exist in Bangladesh on export of vulcanized rubber thread via Akhaura LCS. Similarly, exports of yarn, milk powder, fish, sugar, and potatoes from India (particularly from the northeastern states and West Bengal) face port restrictions in Bangladesh.

Finally, the same Commerce Secretary level discussions also note that heavy restrictions limit professional exchanges and cooperation. Moreover, Indian companies and professionals face difficulties in sending remittances back to India. Indian exporters can remit dollars converted from taka only as royalty, consultancy and "other charges", and there is a ceiling on the repatriable amount (for example, under 'royalty', only 6 percent of the sale proceeds in Bangladesh can be repatriated). This creates problems for knowledge-intensive sectors like software, IT and telecom, architecture, and so on.

Thus, non-tariff measures/barriers such as standards, certification, regulations, labeling, documentation and public procurement, licensing, countervailing measures, tariff quotas, and anti-dumping measures are all matters of contention between India and Bangladesh. Non-tariff barriers are the most difficult, and undermine the trade potential of both countries. Sanitary & Phytosanitary and Technical Barriers to Trade and related measures have been found to account for 86.3 percent of all barriers across South Asia.<sup>40</sup> Besides, other hurdles such as stringent visa regimes, inadequate physical connectivity, restrictions in opening bank branches, lack of testing facilities at the border, non-honoring of irrevocable letters of credit, etc., have been faced by exporters and importers in both countries.

There is recent empirical evidence that standards harmonization tends to increase the export variety of a partner country,<sup>41</sup> and this may well apply to Bangladesh‘s exports to India (Rahman _et al_ ., 2011). An arrangement for recognition in India of certificates issued by Bangladeshi testing laboratories for export products will help exports.<sup>42</sup> There have been misunderstandings regarding acceptance of test certificates issued by BSTI labs for products accredited by NABL (lndia). Testing laboratories could be part of customs stations, at least to cater to testing requirements of more commonly traded products. Mutual recognition of testing laboratories and test reports from accredited laboratories by customs authorities will be very useful. In this respect, the upcoming South Asian Regional Standards Organization (SARSO) in Dhaka is a very welcome step.

Greater use of information technology in customs, to expedite processes such as electronic transfer of test reports and certificates of origin would help bilateral trade as well as the global trade of the two countries. This could be addressed if Bangladesh and India implement a single window system for customs. In parallel, harmonization of HS codes at 8-digit level will reduce disputes on classification and also provide the basis for establishing a system of seamless exchange of data between the customs authorities of Bangladesh and India.

Such non-tariff measures/barriers can easily reduce the potential gains from tariff liberalization. Therefore, the next generation of trade talks between the two countries should give the highest priority for reduction of non-tariff measures/barriers.

> 40 See, for example, ADB-UNCTAD (2008) and Rahman _et al._ (2011).

> 41 See, for example, Shepherd (2007).

> 42

> Bangladesh and India agreed that the respective standards‘ bodies, BIS and BSTI, will finalise the Agreement on bilateral cooperation to enable mutual recognition for each other's standards for specified products. Refer to the Summary record of India-Bangladesh Commerce Secretary level discussions held at New Delhi on 28 -29 March, 2012.

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