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Published: 02 September 2018

Road transport convention and BBIN MVA

M S Siddiqui

Bangladesh, India and Nepal had given nod to operating procedures for movement of passenger
vehicles in the sub-region under Bangladesh-Bhutan-India-Nepal motor vehicles agreement (BBIN-
MVA) for seamless flow of passenger and cargo traffic in the region in Thimphu, Bhutan on 15 June
2015. However, Bhutan could not ratify it later and others signed the Motor vehicle agreement
(MVA).

At present there are some associated agreements from travelling transport through BBIN countries
but those are bilateral, and require a variety of permits at different stages of a journey. There are
different non-tariff barriers preventing the smooth travelling of vehicles. The BBIN MVA was signed
to streamline the process of acquiring cross-border permits.

The BBIN MVA is a framework agreement and a part of the effort to economically integrate the sub-
region, where intra-regional trade is still very low due to the poor current state of roads, railways and
other trade-related infrastructure. It is expected to lower down the transaction costs of doing trade
significantly, hence resulting in generating new economic opportunities.

Among others, the agreement includes appropriate clauses to look at insurance, permits, visa with
multiple-entry, applicability of local laws, and business facilitation.

The Agreement hope to help create a unified market that would generate more trade and investment
opportunities for domestic and international companies. It will integrate the region to foster regional
value chains for regional and global market.

BBIN countries currently face a number of logistical impediments. The export of India to other BBIN
countries are remarkable but export to India is very insignificant are not seamless. The Trade
between India-Bangladesh, Bangladesh-Bhutan, Bangladesh-Nepal, is plagued with various
problems since Bhutan and Nepal are landlocked and require going through India. Problems are
related to loading unloading of goods, lack of banking facilities, narrow road connectivity, marginal
use of railways and inland waterways and communication problems at borders, etc., causes wastage
of time and induces high costs. Bangladesh is importing about 10% from India but export less than
one percent.

BBIN MVA is expected to solve these problems and work on the development of infrastructural and
regulatory mechanisms in the region. The agreement is likely to yield maximum dividends for the
land-locked countries as it will integrate them more effectively with the global economy.

BBIN countries have many obstacles in regional trade. The custom procedures differ significantly
from country to country. Each country has its own set of rules and regulations for customs clearance
procedures. The working hours of custom offices differs in each country and creates lot of problems
for the custom clearance procedures Furthermore, there are is no standardized procedure for
documents related transit, export, import and other formalities.

Exporters need to prepare separate set of documents for different customs points for exports and
imports to complete the formalities of custom clearance at borders.

Bangladesh has more than 14 boarder land ports with India. The whole procedure is laden with
administrative and regulatory complexities and a substantial amount of time goes for taking approval
from various authorities such as customs, plant quarantine, border management agencies, standard
related organization at checkpoints. Bangladesh is facing quite a lots of non-tariff barriers in export
to India and also to Nepal and Bhutan at the transit points in India.

These non-tariff barriers may be resolve through mutual negation but there are some global
experiences. These countries may resolve the barriers but joining and implementing Transports
Internationaux Routiers (TIR), an international Road Transport convention.

This is the Customs Convention on the International Transport of Goods under cover of TIR Carnets
(TIR Convention, 1975) is one of the most successful under the multilateral framework of United
Nations Economic Commission for Europe (UNECE).The TIR Carnet system offers a 'single customs
guarantee' backed by the TIR international guarantee chain, managed by International Road
Transport Union (IRU). The adoption of TIR will, therefore, cover duties and taxes at risk during
international transit from a minimum up to EUR 60,000 per TIR carnet, thus protecting state revenue
from any potential losses during international transit.

The TIR Convention permits the international carriage of goods by road from one customs office of
departure in one country toa customs office of destination in another country, through as many
countries as required, without any intermediate frontier check of the goods carried, unless customs
authorities decide otherwise.

The TIR system provides an important transit facilitation instrument through its standardized format
for transit declaration. It is the only global customs transit system that provides easy and smooth
movement of goods across borders in sealed compartments or containers under customs control
from the customs office of departure to the customs office of destination.

The TIR System operates on six pillars: (1) secure vehicles or container, (2) international guarantee
chain, (3) TIR carnet, (5) reciprocal recognition of customs controls, (5) controlled access (6) TIR IT
risk management tools. These pillars, if implemented properly can ensure that goods travel across
border with minimum interference en route and at the same time, provide maximum safeguards to
custom administrations.

The TIR system is based on five key principles that facilitate the efficiency and effectiveness
of the TIR customs transit regime. The six key principles are: (1) Vehicles and containers should
comply with standard regulations to ensure customs sealing; (2) Duties at risk are covered by an
internationally valid guarantee at all times; (3) The TIR Carnet functions as transit declaration and as
guarantee document throughout the journey; (4) Customs control measures and sealing at departure
must be recognized by all countries of transit and destination; (5) Access to the TIR procedure is
only granted by the national competent authorities to national associations and transport companies
who meet the strict criteria of reliability and (6) IT management system.

IT management system is an important risk management instrument in the TIR system and enables
early detection of potential irregularities. The TIR system can significantly improve the effectiveness
and robustness of the BBIN MVA in the region and, moreover, can be instrumental for better
connectivity of the BBIN region to other world markets.
The TIR Convention has been implemented and is operational in most of the Asia Pacific countries.
China has recently ratified the TIR Convention to become the 70th contracting party in 2016.India
becomes 71st country to ratify UN TIR Convention in 2017 and Bangladesh not yet ratified the
convention.
The TIR System promotes harmonization of customs procedures; uniform trade practices and
effective regional transit, which in turn, help countries reduce substantial amount of trade costs
involved in these procedures. It eliminates duplication of procedures and contributes the efficiency of
the administrative and regulatory procedure at crossing points.

The adaptation of the TIR system in BBIN MVA will facilitate the integration between customs and
other stakeholders based on mutual accepted protocols thereby eliminating the potential risks and
irregularities in the course of the clearance of traffic and transit. Therefore, it is good for BBIN
countries to accede to TIR system rather than exploring other options. In short, the adoption of the
TIR System in BBIN MVA is expected to address existing glitches in transit and transport facilitation
of between the four countries.

The International Road Transport Union (IRU) started as a group of national road transport
associations from eight western European countries: Belgium, Denmark, France, the Netherlands,
Norway, Sweden, Switzerland and the United Kingdom in Geneva on 23 March 1948, one year after
the United Nations Economic Commission for Europe (UNECE), to expedite the reconstruction of
war-torn Europe through facilitated international trade by road transport. By 1959, the successful
system led to the United Nations TIR Convention, still in place today with almost 71 contracting
parties - nations and multinational bodies - on four continents, and overseen by the United Nations
Economic Commission for Europe (UNECE). It continued to expand and the benefits it has brought
across the Eurasian continent and many countries in Africa, Asia, the Middle East and South
America are now joining the system.

The TIR Convention can help BBIN countries to implement the BBIN MVA but also fulfilling their
commitments of the WTO TFA. Other than this, the inter- modal aspect of the TIR System will help
BBIN countries to connect with other regions such as Middle East, Central Asia, and Europe through
maritime transport.

The BBIN MVA lacks any guaranteeing mechanism to protect customs revenue in the event
of goods being diverted to the national territory of the state through which material will pass. The
system should be such as to also endemically prevent evasion of Customs duties through a WCO
recognized Customs guaranteed transit system. The best available system is the UN TIR
Convention overseen by the International Road Transport Union (IRU). Without such a mechanism,
the MVA could not be operational. BBIN need a collective decision to accede to the TIR Convention
can play an important role in the harmonization of trade and transport standards that facilitate cross
border trade flows. TIR may be a convention to remove non-tariff barriers with the sincere efforts of
the member countries.

The writer is a Legal Economist.

Email: mssiddiqui2035@gmail.com