US embassy cable - 05DHAKA3795

UNCLAS DHAKA 003795 
 
SIPDIS 
 
E.O. 12958: DECL: N/A 
TAGS: ETRD, BG, IN 
SUBJECT: Cordial Bangladesh-India Trade Talks Yield Few Results 
 
1.   Summary: India and Bangladesh held trade talks August 1- 
2 in Dhaka.  Although both sides described the meeting as 
cordial, and some minor issues were addressed, there were no 
major breakthroughs.  Both parties agreed to continue 
efforts to resolve pending issues.  End summary. 
 
2.   The India-Bangladesh Joint Working Group on Trade 
Issues held its third meeting on August 1-2 in Dhaka.  Mr. 
Ilias Ahmed, Joint Secretary of the Ministry of Commerce, 
led the Bangladesh delegation, while his counterpart, Mr. 
MVPC Shahstry, led the Indian delegation.  The meeting 
focused on non-tariff and para-tariff barriers identified by 
each side and discussed mechanisms to resolve some of them. 
The working group's next meeting is set for February 2006 in 
New Delhi. 
 
3.   An aide to Ahmed told Embassy Econ/Specialist the sides 
reached agreement on three issues: 
 
--  India agreed to establish six bank branches in its 
northeastern provinces to facilitate duty and tax payments 
on cross-boarder transactions. 
--  India agreed to improve the infrastructure of Indian 
land ports.  Bangladesh claims poor infrastructure imposes 
unreasonable delays on imports from Bangladesh. 
--  Bangladesh agreed to permit Indian experts to visit 
Dhaka in October 2005 to validate the standards and 
capacities of several Bangladeshi laboratories, in the 
expectation India would permit the import of Bangladeshi 
goods certified to meet standards by these laboratories. 
 
4.   Mutual recognition of standards and certifications is a 
continuing issue between the two countries.  Bangladeshi 
exports of cement, condensed milk, electrical appliances, 
dry cell batteries and mineral water to India must first be 
registered with and certified by the Bureau of Indian 
Standards.  Bangladeshi exports of poultry and dairy 
products also suffer from India's mandatory sanitary import 
permit requirements.  Despite Indian concessions, Bangladesh 
did not agree to eliminate the 'Khamarbari' certificate 
required of Indian potato exporters.  Bangladesh did not 
agree to Indian demands to eliminate a five percent subsidy 
for local yarn manufactures. 
 
5.   Comment: Bangladesh's sizable trade deficit with India 
is a continuing source of friction for Bangladesh, but 
provides little incentive for India to remove barriers in 
exchange for greater access to Bangladesh.  During FY 2004 
(July -June) Indian exports to Bangladesh were $1.6 billion 
while Bangladesh exports during the same period were a mere 
$89 million.  This week's limited progress can perhaps best 
be viewed in the context of upcoming political visits 
between the two countries.  End comment. 
Bangladesh did not comment on India's claim on payment 
procrastination by some of the Bangladeshi banks. 
 
CHAMMAS