Bangladesh/Nepal
Monopolistic diplomacy
Bangladesh may be Nepal's second-largest trading partner in Southasia (after India), but who would believe that the total amount of their trade only comes to a measly USD 65,000 per year? There is undoubtedly much room for improvement here, and that is exactly what officials from the two countries met to discuss recently in Dhaka. While the meeting ended in agreement that a bilateral preferential trading agreement and better transport links are key to an increase in trade, serious political barriers seem to be making both upgrades nearly impossible at present.
The key barrier to greater trade is the high import tax levied by both sides. As a result, Kathmandu has asked for duty-free trade on a list of 140 agricultural items, which currently form the bulk of the country's exports to Bangladesh. But Nepali officials say they cannot provide their Bangladeshi counterparts with similar concessions when it comes to the latter's most significant exports, such as cement and clothes. The crux of the problem? Nepal has a pre-existing agreement with India that stipulates that it cannot provide a third party with greater facilities than those it provides to New Delhi. And as there is no Nepal-India duty-free regime to date, the former is now unable to sign one with Bangladesh.
Bangladesh and Nepal, of course, do not share a border. Instead, all goods going to and fro between the two must pass through the 'chicken's neck' that is India's only connector to its volatile northeastern states. Though there is a trilateral agreement allowing Bangladesh and Nepal to traverse the about 50 km strip between the border towns of Banglabandh and Kakarbhitta, problems have constantly arisen due to inadequate communication between the parties on the ground, including a lack of proper identification cards to ensure access.