commonly known as the Hortex Foundation, has been set up to boost export earnings of the country. It was established as a company under the Ministry of Agriculture as a non-profit horticulture development and promotional agency in the private sector to facilitate market development for a wide range of value-added products. 19 This is a specialized fridge. Current quarantine office has the household fridge. They need reagent fridge with standard temperature. 20 Exposure to OCPs has been associated with human health risk of arthritis, skin disease, bone disorder, endocrine disruption, developmental abnormalities, reproduction failure, cancer, and nerve disorder. For humans, food is the major pathway for exposure to OCPs. Study on Tomatoes produced in Narayanganj found that all of the contamination levels were above the MRL proposed by the EC regulation.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 25 Similarly, respondents from Sonamasjid, Burimari, and Hili LCSs have identified the ‘issuance of IPs from Dhaka’ as a significant barrier in conducting trade in agricultural products. (See Box A below)

Box A: Obtaining Import Permit (IP) from the DAE, Dhaka is the main barrier For agricultural items, Import Permit (IP) must be obtained from the Plant Quarantine office in Dhaka, which takes 3 to 7 days. If the importer physically visits the DAE in Khamarbari, Dhaka, it takes 2 to 3 days. Letter of Credit cannot be opened without this IP. Obtaining the IP for agricultural products entails some additional costs. There are quarantine offices (office of the Deputy Director, Quarantine) in all LCSs. If IPs are issued from those offices, it will greatly relieve importers. (Respondents from Benapole, Sonamosjid, Hili and Burimari).

(X) CITES Permit for export of Agar from Dhaka: Agarwood is a unique non-timber wood product, and there are around 250-300 enterprises producing Agarwood and Agar Oil in Sujanagar of Barolekha upazilla under the Moulvibazar district. Agar is used to make different liquid products, such as fragrances, golapjal (scented water), agar bati (incense) and different types of creams. Bangladesh exports aator, agar oil and chips to Singapore, Saudi Arabia and UAE. Exporters must obtain Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) certificate from Dhaka in order to It takes around a month (even more in some export Agar (Aatar) and Agarwood. The cases) to forward the application for CITES present system of CITES certificates being certificate from the Moulvibazar DFO office issued from Dhaka is cumbersome and time- to the CCF office in Agargaon, Dhaka. The consuming. Exporters must first submit an CCF office also takes some time to process application to the Divisional Forest Officer the application. Altogether it takes about a (DFO), Moulvibazar, which is then forwarded to Chief Conservator of Forests (CCF) office in month and a half to get the CITES certificate. Dhaka (the Management Authority of CITES in Bangladesh), for issuance of CITES permit. This can take around six weeks altogether. [Specimen of the CITES certificate is attached as Annex 5] According to the President, Bangladesh Agar & Aatar Manufacturers and Exporters Association, this delay in the issuance of CITES permits (endorsing export) is a significant barrier. (Telephone Interview on 26 September 2017). This was also mentioned by a participant of the 24 September 2017 FGD. The issuing of CITES certificates from the Moulvibazar DFO office instead of the Dhaka CCF office would reduce Agar and Aatar manufacturers and exporters time and costs. (XI) Requirement of NOC from the Department of Livestock Services: According to the IPO, 2015-18 and the Feed and Animal Feed Act, 2010, importers of animal and fish feed need a licenses from the Department of Livestock Services (DLS), there is no requirement for obtaining individual consignment release orders, however the DLS requires such a release order (in its order issued on 1 July 2017) for imports through the Benapole port. It has been reported in The Daily Sun that “…animal feed worth BDT 500 million (US$ 6.25 million) are rotting at the warehouses for over a month as the importers cannot take delivery of the feed that were imported following customs law where license and NOC are not required if importers pay full tax.” This requirement, which is not based on law but created by an administrative order, has resulted in delay, increased costs, and deterioration in quality and shelf life of fish and animal feed. However, the DLS in a letter to the Commissioner of Customs explained that this measure is required to protect human and animal health.

26 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports

Figure 2.4: Daily Star Report animal feed stuff stuck at Benapole

2.3 NTBS ARISING OUT OF PROCEDURAL OBSTACLES/ HURDLES (CUSTOMS & OGAs)

(I) Main reasons for delay in Customs processing and clearance: The Study findings suggest that processing of import export clearance activities in Customs are often delayed mainly due to the following reasons: (i) frequent problems with the ASYCUDA World (AW) server; (ii) the lack of dedicated sheds for physical examination; (iii) the lack of skills (e.g. tariff classification and valuation); (iv) insufficient equipment (e.g. Pangaon Customs has no scanner); and (v) incomplete submission of declarations (e.g. lack of necessary documents with the goods declaration). While disputes over tariff classification and valuation are two important customs-related NTBs in general cases, agricultural trade does not suffer as much from classification disputes. On the other hand, frequent stoppage of the AW server was termed by key respondents as an important NTB causing delay at Customs. A number of C&F Agents indicated that this problem arises frequently due to - (a) inadequate server capacity and (b) insufficient internet speed. (A leader of Dhaka Customs Agents Association interviewed on 19 September 2017). The NBR ICT team mentioned that users’ often do not have adequate bandwidth (around 2000 users- internal and external- agents, officials) to send and receive data from the AW server, which slows down the server, resulting in data traffic congestion causing the server to close down. The suggested solution was: “Users need to have at least 1 mbps dedicated bandwidth in their PC.” (An AW ICT official in the NBR interviewed on 19 September 2017). Again, an importer/ exporter of agricultural products complained that Customs does not ask for all missing documents at one time, but rather request such documents one after another. As a result, it takes more time than usual to clear their imported products. This procedural delay at the customs point becomes a barrier for them. The lack of knowledge among traders about the import-export documentation requirements is partly responsible for this. (Discussion with a representative of a beverage company importing carrot as a raw material for juice).

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 27 Lack of any clearly specified procedures for re-exporting perishable goods is cited as another procedural barrier. A Customs official mentioned that – “There are provisions for re-export under Section 21 of the Customs Act 1969. But it is neither pragmatic nor possible to re-export, within six months, inferior quality fish/ defective fish returned by foreign buyers. In this case a certificate from the Fish Inspection and Quality Control (FIQC) is necessary. This is not possible, for once a consignment of fish is returned by buyers on the grounds of quality, it is not repairable like an industrial product. As such, although it is legally permitted, we do not allow re-export of fish which has quality problem. We issue a demand notice as these fish consignments are not exportable. Exporters consider this demand notice as an NTB”. He suggested that a separate standing order is required which delineates required procedures in such cases. (II) Delay in Customs examination and assessment: Existence of tariff dispersion and the presence of multiple tariff and duty rates on products having similar description (e.g. HS Headings 73.04, 73.05, and 73.06) create confusion among Customs officials thereby requiring close monitoring and/ or examination. For example, there is a 25 percent supplementary duty on ‘line pipes’ while there is no such duty on ‘drill pipes’. Such tariff dispersion among products of similar description causes delay in customs clearance. This delay in assessment of imported goods is another NTB. Further, there is a practice at Chittagong Custom House to scan all direct delivery containers before their departure from the port area. In addition, most of these containers are also intervened for physical examination prior-or-post-delivery. This implies that scanning of them is redundant and unnecessary. Moreover, Customs officers posted at the port delivery gates usually have a quick view/ glance of the inside of containers by opening their front-cover to verify the goods declarations, which is tantamount to physical examination and causes further delay. Assessment in Customs is also delayed due to wrongdoings, such as manipulations/ mis-declarations, by C & F Agents/ importers. A mid-level Customs official at Benapole Customs House informed the BTFA that importers/ exporters/ customs agents often submit fake BSTI certificates/ health certificates/ quarantine certificates. Detection of such fake/ doctored documents makes customs suspicious of bona fide documents and causes delay in assessment. Frequent power outages are also a major problem, causing delays in automated customs assessment and clearance processes. In Burimari, the submission of goods declarations is often delayed for 2 to 4 hours due to such electricity outages or load shedding, as the AW Server remains down for this period. On Saturdays and Thursdays, the problem becomes serious, and no declaration/ bill of entry can be registered during the power outage.

(III) Lack of adequate manpower in Customs:

The Study team heard that an acute shortage of manpower within the Customs department was a major constraint in quick Customs processing. The Customs department is said to be understaffed by about 40 percent. In some stations such as Pangaon Custom House, the shortage is even higher; i.e. the Customs department is running its operations with only 60 percent of its approved personnel in most of its stations. The situation is worse in Chittagong and Benapole Customs Houses. Table 2.3 shows that Benapole Customs House runs its business with just under 50 percent of its approved number of officials.

28 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports Table 2.3: Approved posts and current strength at Benapole Customs House Name of posts/ class of employees Sanctioned posts Currently employed Vacant posts 1st class posts 48 38 10 2nd class posts 124 77 47 3rd class posts (computer operator, Office 151 47 104 super, head assistant, sub-inspector, driver, cashier etc) Others 18 8 10 Total 341 170 171 Source: Benapole Customs House, 25 October 2017 The NBR considers manpower shortages as a major hindrance in maintaining a 24-hour service in Chittagong Customs21.

(IV) Lack of adequate space in Customs offices:

A lack of adequate space was found to be a major problem in Land Customs Stations (See Figure 2.5). Other than Benapole which is now a Custom House, Customs offices in other LCSs have to grapple with the lack of adequate/ modern office buildings and warehouses. In particular, Bhomra, Sonamosjid, and Hili Customs do not have modern offices with the required space. As such Customs officials are forced to work with limited space in a suffocating environment.

Figure 2.5 Sonamasjid Land Customs Office (V) Lack of synchronized officer hours:

While work at Customs on the Indian side of the Petrapole-Benapole border crossing starts at 11.30 AM, it starts on the Bangladesh side at 9.00 AM. Moreover, Fridays and Saturdays are the port closing days on the Bangladesh side whereas Sundays is the port closing day in India, as a result, India-bound export goods from Bangladesh need to wait for processing, and vice versa. A private sector stakeholder mentioned that the lack of synchronized hours and absence of interconnectivity between Customs, port operators, and private sector businesses have a negative impact on trade facilitation in Bangladesh. Once the export is completed, no mentionable delay happens on the Indian side, as the capacity at the Petrapole Port has increased during the last two years. Officials in Benapole Customs stated that their hours were set in line with when trucks were due to arrive from Haridaspur, India. Moreover, the BSF in India always keeps the entry-exit gate located on the Indian side closed. Therefore, even though Benapole Customs opens its office at 9.00 AM, the examination team starts their operation after 11.00 AM, as Indian trucks start to arrive after that time.

21 The Dhaka Tribune, Customs to remain open 24 hrs. at Chittagong port, 23 July 2017

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 29 (VI) Absence of LCS-based domestic transit:

The current requirement to clear goods at the land customs station, rather than at another customs clearance location, contributes to congestion at LCSs, such as at Benapole. The introduction of domestic transit would allow importers to move goods (subject to Customs conditions) to locations nearer their business centers, and reduce border congestion. This facility is recommended by the WCO, and required under the WTO TFA. The lack of an agreement on allowing Indian vehicles to carry goods to their destination in Bangladesh, and vice versa is also a contributor to border congestion, although this is under discussion as part of the Bangladesh, Bhutan, India, Nepal Motor Vehicle Agreement.

(VII) Goods are subject to multiple inspections and examinations:

Traders also complained about the recording of details of import goods (from India) separately by two agencies: Customs and Border Guard Bangladesh (BGB) on the Bangladesh side. Customs receive manifest from the carrier of imported goods while the BGB keeps records of imported consignments. According to trade, this duplication of efforts creates congestion of trucks carrying goods into Bangladesh. The study findings reveal that 100 percent imported consignments are stopped and checked by the BGB, after customs assessment and clearance at land ports. This results in significant delays in carrying imported goods from the port premises to importers’ premises. For example, around 20 types of products are regularly imported through the Bhomra LCS, including onions, fruits, wheat, oranges, grapes, pomegranates, lemons etc., and are intercepted by the BGB for rechecking. Such delays could be avoided with an effective coordination mechanism between government agencies concerned and a proper risk management system in place within the BGB based on the selectivity criteria . Again, some respondents (importers/ customs agents) observed that in Chittagong they often need to order multiple times for container keep down, especially for agricultural products; once for Customs examination, again for drawing sample for radiation, again for drawing sample for quarantine certification. They insisted these multiple inspections of the same consignment increases transaction costs and can easily be avoided by Customs coordinating with OGAs in terms of organizing the inspection and examination times. One respondent at the Benapole port mentioned that the trucks/ vans carrying imported goods from the Benapole port has to wait from 10 PM to 10 AM at the BGB-Customs jointly operated check post locally called “Bashkol”. They said if the “Bashkol” remains operative at night, it will facilitate trade. (A leader of the Benapole Truck Owners Association on 26 April 2017).

2.4 OTHER NTBS

(I) Lack of awareness among traders about regulatory requirements:

Importers are often unaware of the need to obtain Import Permits (IP) for particular agricultural products prior to opening LCs, or that they will require quarantine certificates for all agricultural products from the DAE after importation. This is also the case regarding many other regulatory requirements for OGAs. For example, few are aware that permission from the Tea Board is mandatory for imports and exports of tea. This lack of awareness of import requirements is often responsible for additional time taken in completing import formalities, resulting in increased business costs. Lack of awareness of laws, rules, procedures, standards, certifications, and packaging requirements in export destinations also act as an important barrier to agricultural exports. For example, even though some Bangladeshi exporters of agriculture products/ agro-processed products are generally aware about packaging requirements (i.e. ISPM 15) in the mainstream markets (e.g. the EU and the Middle East) and other destinations, many others are not. Some traders fail to follow packaging requirements properly due to lack of awareness and cost considerations. All wooden packaging materials, such as boxes, crates, pallets, which

30 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports are made using any unmanufactured wood products, must meet the new requirements, and be either heat treated or fumigated with methyl bromide under an officially approved program and carry the internationally recognized mark. Similarly, buyer requirements must be met, e.g. the packing size of banana for Kuwait, the UAE and Qatar is 13.5 kg Box Top 3 Ply, Bottom 5 Ply and 4-7 Color Print the Box (Source: email communication with a respondent from Hortex Foundation, 3 October 2017). These specifications of packaging vary from market to market. Bangladeshi exporters are less aware of these requirements in export destinations and less skilled in meeting those requirements (Interview findings, 27 September 2017, followed by e-mail communication on 03 October 2017).

(II) Service Barriers (Visa complexity):

Getting Indian visas is often a lengthy and cumbersome process. Bangladeshi businessmen need to submit their Indian visa application online, which often takes up to 15 days as the system constantly shows a “busy” message. After submission, another seven days is required for the visa to be issued. Many times, the applications are rejected. The complexity and delay in getting Indian visa by business people was observed as a major NTB. (One respondent from a large agro-processing products manufacturer and exporter, 17 July 2017).

(III) Occasional imposition of congestion surcharge:

Interviews with key informants at the Chittagong Sea Port revealed that operators of feeder vessels bound for Chittagong from Australia, Singapore and Colombo ports have imposed additional surcharges. For example, ANL, an Australian shipping company, which is a part of the CMA CGM Group, has imposed a Port Congestion Surcharge (PCS) of $150 per TEU for all imports into Chittagong following the heavy (ongoing) congestion at the Chittagong port. This PCS came into effect from 20 July 2017. This additional surcharge affected the trade community as imports and exports became costlier. During interviews, key respondents (importers/ exporters) also stated that increased costs arising from sudden imposition of congestion surcharge will significantly hamper their competitiveness. Their concerns were also echoed in a daily newspaper report, “Textile millers, jute spinners and shippers have expressed their concern over the imposition of additional surcharge while leaders of the country's apparel makers expressed fear of shifting work orders to other competitors.”(Monira Munni in Daily Financial Express, 7 August 2017). If imposed once, the PCS will not be treated as a NTB, as shippers were compelled to do this due to congestion at the Chittagong port; however it may turn into an NTB if port congestion becomes a regular phenomenon and the surcharge continues.

(IV) Distrust among agencies due to submission of fake certificates:

Our visit to the Benapole Port revealed that manipulated certificates submitted by a section of importers (or their agents) to clear their consignments at the Benapole customs house22 created distrust among officials and caused suspicion about the genuineness of certificates (such as BSTI certificates). This suspicion results in verification of more certificates creating delays even for consignments with genuine documents/ certificates. Frequent occurrence of similar fraudulent activity would prompt Customs authority to introduce a permanent control measure which could very well be an NTB itself23.

(V) Complexities arising from simple procedural mistakes:

22 For example, Benapole Custom House has recently detected a forged or doctored BSTI letter no 36.005.000.09.03. 3192. 2014/145(1), dated-12/07/2017. This BSTI NOC was manipulated by the importer or agent. 23 Mr. Zillul Hye Razi, a trade expert, indicated that one-off measure is not an NTB. But a control measure such as issuing an office order by Customs to fight fake BSTI certificate or manipulated quarantine certificate will be treated as an NTB (12 Aug 2017).

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 31 In the case of import of plant and plant materials, the amount imported must be within the quantity allowed in the Import Permit (IP) issued by the Plant Protection Wing. If imported goods are more than the amount mentioned in the IP, the quarantine authority will not issue the release order. Similarly, if the Phytosanitary Certificates issued by the respective government agency of the exporting country do not quote the IP number (with date) of the Plant Protection Wing, and do not state whether additional conditions of the IP has been fulfilled, the Plant Protection Wing does not issue a release order causing an additional delay in the clearance of the consignment. Delays resulting from such simple procedural mistakes are also cited by some respondents as a NTB at the Benapole Port.

(VI) Unnecessary requirements under the IPO:

The Import Policy Order (IPO), 2015-2018 requires that all commercial imports must be made on the basis of Letters of Credit (LCs). It seems that such requirement is oblivious of the fact that a large percentage of international trade transactions is currently conducted on the basis of alternative mechanisms, such as revolving vendor account, purchase order financing, invoice factoring, etc. Again, the IPO requires all imports to carry a country of origin (COO) certificate by the exporting country’s chambers of commerce. This is also cited as an unnecessary provision by many respondents Other than goods imported under the preferential agreements of SAFTA and APTA, there seems to be no use of COO certificates for goods of non-preferential import.

32 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports SECTION 3: STEPS TAKEN TO IMPROVE THE SITUATION While the previous section (Section 2) identified the NTBs that inhibit Bangladesh’s trade in agricultural products, this section offers an insight on the steps taken by relevant government agencies, including Customs and OGAs, to remove such obstacles so as to improve trade processing and facilitate trade. Similar to Section 2, findings in this section are based on both primary and secondary data that include input from relevant stakeholders.

3.1 STEPS TAKEN BY CUSTOMS

Customs assessment and clearance processes have undergone significant changes over the years with the introduction of ASYCUDA (Automated System for Customs Data) in the mid-1990s, culminating with the implementation of ASYCUDA World (AW) in the Customs Houses in July 2013. Customs has completed implementation of ASYCUDA World in six Customs Houses, nine LCSs, nine off-docks (also known as private ICDs), and the Hazrat Shah Amanat Airport Airfreight unit in Chittagong. AW in Bangladesh now covers more than 90% of its international trade in terms of customs processing. By reducing human interventions, the automated processing has improved Customs’ assessments and clearances. Since the introduction of AW, submission of declarations and the application of selectivity criteria using AW selectivity module became easier. The AW selectivity module is now capable of classifying import declarations into red and yellow using the software; however the Study observed reluctance in Customs offices to use this facility. Investigation revealed that Customs is yet to apply the selectivity module for risk management purposes. The NBR has undertaken a plan to establish a central risk management system using automated selectivity with assistance from development partners including USAID24, which once implemented will greatly reduce the number of physical and documentary examinations by Customs of import consignments. Automation within the banking system in Bangladesh over the last decade has recently enabled the AW system in Customs to receive LC-related information electronically. Previously, checking and verification of LC-related information was not possible online and a Customs officer had to physically visit the concerned bank for LC verification. This manual verification of LC and the consequent delay was removed with the establishment of connectivity of LC (e-LC) with the AW system from 25 January 2015 under a joint initiative of the Bangladesh Bank and the NBR. The e-LC enabled Customs officials to verify the LCs submitted by importers with their respective banks online. The NBR also took initiative to implement e-EXP through the use of the AW system. Under the recently implemented e-EXP system, the Bangladesh Bank regularly updates batches of EXP data. By keying in 6-digit EXP number in box no. 44 of the electronic Bill of Exports, Customs can now verify the information of EXP with the Bill of Export information and process the Bills of Exports. (The NBR letter no. 08.01.0000.091.01.001.16 (part 3)/1080, dated 07/12/2016). In order to address the acute shortage of officers, the NBR has recruited 1,321 Assistant Revenue Officers (ARO) since 2011. Year-wise recruitment at the level of ARO is shown in Table 3.1. This fresh recruitment of AROs expedited the execution of tasks/ activities in Customs offices. The NBR has also recruited new staff in other lower level positions. Table 3.1: Recent recruitment at the ARO level (directly recruited by the Public Service Commission) Year Assistant Revenue Officers 2011 106 2014 673 2015 59

24 USAID assists the NBR through its BTFA project.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 33 2016 63 2017 420 (Source: The NBR) The Study also witnessed a resolve in Customs to help remove localized problems. An example from Benapole may be cited here; in the case of imported yarns through Benapole Port, there was no facility to measure the count (decitex)25, resulting in delays at the port. In order to solve the problem, Customs and the textile importers (such as Bangladesh Textile Mills Association (BTMA)) worked together, with the BTMA providing a Yarn Reel Tester (Model YG086A) and Electronic Balance to the Customs authority of Benapole. Experts from the BTMA also trained concerned Customs officials on how to use the machines. (Interview with a Customs official). Accordingly, the long-standing problem of determining the count of yarns was resolved. 3.2 STEPS TAKEN BY THE SHIPPING MINISTRY The Ministry of Shipping and its affiliated organizations have undertaken many initiatives to address issues related to inadequate infrastructure constraints at different land and sea ports affecting international trade. Noticeable activities undertaken by the the Chittagong Port Authority (CPA) and the Bangladesh Land Port Authority (BLPA) are highlighted here. The CPA, operator of the largest sea port in Bangladesh, has taken the construction of new jetties. Two terminals, one in Patenga and the other in Laldia, are being built to enhance the capacity of the Chittagong Port. The CPA has also completed formalities and has sent a tender evaluation report to the Ministry of Shipping to build a 220 meter long “Service jetty” upstream of the port jetty-1 at an estimated cost of BDT 883.4 million (US$ 11.04 million) (to be funded from the CPA’s own fund). Once built, it is envisaged that this will improve the operations and efficiency of the Chittagong port (Interview with the Chief Planning Officer, CPA on 24 October 2017). However, the President of the Chittagong Chamber of Commerce and Industry commented that these initiatives may not be enough, considering the volume of trade through the Chittagong Port and noting that a number of additional terminals were needed to be constructed by the CPA to ease the situation. The senior vice president of Bangladesh Steamer Agents Association, Mr. Syed Mohammad Arif, was of the opinion that 5 -7 additional large sized jetties were needed to cope with the increasing volume of imports. (The Daily Prothom Alo, 19 September 2017). The CPA also introduced the Vessel Traffic Management Information System (VTMIS) to enhance maritime safety as well as to reduce the threat of piracy and theft in anchorage areas. The VTMIS provides surveillance for vessels in the port's territory, and in case of any incident, this enables rapid Coast Guard intervention. Further, the CPA has procured and installed a Mobile Vehicle Scanner to bring efficiency in its activities. The port of Chittagong also procured an “Oil reception vessel” (in 2005) to stop spreading of spilled oil (source: the CPA). In order to increase the capacity of the port, the CPA has procured 171 handling pieces of equipment of different types during the last three years. Table 3.2 below provides details of the various types of equipment procured by the CPA during FY 2016-2017. Table 3.2: Equipment procured by Chittagong Port Authority in 2016-17 Sl. No Categories of Equipment Quantity 1 Rubber-tired Gantry Crane (4o tons) 3 2 Straddle Carrier High (40 Tons) 4 3 Loaded Container Handling Reach Stacker (45 tons) 4

25 Measuring the count is important to Customs officers, as yarns with different counts attract different rates of customs duty.

34 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 4 Empty Container Handling Forklift Truck 4 5 Container Mover 5 6 Battery-operated Forklift (1.5 tons) Truck 4 7 Tally Handler 4 8 Log Handler 1 9 Draw-Bar Type Trailer (6 tons) 15 10 Tractors (25 tons) 6 11 Forklift Truck (5 tons) 20 12 Pneumatic Conveyor 1

(Source: Collected from the CPA) The CPA also entered into a contract with Shanghai Zhenhua Heavy Industry Co., Ltd. (a Chinese company) to buy six gantry cranes for BDT 3449.20 million (US$ 43.11 million) for the New Mooring Container Terminal26. Further, the port authority also constructed an overflow yard with storage capacity of 1500 empty containers (The Daily Sun, 11 August 2016). The CPA has also taken necessary steps to procure more gantry cranes, mobile cranes, forklift trucks, variable reach trucks, straddle carriers and mobile harbor cranes etc. for the port. Table 3.3 below highlights various pieces of equipment that are in the pipeline for procurement by the CPA in FY 2017-18. Table 3.3: Equipment that will be procured by the CPA in FY 2017-18

The Study found that in order to improve the infrastructure at the Benapole and Burimari land ports, the SASEC (South Asia Sub-regional Economic Cooperation) Road Connectivity Project, involving a cost of BDT 1680.37 million (US$ 21 million), is currently being implemented by the BLPA [Contribution to fund:

26 D. Barua, “Chittagong port buys six cranes at BDT 3440 million (US$ 43 million)”, The Daily Star, 16 October 2017.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 35 GoB: 14 percent; the Asian Development Bank- 86 percent]. The completion date for the project is December 2017. Two large covered areas are being built, by demolishing eight unusable old areas at the Benapole Port. The floor of the transshipment yard and the truck terminal yard has been paved with reinforced concrete. In order to ease the congestion of trucks in Benapole, the BLPA has sent a Development Project Proforma (DPP) of the ‘Cargo Vehicle Terminal Construction’ project [cost BDT 1898.3 million or US$ 23.73 million] to the Ministry of Shipping on 09 July 2017, which awaits approval from the Government. The BLPA has sent another DPP involving an estimated cost of Tk. 13000 million (US$ 162.5 million) to construct the truck terminal and heavy stack yard at the Benapole port (Telephone discussion with Mr. Hasan Ali, Superintendent Engineer, BLPA on 12 December 2017), which also awaits Government approval. Further, the BLPA has undertaken a project titled ‘Bangladesh Regional Connectivity Project: Development of Sheola, Bhomra & Ramgarh land ports’ and another project titled ‘security and CCTV at Benapole port’ jointly funded by the World Bank and the GoB for the development of Sheola, Bhomra and Ramgarh land ports. The DPP for the project at a revised costs of BDT 6930 million (US$ 86.63 million) (original cost was BDT 5965.8 million (US$ 74.57 million) was approved by the Executive Committee of the National Economic Council (ECNEC) on 01 August 2017. A new link road was built at the Benapole port to link Indian ICP, and it is now being expanded to carry import-export goods. After its completion, the existing link road will be used for immigration purposes. Automobile chassis is currently being imported through the new link road (it is not yet fully operational) (Interviewees from the BLPA office in Benapole). Furthermore, the BLPA has completed a concreted area of 3,500 square meters and a transshipment shed of 2,325 square meters at the Burimari land port. It has also procured 11 forklifts (having a capacity of 2.5-10 tons each). The Tamabil Land Port Development Project is being carried out at a cost of BDT 692.6 million (US$ 8.66 million) (July 2014-June 2018). The DPP for another project titled ‘Construction of parking yard, open stack yard, heavy stack yard, office buildings, and other infrastructure facilities’ was approved by the Government, and approximately 75 percent of the work under the project have already been completed. Completed activities include construction of the warehouse having a storage capacity of 400 metric tons, 2 weighbridges (each having a capacity of 100 metric tons), one parking yard and one stack yard (for coal and stones/ boulders). The port has become partially operational since 27 October 2017. Remaining activities under the project will be completed by 30 June 2018. (Mr. Md Hasan Ali, Superintendent Engineer, BLPA, in a telephone interview on 12 December 2017). A link road was constructed with India to facilitate movement of traded goods. In addition, the BLPA undertook initiatives for the development of the Belonia Land port, Dhanua-Kamalpur land port, Tamabil land port and Sonahat land port (under Bhurungamari upazilla of Kurigram district). (Source: Interview with an official of the BLPA on 21 September 2017). The Study also learnt that the BLPA is in the process of acquiring new lands at the Benapole port to increase the port’s loading, unloading, and transit space. 3.3 STEPS TAKEN BY THE MINISTRY OF AGRICULTURE The Ministry of Agriculture and the Department of Agriculture Extension (DAE), one of its affiliated organizations, have undertaken several initiatives to address the issues of capacity constraints at the Plant Quarantine Wing, some of which are highlighted below. The Plant Quarantine Department has procured necessary inspection equipment, microscope, inspection table (procured under Phytosanitary project), Gas Chromatography Mass Spectrometer (GCMS), Injector and High Performance Liquid Chromatography (HPLC) during the last 4-5 years. The HPLC is used to test whether Aflatoxin and Euracic acid (in food items made of flour/wheat, such as biscuits, etc.) is within limits set by the EU. The Quarantine office located in Chittagong can conduct necessary tests and inspections, and issue the release order within a day (except tests that require more time, such as germination tests) [A respondent from the Plant Quarantine Office in Chittagong interviewed on19 September 2017). The shortage of three-phase electricity supply at the DAE office in Chittagong has also been resolved.

36 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports Further, a packing center was built in Dhaka’s Shyampur area by the DAE. The center entailed a cost of BDT 1599.90 million (US$ 19.99 million) under the project titled “Phytosanitary Capacity Strengthening Project”, fully funded by the GoB. This new facility has strengthened the country's phytosanitary capacity so that the exit of pests and diseases through agricultural products is obstructed. The packing center went into operation in May 2017, and has cooling, sorting, grading, inspection, and packaging facilities for the fresh produce. Six new office buildings and seven post-entry quarantine stations (in limited scale) have been established in locations, such as Mongla, Chittagong, Sonamosjid, Hili, Burimari, and Nurerbagh (Gazipur). Furthermore, the Import Permit Regime of the Plant Quarantine Wing is being automated (A respondent from DAE). On implementation, the IP system of the DAE will be able to connect with any National Single Window System implemented by the GoB.

3.4 STEPS TAKEN BY THE BSTI

The Bangladesh Standards and Testing Institution (BSTI) has also significantly streamlined and automated its operations. The Certification of Marks (CM) system of the BSTI has been automated, and a software program by Synesis IT has been installed with the assistance of World Bank Group in order to issue CMs online. (Interview with a BSTI official on 26 July 2017). However, streamlining the operations at the Dhaka office and modernizing its procedures will not be enough. As illustrated in the previous section (Section 2) of this Study the capacity constraints at BSTI and the lack of adequate facilities in field offices still have a significant effect on trade. Therefore, the BSTI needs to take immediate steps to streamline the operations and modernize procedures of various field offices, and also to establish more field offices at appropriate places (e.g. at Benapole).

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 37 SECTION 4: CONCLUSIONS AND RECOMMENDATIONS

Limiting its focus to NTBs, procedural or otherwise, that affect clearance and processing at-the-borders and behind-the-borders, the Study provided an in-depth analysis of NTBs in Bangladesh that inhibits the country’s agricultural imports and exports, and contributes to delays and increased costs in trade in vegetables, agricultural and agro-processed products and foods. It also provided an examination of the initiatives undertaken by relevant government agencies aimed at removing or reducing some of those barriers or hurdles.

4.1 NTBS THAT AFFECT AGRICULTURAL TRADE

The Study found that there are indeed a large number of procedural obstacles that originate from inefficiencies in trade and Customs processing systems. In addition, there are also inefficiencies in standards and certification agencies, such as the BSTI, Plant Quarantine, etc., that contribute to delays in ensuring standards and health and food safety obligations in relation to agricultural products in Bangladesh. A summarized version of the major findings of the Study, as outlined in details in Section 2, is produced below.

1. Inadequate Infrastructure and Capacity Constraints at Ports:

The Study found that capacity constraints and lack of operational efficiency at the Chittagong Port act as NTBs for traders, including those involved in agricultural trade. This is one of the main reasons for the recent severe congestion of cargo vessels and containers at the Chittagong Port. The port also lacks necessary equipment, such as gantry cranes and container handling equipment. The delay in transshipment of goods to private ICDs from the Chittagong Port has also been viewed as an NTB. While the standard time for such transshipment from Chittagong port to private ICDs is 24 hours, it actually takes 4 to 5 days, and in some cases even 10 days. At land ports, there is inadequate storage capacity, which forces importers of vegetables and agricultural products to take delivery of their cargoes on a truck-to-truck basis. They also do not have cool chain facilities. Most of the land ports also suffer from the lack of equipment and absence of open yards. The lack of separate roads for entry-exit of trucks and the existence of narrow entry-exit passage at most land ports also affect agricultural imports and exports. Most land ports suffer from capacity constraints, though Benapole being the largest LCS suffers less in terms of capacity. Lack of BR engines at Rohanpur and other railway LCSs often cause delays for the carriage of imported goods (racks) from railway LCSs to different destinations within Bangladesh. Lack of cold storage, cool-chain facilities, and LCL sheds inhibits exports of vegetables and other agro- processed products and foods at the HSIA. In particular, the cargo handling situation is very unsatisfactory due to the shortage of ground handling staff in the cargo village at the HSIA and lack of required equipment and scanning machines. Careless handling of export-bound agricultural products at the HSIA is another barrier to trade.

II. Infrastructural and Capacity Constraints in Standards Agencies:

The Study found that the lack of BSTI offices in required places is a major constraint to facilitate clearance of mainly imported goods that require BSTI certifications. For example, the BSTI does not have any office in Benapole and Mongla. The absence of a BSTI office in LCSs results in increased time and costs in obtaining BSTI certificates. Trade also suffers due to the lack of capacity constraints at BSTI, which does not have adequate capacity to test agro-processed products. For example, the BSTI Chittagong office cannot issue certificate for sunflower oil, and the BSTI Khulna office does not have the capacity to test tiles. For these products, importers have to obtain BSTI certificates from Dhaka. Again, higher costs of conducting tests, especially the microbiological tests, for exports of agro-processed products, such as juice, fruit drinks, energy

38 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports drinks, mineral water, soft drinks etc., and the time the BSTI takes to conduct tests negatively impact trade by enhancing trade transaction costs. Inadequate infrastructure, such as lack of testing equipment, accessories and chemicals, as well as the dearth of trained manpower in the Plant Quarantine Wing of the DAE, is an additional NTB that creates disadvantages for exporters and importers of agricultural products. In many LCSs, the Plant Quarantine offices lack capacity to conduct some tests, such as the Organochlorine and Organophosphate tests. Again, MRL testing facility is not available in most of the quarantine offices. Importers of plant and plant parts face delay as the Import Permit is not issued from regional offices, and they need to travel to the Plant Quarantine office in Dhaka to get the permit. The significant delay in getting a CITES certificate to export agar and aatar is a major problem for the producers/ exporters of agar and aatar. Requirement of NoC from the Department of Livestock Services for clearance of animal feeds is another barrier, since it is not mandated by the Import Policy Order, 2015- 18. Lack of a designated authority for issuing a Free Sales Certificate, non-issuance of a fire certificate in case of fire, absence of a radiation testing facility at land ports, and duplication of tests to determine fit for human consumption are some of the other examples of infrastructural and capacity constraints that could be treated as NTBs and affect Bangladesh’s international trade.

III. NTBs Arising Out of Procedural Obstacles (Customs and OGAs):

The Study findings suggest that processing of import export clearance activities in Customs are often delayed mainly due to the following reasons: (v) frequent problems with the ASYCUDA World server due mostly to internet connectivity issues; (vi) the lack of dedicated sheds for physical examination; (vii) the lack of skills (e.g. tariff classification and valuation); and (viii) the lack of equipment (e.g. Pangaon Customs has no scanner) and incomplete submission of declaration (e.g. lack of necessary documents with the goods declaration). Despite significant improvements made by the NBR in assessment and clearance through automation, there are often delays in Customs assessments and examinations, mainly due to the lack of risk management in the selection process, resulting in high rates of intervention. The practice at Chittagong of scanning all direct delivery containers before their departure from the port area was viewed as unnecessary, since most of them are also intervened for physical examination prior-or-post-delivery. A related issue is the existence of tariff dispersion and the presence of multiple tariffs and duty rates on products having similar descriptions (e.g. HS Headings 73.04, 73.05, and 73.06). , which creates a perception of risk to customs, such as manipulations/ mis-declarations by customs agents/ importers. Frequent power outages, especially in LCSs such as Burimari, also create a major problem, as these stations do not have adequate back-up electricity generation, thus causing delays in automated Customs assessment and clearance processes. The Study team heard that an acute shortage of manpower within the Customs department was a major constraint in quick Customs processing. The Customs department is understaffed by about 40 percent, as it is running its operations with only 60 percent of its approved manpower position in most of its stations. In some stations such as Pangaon customs station, the shortage is even higher. A lack of adequate space was said to be a major problem in LCSs, other than Benapole which is now a Custom House. Customs offices in all other LCSs, particularly Bhomra, Sonamosjid, and Hili, suffer from a lack of space, adequate modern office buildings and warehouses.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 39 The lack of synchronized office hours between Indian and Bangladesh Customs creates delays and traffic congestion for trucks carrying import and export goods. This is a significant problem, as the delay results in time lost and damages to cargo resulting in increased costs, especially for perishable agriculture products. The current requirement to clear goods at the border, rather than at another customs clearance locations, also contributes to congestion. The introduction of domestic transit would allow importers to move goods (subject to Customs conditions) to locations nearer their business centers, and reduce border congestion. This facility is recommended by the WCO, and required under the WTO TFA. An additional problem at border crossing points is multiple inspections and examinations by different government agencies, the absence of a proper risk management system in the examination processes among different agencies, and duplication of activities by different agencies

IV. Other NTBs:

The Study also found that a lack of awareness among traders of the regulatory requirements, laws, rules, procedures, standards, certifications, and packaging requirements in export destinations, act as an important barrier to agricultural exports. In the case of imports, the trading community, at times, submits incomplete declarations due to lack of knowledge of documentary requirements, and suffer from the subsequent delays. Distrust among agencies, due to the submission of fake certificates at land ports was also viewed as a problem. The suspicion results in increased verifications, creating delays even for consignments with genuine documents/ certificates. There are also unnecessary requirements under the IPO, such as requiring letters of credit for all commercial imports including those in agricultural products, when a large percentage of international trade is currently conducted on the basis of alternative mechanisms. The delay in obtaining business visas for India is identified as another major barrier.

4.2 STEPS TAKEN TO IMPROVE THE SITUATION

The Study observed that government agencies, including Customs and OGAs, recognized that there are NTBs that inhibit Bangladesh’s trade in agricultural products, and undertook various steps in order to remove such obstacles. This is reflective of the agencies’ sincere efforts to improve trade processing and facilitate trade. Customs assessment and clearance processes have undergone significant changes over the years with the introduction of ASYCUDA in the mid-1990s, culminating with the implementation of ASYCUDA World (AW) in the Customs Houses in July 2013. Since the introduction of web based AW, the submission of declarations has become easier. The recent establishment of connectivity between the LC system (e-LC), and the AW system (from 25 January 2015, under a joint initiative of the Bangladesh Bank and the NBR) has enabled Customs officials to verify the LCs submitted by importers with their respective banks online. The NBR also took an initiative to implement ‘e-EXP’27 through the use of AW system. In order to address the acute shortage of officers, the NBR has recruited 1,321 AROs since 2011, as well staff/ employees in lower level positions. The Ministry of Shipping and its affiliated organizations have undertaken many initiatives to address issues related to inadequate infrastructural constraints at different land and sea ports that affect international trade. For example, the CPA has taken the initiative to construct new jetties. Further, it has procured and installed a Mobile Vehicle Scanner to help meet demand for non-intrusive examinations. In order to increase the capacity of the port, the CPA has procured 171 pieces of cargo handling equipment of different types

27 The EXP certificate refers to the document issued by a Bangladesh-bank authorized dealer (scheduled banks) that reports the realization of proceeds from a particular export operation.

40 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports during the last three years. It has also taken steps to procure additional gantry cranes, mobile cranes, forklift trucks, variable reach trucks, straddle carriers, mobile harbor cranes, etc. for the port. In the case of initiatives undertaken by the BLPA, the Study found that in order to improve the infrastructure at the Benapole and Burimari land ports, the SASEC Road Connectivity Project is currently being implemented. Other on-going projects of the BLPA include- the ‘Bangladesh Regional Connectivity Project: Development of Sheola, Bhomra, and Ramgarh land ports’, and the ‘Security and CCTV at Benapole port’. Furthermore, the BLPA has concreted 3,500 square meters of land, constructed a 2,325 square meters transshipment shed at the Burimari land port, and procured 11 forklifts (having a capacity of 2.5-10 tons each). The Tamabil Land Port Development Project is being carried out with 75 percent physical progress made so far. In addition, the BLPA undertook initiatives for the development of the Belonia Land port, Dhanua-Kamalpur land port, Tamabil land port and Sonahat land port (under Bhurunggamari upazilla of Kurigram district). The Study also learned that the BLPA is in the process of acquiring new lands at the Benapole port to further increase the port’s capacity. The Ministry of Agriculture and the DAE have undertaken several initiatives to address the issues of capacity constraints at the Plant Quarantine Wing. For example, the Plant Quarantine Department has procured inspection equipment, a microscope, inspection table, GCMS, injector and HPLC during the last 4-5 years. The Quarantine office located in Chittagong can now conduct necessary tests and inspections, as well as issue the release order within a day (except tests that require more time, such as germination test). Further, a packing center was built in Dhaka’s Shyampur area by the DAE. The new facility went into operation in May 2017, strengthening the country's phytosanitary capacity. Six new office buildings and seven post-entry quarantine stations (in limited scale) have been established in locations, such as Mongla, Chittagong, Sonamosjid, Hili, Burimari, and Nurerbagh (Gazipur). The Bangladesh Standards and Testing Institution (BSTI) has significantly streamlined and automated its operations. The Certification of Marks (CM) system of the BSTI has been automated, and a software program by Synesis IT has been installed with the assistance of World Bank Group to issue CMs on-line.

4.3 RECOMMENDATIONS

In order to overcome infrastructural and capacity constraints at ports and in standards agencies (e.g. plant quarantine, BSTI, and BCSIR), remove or reduce procedural obstacles in Customs and other government agencies, and address other non-tariff barriers related to trade in agricultural products, a number of activities need to be undertaken. The followings are some of the proposed activities, which are divided into short, medium and long-term considering the likelihood of time to be taken for their implementation:

I. Short term priorities:

1. To enhance the performance of the Bhomra land port, the local port authority under the BLPA needs to activate the port sheds/ warehouses28 (it has 2 warehouses) by taking warehouse keeper license from the Customs authority, and allowing importers to store their goods. Currently, the port authority does not allow importers to use them, as it is yet to obtain the warehouse keeping license. In the absence of warehousing, import consignments currently enter the Bhomra LCS on advance payment of duties and taxes. It is, therefore, imperative to allow storage of goods at the port sheds/warehouses at Bhomra port prior to their clearance on payment of duties and taxes. 2. The current placement of the weighbridge at Benapole is not suitable for trade, as it is located deep inside the truck terminal (about 200 meters inside from the entry point). Therefore, it must be moved

28 Here, the term ‘warehouse’ refers not to the bonded warehouse that relates to a suspensive duty regime, but to the temporary warehouse where imported or exported goods are temporarily stored before their customs clearance for import or export respectively.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 41 to the planned (new) truck terminal to be constructed on the one acre of land acquired for this purpose. 3. The unnecessary practice at Chittagong of scanning all direct delivery containers before their departure from the port area needs to be reviewed, as most of these containers are also intervened for physical examination prior-or-post-delivery. 4. In order to reduce the frequency of testing, the BSTI must consider the adoption of risk-based testing. This will not only address the issue of higher costs for tests but also reduce the clearance time by reducing the number of consignments subject to testing, and will therefore be an important trade facilitation measure. 5. For the same reason mentioned in paragraph (3) above, the Plant Quarantine Wing under the DAE must consider adopting the risk-based inspection processes in selecting imported agricultural and plant- based consignments to ensure the fulfilment of quarantine requirements. 6. The Government should consider establishing a dedicated traffic control unit at Benapole. As the Benapole-Jessore road remains occupied with trucks in a haphazard manner creating a serious traffic jam, a dedicated traffic unit with adequate police personnel will significantly improve the traffic situation at Benapole. 7. The Government should consider allowing the issuance of the CITES certificates for agar agar (aator) products regionally, from Moulvibazar. Currently, exporters of agar, aator, agarwood and agar-oil need to wait more than a month to obtain a CITES certificate from the Chief Conservator of Forest office in Dhaka.

II. Medium term priorities:

1. The port operator or the NBR should install a digital weighing machine/ bridge at Bhomra LCS, at the point of entry. In addition, a mechanized system for loading and unloading should be introduced to avoid delay and reduce costs. 2. The NBR needs to improve the Customs laboratory at the Benapole Custom House. The lab, established about 2 years ago, is still non-functional, with only one chemist, who cannot cover all areas. It requires improvements including, the necessary testing equipment and the qualified manpower to operate the laboratory effectively. 3. The NBR has to consider activating the currently non-functional LCSs, especially at those places that assumed greater relevance as trade routes in recent years. This will assist traders in avoiding the current congestions in specific locations, such as Benapole and Bhomra. 4. The Government should consider moving the Khulna Plant Quarantine office inside or near the Mongla port to facilitate quick clearance of import and export consignments of agricultural products. The plant is currently located in Khulna city, 50 kilometers away from the port of Mongla. 5. In order to promote exports of food and other agricultural items, an authority needs to be designated to issue Free Sales Certificates. The Ministry of Health, the BSTI or any other authority may be designated to issue the FSCs. Detailed procedures for issuing such certificates should also be developed and published. 6. The Government needs to consider introducing the land customs station-based domestic transit system, as the current requirement to clear goods at the border, rather than at another customs clearance locations, contributes to congestion. The introduction of domestic transit would allow importers to move goods (subject to Customs conditions) to locations nearer their business centers, and reduce border congestion. 7. The Indian Embassy in Bangladesh should consider further simplifying the Indian visa issuance procedure for Bangladeshi business community, as it would ease inter country trade. This would require a constructive dialogue between two governments.

42 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports III. Long term priorities:

1. As part of the future National Single Window concept, the Government should require border agencies to develop a Coordinated Border Management approach (as recommended by the WCO) with defined roles, responsibilities, procedures, coordinated examinations, shared approaches to risk/ selectivity and shared facilities such as laboratories. 2. Port operations at land ports, especially at Benapole and Bhomra, need to be automated. Currently, land port activities at Benapole and Bhomra are conducted manually. Therefore, even though the Customs operations are automated, port users do not enjoy the full benefits of such automation, as it is not extended to land port operations. Users (e.g. importers/ exporters, customs agents) asked for automation of the Benapole and Bhomra ports for greater transparency and facilitation of trade. 3. The Government need to increase and improve quickly the efficiency and capacity of the Chittagong Port. To that end, new jetties, terminals need to be constructed. Equipment, such as gantry cranes, fork lifts, etc., need to be procured to ensure seamless operation at the port. The port’s turnaround time also need to be significantly reduced (from 7-10 days’ to 1-2 days) through development of physical infrastructure and enhancement of the efficiency of its staff. A committee, supported by Port specialist advisors, should be constituted to examine which vital components of the Strategic Master Plan for the Chittagong Port (by ADB) 2015 are unimplemented, and activities/plans need to be completed on a priority basis (with necessary changes where necessary). 4. The Government has to consider facilitating the private sector in establishing and operating cold storage and cool-chain facilities at least at the HSIA and the Benapole Port. This will be of great assistance to exporters of vegetables, fruits and flowers. A key informant from the Benapole Port urged for a ‘sandwich-type’ cold room at Benapole29. 5. The BSTI should consider setting up a testing lab at Benapole. Currently, it takes at least a month to get the BSTI report/ certificate from the BSTI Khulna office after the collection of samples. Further, the BSTI should be required to adopt a risk based approach to the sampling/ testing of imported goods. 6. For the same reason mentioned in paragraph (5) above, the BCSIR needs to consider setting up a testing facility at the Benapole port in order to facilitate quick clearance of agro-processed and food products that require tests from the BCSIR, as an alternative to BSTI. 7. The Government and private sector port operators must create provisions for modern office complexes at land ports, which provide suitable space for necessary stakeholders. For example, Bhomra, Sonamasjid, and Hili Customs do not have adequate space to run its activities smoothly, and operate their activities from cramped offices; the Customs office at Bhomra is often inundated during heavy rainfall, causing damage to important official documents. Modern customs offices at those ports will enable the implementation of automation and facilitate the smooth operation of customs processes. The concreting of the Sonamasjid port premises is badly needed to facilitate port operations. 8. The construction of a deep-sea port in Bangladesh, whether at Paira in Patuakhali district or Sonadia in Coxes Bazar district, is an urgent requirement in order to cater to the growing needs of trade including facilitation of the entry of mother vessels, and reduce the time and costs of transportation.

29 According to Wikipedia, a sandwich panel is an “structure made of three layers: a low-density core, and a thin skin- layer bonded to each side”. These are popularly used in cold storage facilities.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 43

APPENDICES: Annex1: Questionnaires

Annex I.I: Questionnaire for Importers and Exporters of Agricultural Products and/or Agro-Processed Foods)

Name of Respondent (Optional): 1. What is your role in agricultural trade?

Import Export Both

2. What are the items that you import/export?

a.

b.

c.

3. * What are the five most burdensome regulations/procedural obstacles you face while carrying out the export or import processing of agricultural products and/or agro-processed foods? * Please rank them on a scale of 5 to 1, with 5 being the most burdensome, and 1 being the least. * Please also elaborate how these NTBs are burdensome for you?

(5) ------

Elaborate:

(4) ------

Elaborate:

(3) ------Elaborate:

(2) ------

Elaborate:

(1) ------Elaborate:

44 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports

4. Do you generally face any or more of the following obstacles/challenges at Customs while carrying out your import or export processes? (Tick if yes):

Obstacle/Challenge faced Are You Describe the State of Progress Over the Last 3 Years? at Customs/border Affected by (Please Tick the Appropriate Box) This? (Tick Yes Improved Remained the Deteriorated or No) Same Inconsistent/arbitrary Yes / No behavior of officials with regard to: 1. Classification 2. Valuation etc. Complex clearance Yes / No process at Customs Double/multiple physical Yes / No inspection/checks by Customs/other agencies at checkpoints Multiple documentation Yes / No requirements at Customs/Non-acceptance of copy documents Lack of cool chain/cold Yes / No storage facility for export goods in ports Lack of adequate Yes / No procedures for imported perishable goods Inadequate border Yes / No infrastructure Lack of access to trade Yes / No information/ No customs enquiry point Lack of synchronized Yes / No office timing at cross- border customs offices (e.g. between India and Bangladesh) Lack of integrated check Yes / No post (ICP)/ Lack of coordinated border management Inadequate road access to Yes / No land ports Presence of para-tariffs Yes/No

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 45

5. Do you face any problem in completing quarantine/phytosanitary/fumigation procedures for your import/export consignments of vegetables/fruits from the Department of Agricultural Extension (DAE)? Is there any capacity constraints at its Plant Quarantine Wing?

Yes No

Please elaborate what problems you face? Or, what are the capacity constraints? How the situation can be improved?

7. Do you face any problem in terms of completing radiation testing procedure for your import consignments of agro-food products from the Atomic Energy Commission (AEC)? Is there any capacity constraints at the AEC?

Yes No

Please elaborate what problems you face? Or, what are the capacity constraints? How can the situation be improved?

8. Do you face any problem in getting health/safety/standards certificates from Bangladesh Standards and Testing Institute (BSTI)? Is there any capacity constraints at the BSTI?

Yes No

Please elaborate what problems you face? Or, what are the capacity constraints? How the situation can be improved?

9. Do you think there are any unnecessary obstacles related to import/export of your agricultural products that relate to other agencies (e.g. Ministry of Commerce, Export Promotion Bureau etc.)? Please elaborate.

Thanks very much for your cooperation.

46 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports Annex I.II: Questionnaire for Chamber Bodies & Trade Associations

Name & Designation of Respondent (Optional): Name of Chamber Body/Trade Association:

1. What are the agricultural products and/or agro-processed food products that your association members import or export?

a.

b.

c.

d.

2. * What are the five most burdensome regulations/procedural obstacles your members face while carrying out the export or import processing of agricultural products and/or agro-processed foods? * Please rank them on a scale of 5 to 1, with 5 being the most burdensome, and 1 being the least. * Please also elaborate how these NTBs are burdensome.

(5) ------

Elaborate:

(4) ------

Elaborate:

(3) ------Elaborate:

(2) ------

Elaborate:

(1) ------

Elaborate:

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 47 3. (a) Do your members raise any complaint about obstacles/challenges they face at Customs or the port authority while carrying out their import or export processes?

Yes No

Please Elaborate.

(b) Have you approached the NBR or relevant government/border agency(ies) to resolve or remove or improve upon those obstacles/challenges?

Yes No

(c) What was the outcome of such initiatives? Please elaborate.

(d) How can the situation be improved? Please elaborate.

4. Is there any capacity constraints at the Department of Agricultural Extension and Plant Quarantine Wing in conducting quarantine/phytosanitary/fumigation procedures related to import/export of vegetables/fruits?

Yes No

Please elaborate on the capacity constraints? How the situation can be improved?

5. Is there any capacity constraints at the Atomic Energy Commission (AEC) in conducting radiation testing procedure related to import of agro-food products?

Yes No

Please elaborate on the capacity constraints? How the situation can be improved?

6. Is there any capacity constraints at the Bangladesh Standards and Testing Institution (BSTI) in conducting health/safety/standards procedures on agricultural products and agro-processed foods?

Yes No Please elaborate what problems you face? Or, what are the capacity constraints? How the situation can be improved?

7. Do you think there are any unnecessary obstacles related to import/export of your agricultural products that relate to other agencies (e.g. Ministry of Commerce, Export Promotion Bureau etc.)? Please elaborate.

Thanks very much for your cooperation.

48 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports Annex I.III: Questionnaire for other border agency officials

Name of Respondents (Optional): 1. What are the sanitary/phytosanitary/health/standards related certificates/issues in your organization/agency that an importer or exporter of agricultural products and/or agro-processed foods needs to comply with? Please fill in the boxes in the following Tables: Import:

Product name/ Border/regulatory Permit/license/certifi Regulatory procedure Product group agency cate needed

Export:

Product name/ Border/regulatory Permit/license/certifi Regulatory procedure Product group agency cate needed

2. Is there any capacity constraints at your organization/agency in conducting the regulatory procedure (e.g. quarantine/radiation/testing etc.) related to import of agro-food products?

Yes No

Please elaborate on the capacity constraints? How the situation can be improved?

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 49 3. What are the other barriers or regulations at the border that affect clearance and hampers trade facilitation, especially in relation to agricultural trade (both import and export)?

* Please name the five regulations or barriers or procedural obstacles, with five affecting the most, and 1 affecting the least.

* Please also elaborate how these NTBs affect agricultural goods clearance or hampers trade facilitation.

(5) ------

Elaborate:

(4) ------

Elaborate:

(3) ------Elaborate:

(2) ------

Elaborate:

(1) ------

Elaborate:

4. Do you think there are avenues for improvement? In that case how the government can improve the situation?

* Please name the two most important government measures, by your agency, which may have a significant impact in reducing such NTBs and facilitating agricultural trade.

* Please also elaborate how the government can undertake and implement the said measures.

(1) ------

Elaborate on how to implement the measure:

50 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports

(2) ------

Elaborate on how to implement the measure:

5. (a) Was there any reform program undertaken by the your agency during the last five years to remove any of the NTBs you have highlighted above?

Yes No

(b) What was the result of such effort in terms of improvement in the situation? Please tick the appropriate box.

Improved Not Improved/ Partly Improved/Partly deteriorated Deteriorated

(c) In the case of improvement, please elaborate in which area of NTBs such improvement occurred.

(d) In the case of non-improvement or deterioration, please elaborate in which area(s) of NTBs such stagnation or deterioration was observed.

6. Do you have any specific recommendation(s) for the Government, more specifically for the NBR with respect to addressing NTBs to agricultural trade?

7. Specific question related to the particular agency where the respondent serve, if any.

Thanks very much for your cooperation.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 51 Annex I.IV: Questionnaire 4 for NBR/Customs Officials

Name of Respondents (Optional):

1. In your opinion, what should be the main role of Customs in the 21st century? Please tick the appropriate box(s) (but not more than two boxes).

Collection of Revenue Facilitation of Trade

Simplification of Customs process Protection of local industry

2. Apart from health/standards related requirements, what are the other Non-Tariff Barriers (NTBs) at the border that affect customs clearance and hampers trade facilitation, especially in relation to import and export of agricultural products and agro-processed food products?

* Please name the five regulations or barriers or procedural obstacles, with five affecting the most, and 1 affecting the least.

* Please also elaborate how these NTBs affect customs clearance or hampers trade facilitation.

(5) ------

Elaborate:

(4) ------

Elaborate:

(3) ------Elaborate:

(2) ------

Elaborate:

(1) ------

Elaborate:

3. Do you think there are avenues for improvement? In that case how can the government improve the situation?

* Please name the five most important government measures, by NBR or other agencies, which may have a significant impact in reducing such NTBs and facilitating agricultural trade.

52 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports

* Please also elaborate how the government can undertake and implement the said measures. (1) ------Elaborate on how to implement the measure:

(2) ------Elaborate on how to implement the measure:

(3) ------Elaborate on how to implement the measure:

(4) ------

Elaborate on how to implement the measure:

(5) ------

Elaborate on how to implement the measure:

4. (a) Was there any reform program undertaken by the government during the last five years to remove any of the NTBs you have highlighted above?

Yes No

(b) What was the result of such effort in terms of improvement in the situation? Please tick the appropriate box.

Improved Not Improved/ Partly Improved/Partly deteriorated Deteriorated

(c) In the case of improvement, please elaborate in which area of NTBs such improvement occurred.

(d) In the case of non-improvement or deterioration, please elaborate in which area(s) of NTBs such stagnation or deterioration was observed.

5. Do you have any specific recommendation(s) for the Government, more specifically for the NBR with respect to addressing NTBs to agricultural trade?

Thanks very much for your cooperation.

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 53 Annex I.V: Questionnaire for C & F Agents’ Association/C & F Agents

Name of Respondent (Optional):

1. What is your role in agricultural trade? Import Export C& F Agent

2. What are the items that you clear as an agent?

a.

b.

c.

3. What are the five most burdensome regulations/procedural obstacles you face while carrying out the export or import processing of agricultural products and/or agro-processed foods? Please rank them on a scale of 5 to 1, with 5 being the most burdensome, and 1 being the least. Please give details of how these NTBs affect your members?

(5) ------

Give details:

(4) ------

Give details:

(3) ------Give details:

(2) ------Give details:

(1) ------

Give details:

4. Do you generally face any or more of the following obstacles/challenges at Customs while carrying out your import or export processes? (Tick if yes):

54 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports Obstacle/Challenge faced Are You Describe the State of Progress Over the Last 3 Years? at Customs/border Affected by (Please Tick the Appropriate Box) This? (Tick Yes Improved Remained the Deteriorated or No) Same Inconsistent/arbitrary Yes / No behavior of officials with regard to: 1. Classification 2. Valuation etc. Complex clearance Yes / No process at Customs Double/multiple physical Yes / No inspection/checks by Customs/other agencies at checkpoints Multiple documentation Yes / No requirements at Customs/Non-acceptance of copy documents Lack of cool chain/cold Yes / No storage facility for export goods in ports Lack of adequate Yes / No procedures for imported perishable goods Inadequate border Yes / No infrastructure Lack of access to trade Yes / No information/ No customs enquiry point Lack of synchronized Yes / No office timing at cross- border customs offices (e.g. between India and Bangladesh) Lack of integrated check Yes / No post (ICP)/ Lack of coordinated border management Inadequate road access to Yes / No land ports Presence of para-tariffs Yes/No

5. Do you face any problem in completing quarantine/phytosanitary/fumigation procedures for your import/export consignments of vegetables/fruits from the Department of Agricultural Extension (DAE)? Are there any capacity constraints at its Plant Quarantine Wing?

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 55 Yes No

Please give details of the problems you face? What are the capacity constraints? How can the situation be improved?

7. Do you face any problem in terms of completing radiation testing procedure for your import consignments of agro-food products from the Atomic Energy Commission (AEC)? Are there any capacity constraints at the AEC?

Yes No

Please give details of the problems you face? What are the capacity constraints? How can the situation be improved?

8. Do you face any problem in getting health/safety/standards certificates from Bangladesh Standards and Testing Institute (BSTI)? Are there any capacity constraints at the BSTI?

Yes No

Please give details of the problems you face? What are the capacity constraints? How can the situation be improved?

9. Do you think there are any unnecessary obstacles related to import/export of your agricultural products that relate to other agencies (e.g. Ministry of Commerce, Export Promotion Bureau etc.)? Please give details of these obstacles.

Thanks very much for your cooperation.

56 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports Annex 2: List of Participants in the FGD Focus Group Discussion on the NTBs Bangladesh Study Date: 24 September 2017 Venue: Golden Tulip The Grandmark Dhaka Hotel (Not according to seniority) Sl. No. Name Designation 1 Mr. Ali Ahmed CEO, Bangladesh Foreign Trade Institute (BFTI) 2 Mr. Pete Gauthier Private Enterprise Officer, Economic Growth Office, USAID 3 Mr. Md. Anwar Hossain Khan Deputy Director, (export), Department of Agricultural Extension, Khamarbari 4 Mr. Md. Azizur Rahman First Secretary , Customs (Export & Bond), National Board of Revenue 5 Mr. Md. Abdul Alim Deputy Commissioner, Dhaka Customs House 6 Mr. Md Saimur Rashid Assistant Chief, Ministry of Agriculture 7 Ms. Jebunnessa Assistant Commissioner, Chittagong Customs House 8 Dr. Dilruba Chowdhury Assistant Professor, Uttara University, Dhaka 9 Mr. Mamunur Rahman Joint Secretary, Federation of Bangladesh Chambers of Commerce and Industry 10 Mr. M. Abdur Rahman, Deputy Chief, Metropolitan Chamber of Commerce and Industry 11 Mr. Md. Joynal Abdin Additional Secretary, Dhaka Chamber of Commerce & Industry 12 Mr. Mizanur Rahman Chief Operating Officer (COO), PRAN 13 Mr. Sheikh Md Farid President, Dhaka Customs Agents’ Association 14 Mr. AKM Akhter Hossain President, Chittagong C&F Agents Association 15 Mr. Md Mofizur Rahman Sazon President, Benapole C & F Agents’ Association 16 Mr. Md Emdadul Haque Lata General Secretary, Benapole C & F Agents’ Association 17 Mr. Matiar Rahman Chairman, Import Export Sub-committee, India Bangladesh Chamber of Commerce and Industry 18 Mr. Mohammed Shahidul Islam Head of Regulatory Affairs, Rahimafrooz (BD) Ltd. 19 Ms Sherajum Monira Farin Research Associate, Centre for Policy Dialogue 20 Mr. Mir Mosaddek Ali Assistant general manager (Export), PRAN 21 Mr. M. A. Aziz CEO and MD, Atlas-Farco 22 Mr. Md. Yanur Rahman Proprietor, Tissa Enterprise (C &F Agent) 23 Mr. Bishwajit Chakraborty Senior Manager (Export), PRAN 24 Ms. Sadia Afroz Junior Research Associate, BFTI 25 Mr. Recardo Sawran Junior Research Associate, BFTI 26 Mr. Md. Nasir Uddin Senior Customs and TF Specialist, USAID BTFA 27 Mr. Andrew Allan DCOP, USAID BTFA 28 Dr. Mohammad Abu Yusuf Customs Specialist, USAID BTFA 29 Ms. Mahmuda Khandaker Senior M&E Specialist, USAID BTFA 30 Dr. Md Khairuzzaman Mozumder COP, USAID BTFA

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 57 Annex 3: Newspaper Clipping on Benapole Port

58 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports Annex 4: Letter Issued by Ministry of Agriculture Regarding Issuance of IPs

BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports 59

Annex 5: Specimen of CITES certificate

60 BTFA Study on NTBs in Bangladesh to Agricultural Imports and Exports

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