Country to be out of LDC by 2026
Zarif Mahmud: Free Trade Agreements (FTAs) have been under discussion with various countries for almost 10 years. But so far it has not been possible to make this agreement with any country. Meanwhile, if everything goes well, Bangladesh will be out of the list of least developed countries (LDC) in 2026. Then duty-free market facilities will not be available in different countries like now. Also, incentives and cash assistance can’t be given against exports. Export trade will face a big challenge.
To deal with these challenges, experts have been suggesting bilateral and regional free trade agreements (FTAs) with various countries and regions by 2026 without relying on GSP or duty-free benefits of certain countries. But the reality is that only Bangladesh has signed a preferential trade agreement (PTA) with neighboring small economy country Bhutan. Apart from this, PTA or FTA was not possible with any other country. However, Bangladesh has FTA with Vietnam, which is a competitor in garment exports, with 27 countries of the European Union (EU), including the United States, the United Kingdom, Japan, India, Chile, China, Singapore, Brunei, Belarus, Kazakhstan, Kyrgyzstan, and about 50 countries.
In this context, officials of the Ministry of Commerce told that in 2010, a policy was formulated for various types of bilateral agreements for the expansion of trade and commerce. FTA or any other similar agreement with any country has been discussed since 2014. Already, the feasibility of FTA with several countries has been examined jointly to assess the benefits. But no further progress was made.
The Ministry of Commerce says that after checking these possibilities, the average tariff of Bangladesh is about 15 percent. About 27 percent of the total revenue of the National Board of Revenue (NBR) comes from import duties. On the other hand, the tariff in countries with which FTA is required is 2 to 3 percent. In other words, although these countries can easily give concessions on tariffs, it was not possible for Bangladesh to give concessions at the same rate due to the fear of reducing the revenue due to this shock. Moreover, the major export markets of Bangladesh are the United States, the United Kingdom and the European Union. Although the proposal was made to these countries, they did not agree to the proposal citing weaknesses in Bangladesh’s labor, carbon emission and other compliance issues.
Progress on FTA
Bangladesh has completed a feasibility study for an Economic Partnership Agreement (EPA) on the lines of an FTA with Japan. Tomorrow, Wednesday, Bangladesh and Japan will jointly announce the results. After some more formalities the agreement can be concluded. Apart from this, the government also wants to finish the proposed Comprehensive Economic Partnership Agreement (CEPA) between Bangladesh and India quickly. At the same time, at least 10 countries including China and Singapore are thinking about this bilateral agreement as soon as possible. The list also includes – Indonesia, Nepal, Sri Lanka, USA, Canada, China, Malaysia, European Union, Brazil, Thailand, South Korea, Argentina, United Arab Emirates, Australia and Saudi Arabia.
Meanwhile, some media reports in India said yesterday that India will reconsider whether to sign a SEPA agreement with Bangladesh if the China-led coalition joins the RCEP. Therefore, doubts have arisen between Bangladesh and India about Sepa.
In this regard, Commerce Secretary Tapan Kanti Ghosh told Daily Industry that FTA is a long-term process. The government has already taken initiatives to enter into FTAs with several countries. FTA or PTA will be done with some countries before 2026.
Professor Mostafizur Rahman, Honorary Fellow of Center for Policy Dialogue (CPD), a non-governmental research organization, said that there will be major challenges in exports after 2026 after exiting LDCs. As a preparation to face this challenge, initiatives should have been taken to make FTS and other bilateral agreements with various countries earlier. But progress on the EPA with Japan is good news. FTAs should be initiated to include trade as well as investment with other countries as soon as possible.
Staff Correspondent: Minister for Land Narayan Chandra Chanda, MP on Saturday said that th…