India is now going to impose a countervailing or anti-subsidy duty on imports of jute goods from Bangladesh, alleging that the latter is subsidising its exports of such products.
The next-door neighbour has already begun an anti-subsidy investigation for slapping the duty.
Opposing India's claim, Bangladesh says the country has shut down all of its jute mills, so there is no basis for such an allegation.
The Indian government imposed anti-dumping duty ranging between $19 and $351.71 per tonne on all jute companies in Bangladesh in 2017.
A country can impose a countervailing duty on imports of goods that have received government subsidies in the originating or exporting country to offset injuries to local products caused by subsidised imports.
"India has long imposed anti-dumping duties on Bangladeshi jute products. They allege that Bangladesh is subsidising exports of jute goods. India has told us that listing some companies in Bangladesh will stop imports from them," Commerce Minister Tipu Munshi told the media after the first day's discussion at the commerce secretary-level meeting between India and Bangladesh at the Secretariat on Sunday.
"We have kept this issue at the top of the agenda in the final secretary-level talk on Monday. We will try to find a solution through discussion," the commerce minister said.
"We have a plan to lodge a complaint with the WTO against India's decision, though we have not yet informed the Indian commerce secretary about it," Tipu Munshi added.
Commerce Secretary Dr Anup Wadhawan paid a courtesy call on his Bangladeshi counterpart prior to the talks.
Last week, an additional secretary at the commerce ministry told The Business Standard, "We have been in a series of talks with India over anti-dumping duty and countervailing duty on jute products for several months. We have requested India to withdraw the anti-dumping duty. But they do not seem to be withdrawing it.
"On the other hand, we have put forward various arguments against India's decision to impose a countervailing duty. Nevertheless, they have continued the investigation for the purpose of imposing a countervailing duty."
The commerce minister said, "Today, [Sunday] we had preliminary discussions on the existing customs issues in the field of bilateral trade, acceptance of the country of origin certificate issued by the Export Promotion Bureau (EPB) and issues in regard to land ports. We will discuss this in detail on Monday.
"The India commerce secretary has told us that he has come to Bangladesh with good intentions. He will work on resolving various issues regarding bilateral trade as much as possible," he added.
Tipu Munshi said, "India helped us as a friend during independence. Indian Prime Minister Narendra Modi is also coming to Dhaka to attend the golden jubilee celebrations. We hope that India will also make this occasion memorable by removing various barriers to exports of goods from Bangladesh."
India does not have faith in the information on added values mentioned in the country of origin certificates issued by the EPB for the export of edible oil from Bangladesh. It wants to send an inspection committee to Bangladesh and verify the information. It also doubts the certificates of origin issued by the EPB, he said.
"But we have told the commerce secretary of India that pricing and value addition are our rights and we will do that," the minister said.
Bangladesh's export earnings from India, a country with a population of over one hundred core, is very low. In the last fiscal year, the country's exports to India amounted to only $1.1billion, while it imported goods worth $5.79 billion. Bangladesh imports the most goods from India after China.
"Since India slapped a ban on onion exports twice in a row without prior notice, we felt that it would not be right to be completely dependent on India to meet the demand for onions. We are arranging alternative markets. However, India has agreed to help us increase our production by providing onion seeds that are produced in the summer," Tipu Munshi pointed out.
The minister said preparation is underway for signing a proposed Comprehensive Economic Partnership Agreement (CEPA) with India.
"After Bangladesh graduates to a developing country in 2026, it will get the GSP facility in the European Union market for additional three years. In 2029, Bangladesh's exports will suddenly face much more competition. As per the government's information, our export income will reduce by about $4 billion during that time," he said.
Commerce ministry officials said a study on the CEPA is going on in the two countries. Bangladesh has proposed getting the same kind of duty-free facility under the CEPA agreement as it now enjoys in the field of export after moving out of the least developed country. But, India has reportedly objected to that proposal.
Commerce Secretary Mohammad Jafar Uddin in February told TBS that the agreement could be signed by next year.
The minister said, "Considering export trades in 2029, we are preparing to sign free trade agreements (FTAs) and preferential trade agreements (PTAs) with different countries. Bangladesh is in favour of signing the CEPA as part of it. PTAs will be signed with Indonesia and Nepal very soon. This year, we will sign bilateral trade agreements with 10-11 countries."
"The signing of the FTAs and PTAs will have some impact on revenue for the time being, but in the long run, it will be good for Bangladesh. The prime minister also directed us to take the initiative to sign bilateral trade agreements," he pointed out.
Bangladesh Commerce Secretary Jafar Uddin, Director General of WTO Cell Hafizur Rahman, Additional Secretary (FTA) Md Shahidul Islam and Indian High Commissioner in Dhaka Vikram Doraiswami were also present during the meeting between the Bangladesh commerce minister and the Indian commerce secretary.