Better Late than Never

Better Late than Never

Subir Bhaumik,
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As they say, better late than never. One of the more positive moves of India’s Modi government has also been one of its least publicised one. Perhaps because the move to ratify the UN TIR convention will not provide much domestic mileage. India has now ratified the United Nations TIR Convention, the 71st country to do so. Ironically the two countries who ratified the convention just before India did are China and Pakistan. And there hangs a tale.

The milestone decision puts India and her neighbours at the centre of efforts to increase overland trade and regional integration across South Asia and beyond, fast-tracking the region’s potential to become a strategic trade hub. The accession to the TIR Convention is part of India’s multi-modal transport strategy that aims to integrate its economy with global and regional production networks through better connectivity.

“I am delighted to welcome India into the TIR family of nations. This is an important step in harmonising standards and boosting transport, trade and development across South Asia,” Umberto de Pretto, IRU Secretary General said.

“We look forward to working closely with the Indian government and business community as we turn our attention now to implementing the TIR system,” he said.

Transports Internationaux Routiers or International Road Transports (TIR) is the easiest, safest and most reliable way to move goods across international borders, saving time and money for transport operators and customs. IRU (Indefeasible right of use) started the TIR System in the late 1940s, helping a war-torn Europe to rebuild devastated trade and commercial links. By 1959, the successful system led to the United Nations TIR Convention, still in place today with almost seventy contracting parties – nations and multinational bodies – on four continents, and overseen by the United Nations Economic Commission for Europe (UNECE). With the continued expansion of TIR, and the benefits it has brought across the Eurasian landmass, many countries in Africa, Asia, the Middle East and South America are now joining the system. The multilateral international transit treaty Customs — Convention on International Transport of Goods under cover of TIR Carnets — is also referred to as the TIR Convention and functions under the auspices of the United Nations Economic Commission for Europe (UNECE).

TIR will be critical in helping India implement the World Trade Organization’s Trade Facilitation Agreement, which entered into force this year.

The Convention will also facilitate India’s current national and multilateral connectivity-related initiatives to improve cross border road transport, facilitating overland trade integration with both eastern and western neighbours. TIR will help India to integrate with Myanmar and Thailand as well as Bangladesh, Bhutan and Nepal. It will also enable India to move cargo along the International North-South Transport Corridor via Chabahar port in Iran, to access landlocked Afghanistan and the energy-rich Eurasian region. The TIR system secures customs duties and taxes and provides a robust guarantee mechanism, thereby reducing trade transaction costs, and facilitating higher growth of intra-regional and inter-regional trade.

With India pushing its own connectivity narrative, especially in the eastern slice of South Asia and to connect to the Tiger economies of South-east Asia, signing the TIR convention had become important. Now it is likely that India will try to get most of its eastern neighbours to sign the TIR convention so that initiatives like the BBIN Motor Vehicles Agreement can be translated into reality to ensure seamless connectivity. No wonder the IRU’s Chief Operations Officer Boris Blanche was effusive.

India’s decision to implement the TIR system will have far reaching benefits for trade and will save significant time and money by streamlining procedures at borders, reducing administration and cutting border waiting times.

The United Nations has confirmed that the TIR Convention will enter into force in India in six months and IRU will begin work with Indian partners on training, development and outreach efforts to facilitate prompt implementation. Its next goal would be to get India’s smaller neighbours to sign up and integrate with the biggest economy of rimland Asia.

It will help India access transnational multi-modal connectivity and play an important role in the proposed transportation architecture in the region and beyond in the backdrop of India recently ratifying the trade facilitation agreement (TFA) of the World Trade Organization (WTO).

TIR will help facilitate India’s trade with its eastern and western neighbours and comes against the backdrop of China’s ambitious “One Belt One Road” initiative aimed at connecting some 60 countries across Asia, Africa and Europe to boost trade and economic ties on the lines of the traditional maritime route. Interestingly, the two countries which signed TIR before India were Pakistan (2015) and China (2016), possibly to make the CPEC corridor a viable operational entity.

On the eastern front, the TIR will help India to integrate with Myanmar and Thailand as well as Bangladesh, Bhutan and Nepal. On the western front, it will enable India to move cargo along the International North-South Transport Corridor via Chabahar port in Iran, to access landlocked Afghanistan and the energy-rich Eurasian region.

The Chabahar port in Iran being developed by India is expected to play an important role in this evolving transportation stratagem. The port is located in the Gulf of Oman, near Iran’s border with Pakistan and will allow India access to landlocked Afghanistan and energy-rich Central Asia through the Jawaharlal Nehru and Kandla ports on India’s west coast.

The TIR system secures customs duties and taxes and provides a robust guarantee mechanism, thereby reducing trade transaction costs, and facilitating higher growth of intra-regional and inter-regional trade.

TIR will also help India move goods along the International North-South Transport Corridor (INSTC) — an ambitious multi-modal transportation project established in 2000 by Iran, Russia and India to promote transport cooperation. INSTC is to connect the India Ocean and Persian Gulf to the Caspian Sea through Iran and then onwards to St. Petersburg and northern Europe through Russia.

For a while, India has been putting in place the building blocks for its transnational multi-modal connectivity plan. This includes a proposed passenger ferry service to Bangladesh, a plan to operationalize the Trans-Asian Railway (TAR) route of Dhaka-Kolkata-Delhi-Amritsar-Lahore-Islamabad-Zahedaan-Tehran-Istanbul, India-Myanmar-Thailand Trilateral Highway project, as well as the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement.

To further promote connectivity, trade and regional integration, India needs to cooperate with neighbouring countries such as Bangladesh, Bhutan and Nepal to make the BBIN Motor Vehicle Agreement operational in particular benefitting from TIR transit system. India needs also to cooperate with Myanmar and Thailand and the whole BIMSTEC region on regional integration and connectivity and link South to South East Asia.

 

Subir Bhaumik is a former BBC Correspondent and author.

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