Adherence to trade agreement between Bangladesh and Bhutan is questioned

At a time when the government is trying to boost the country’s export, limestone export to Bangladesh is slowing down because of changes in bilateral trade agreement protocol between the two countries.

In fact, the export of limestone powder to Bangladesh has completely halted for since February last year.

Because it was the government policy to encourage value addition on mineral products instead of exporting the minerals in its raw form, local industries started to process limestone powder for manufacturing of poultry and fish feed in Bangladesh, which is the primary market.

Under the agreed duty free commodities, Bangladesh agreed to exempt duty on limestone products classified as 2521 under the Harmonised System Code (HSC).

HSC is the internationally harmonised item description and coding system, the standard of which is maintained by the World Customs Organisation (WCO) to classify traded products. It’s purpose is to classify the same commodities under one coding system to avoid language barriers and is used by customs authorities, statistical agencies, and other government regulatory bodies, to monitor and control the import and export of commodities through.

Until February 2016, Bangladesh customs required Bhutan to classify limestone under the HS code of 2521.00.00. As per the Bhutan Trade statistics, 2521 pertains to goods classified as limestone flux, limestone and other calcareous stone, of a kind used for the manufacture of lime or cement. Even the limestone powder processed for poultry and fish feed was classified and accepted under the same HS code.

In early February last year, the Bangladesh customs required Bhutanese exporters to classify the feed grade limestone under new HS code of 2517.49.00. This code as per trade statistics pertains to pebbles, gravel, broken or crushed stone, of a kind commonly used for concrete aggregates, for road metalling or for railway or other ballast, shingle, and flint.

The issue arose because the earlier HS code was included in duty free commodity list under the trade agreement and the new HS attracts a tax of 59.89 percent.

Exporters said that this is as good as blocking the import of this product into Bangladesh from Bhutan as the end buyers are small-scale poultry farmers who cannot afford such huge increase in prices. Since February 3 last year, Bhutanese exporters were unable to export this product.

Such move by authorities in Bangladesh to change the HS code internally, a businessman said violates the trade agreement because duty free access was given based on the nature and type of commodities and not based on HS code.

Even during the meeting of joint working group of customs of Bangladesh and Bhutan, held in July, 2106, the Bhutanese side pointed out that such change in classification should be decided by the two governments and requested the counterparts to classify limestone powder in the earlier HS code.

However, the Bangladesh side claimed that they have elaborately examined the classification issue of limestone powder and have found that it is classifiable under the new HS code of 2517.49.00.

During the same meeting, the counterparts also raised the issue claiming that import of limestone lump from Bhutan is not taking place and requested the Bhutanese side to clarify.

In March this year, the commerce secretary level meeting the Bhutanese side again requested the counterparts to consider classification of limestone powder under the same HS code of 2521.00.00.

The Bangladesh side expressed their inability to consider Bhutan’s request. It, however, offered Bhutan to provide duty free market access to limestone under the new HS code at the earliest. This means a new commodity classification will gain duty free access.

One of the Bhutanese exporters said that no country could change the first six digits of the HS code as mandated by the World Customs Organisation. Countries can add the next two digits to further specify the commodities.

However, the land customs station in Bangladesh did not provide duty free access because it requires a special order from their national revenue board to do so.

Counsellor at the Bangladesh embassy in Thimphu, Md. Anisur Rahman, said that he is not sure whether the national revenue board has issued a notification or not. However, he said the issue would be resolved in the next bilateral trade meeting that will be held in Bangladesh sometime in November.

According to Bhutan trade statistics, limestone is exported under two HS classification- 2521.00.10, which is limestone flux, and 2521.00.90, which is the limestone and other calcareous stones.

In 2014, Bhutan exported lime stone flux worth Nu 23.25M to Bangladesh and in 2015 the value stood at Nu 25.95M. However, in 2016 this dropped to Nu 2.8M. As of June this year, the product’s export value stood at Nu 113, 652.

Similarly, exports classified as limestone and other calcareous stones, the export value to Bangladesh dropped from Nu 325M in 2014 to Nu 312M in 2015 and Nu 165M in 2016. As of June this year, the provisional statistics reveal an export value of Nu 139M. This classification is for limestone lumps and other calcium minerals exported in raw form.

Tshering Dorji