seminar on bd-pak trade opportunities under safta

8/3/2019 Seminar on BD-Pak Trade Opportunities Under SAFTA

http://slidepdf.com/reader/full/seminar-on-bd-pak-trade-opportunities-under-safta 1/22

Presentation on:Presentation on:

³BANGLADESH³BANGLADESH--PAKISTAN TRADEPAKISTAN TRADE

OPPORTUNITIES UNDER SAFTA´OPPORTUNITIES UNDER SAFTA´

BY BY Saifuzzaman Chowdhury Saifuzzaman Chowdhury PresidentPresident

Chittagong Chamber of Commerce & Industry Chittagong Chamber of Commerce & Industry



Importance of bilateral trade cooperation:Importance of bilateral trade cooperation:

The The muchmuch hypedhyped changechange--overover inin globalglobal politicalpolitical andandeconomiceconomic arenaarena andand itsits perceivedperceived falloutfallout onon nationalnationalprogressprogress andand security,security, hashas causedcaused every every country country of of thethe world, world, toto pursuepursue pragmaticpragmatic policy policy andand strategy strategy

with with duedue emphasisemphasis onon itsits competitivecompetitive resourcesresources basebaseandand comparativecomparative prospectsprospects andand potentialspotentials toto attainattainthethe cherishedcherished goalgoal of of viable viable developmentdevelopment.. InIn fact,fact, ininaa bidbid toto ensureensure sustainablesustainable nationalnational progressprogress andandsecurity,security, every every country country isis oror oughtought toto bebe very very activeactive

toto harnessharness eveneven anan iotaiota of of opportunity opportunity.. ButButattainmentattainment of of thisthis muchmuch covetedcoveted goalgoal andand objective,objective,isis quitequite oftenoften impossibleimpossible forfor anan individualindividual country country alonealone without without thethe collaborativecollaborative helphelp andand collectivecollective

efforteffort of of otherother country country.. Cont·d..P/2 Cont·d..P/2



Multilateral,Multilateral, plurilateralplurilateral oror regionalregional arrangementsarrangements andandcooperationcooperation cancan yieldyield bestbest resultresult inin thisthis regardregard.. ButBut very very often,often,negotiationsnegotiations onon multilateral,multilateral, plurilateralplurilateral oror regionalregional basisbasis areare of of

complexedcomplexed naturenature andand timetime consuming consuming.. ItIt requiresrequiresharmonizationharmonization of of lotlot of of divergentdivergent andand conflicting conflicting interestsinterests andandsynthesizing synthesizing of of varying varying demandsdemands of of many many countries,countries, which which areare

very very difficultdifficult toto addressaddress.. OnOn thethe otherother hand,hand, negotiationnegotiation betweenbetweentwotwo countriescountries andand accommodating accommodating eacheach other·sother·s differentdifferentinterestsinterests isis muchmuch moremore easy easy toto handlehandle.. As As aa result,result, bothboth thethecountry country cancan early early harvestharvest theirtheir economiceconomic complementaritiescomplementarities andandcompetitivecompetitive advantagesadvantages forfor theirtheir sharedshared gainsgains andand benefitsbenefits.. This This

very very prospectprospect of of reaping reaping early early benefitsbenefits andand possibility possibility of of exploiting exploiting collectivecollective potentialities,potentialities, isis now now encouraging encouraging many many countriescountries toto enterenter intointo bilateralbilateral pactpact oror understanding understanding eveneven

within within aa regionalregional arrangementarrangement.. The The isis why why Trade Trade Agreement Agreement atatbilateralbilateral level,level, isis onon surge,surge, inin recentrecent time,time, inin internationalinternational arenaarena..

The The phenomenonphenomenon alsoalso postulatespostulates thethe efficacy efficacy of of pursuing pursuing enhancedenhanced bilateralbilateral tradetrade cooperationcooperation betweenbetween BangladeshBangladesh &&PakistanPakistan eveneven underunder thethe ambitambit of of SAFTASAFTA forfor thethe mutualmutual

interestsinterests..



The Evolution of SAPTA to SAFTA: The Evolution of SAPTA to SAFTA:

88 December,December, 19851985:: SAARCSAARC was was establishedestablished with with formalformaladoptionadoption of of itsits chartercharter by by sevenseven membersmembers..

December,December, 19881988:: FourthFourth SAARCSAARC SummitSummit Meeting,Meeting, heldheldinin Islamabad,Islamabad, PakistanPakistan gavegave aa directiondirection toto identify identify areasareasof of economiceconomic cooperationcooperation towardstowards formationformation of of SAPTASAPTA..

1111 April, April, 19931993:: SAARCSAARC PreferentialPreferential Trading Trading Arrangement Arrangement (SAPTA)(SAPTA) was was signedsigned..

3030 April, April, 19951995:: SAPTASAPTA ConsolidatedConsolidated NationalNational SchedulesSchedules

of of concessionconcession was was approvedapproved by by FifthFifth SessionSession of of thetheSAARCSAARC CouncilCouncil of of Ministry Ministry inin New New Delhi,Delhi, IndiaIndia..

66 January, January, 20042004:: SAFTASAFTA was was signedsigned inin Islamabad,Islamabad,PakistanPakistan

July July 20062006:: SAFTASAFTA camecame intointo forceforce..



Comparative IntraComparative Intra--Regional Merchandise trade:Regional Merchandise trade:

19961996

( (%%) )20002000( (%%) )

20022002( (%%) )

20042004( (%%) )

20062006

( (%%) )

EUEU ( (2525)) -- 6666 6767 6767 6666

NAFTANAFTA 4343 4646 4646 4343 4242

ASEAN ASEAN 2222 2323 2323 2424 2424

MERCOSER MERCOSER 2222 2121 1414 1515 1616

Adden Adden Country Country 88 88 1111 99 99

SAPTA/SAFTASAPTA/SAFTA <<55 <5<5 <5<5 <5<5 <5<5

Cont¶d..P/2



The The aboveabove tabletable delineatesdelineates thatthat SAARCSAARC asas aa regionalregionalarrangementarrangement hashas nevernever beenbeen ableable toto exploitexploit itsits prospectsprospects

andand potentialspotentials asas itit was was expectedexpected forfor.. SinceSince itsits inceptioninceptionintraintra SAARCSAARC tradetrade was was below below 55%% which which isis oneone of of thethelowestlowest inin thethe world world asas aa regionalregional pactpact.. MyriadMyriad of of reasonsreasonsmay may bebe attributedattributed towardstowards thethe underunder exploitationexploitation of of ourour

regionalregional potentials,potentials, butbut eacheach andand every every family family membermember of of SAARCSAARC shouldshould now now bebe very very activeactive toto pursuepursue allall meansmeans andand ways ways toto realizerealize itsits collectivecollective potentialspotentials.. Hence,Hence, itit isis very very highhigh timetime thatthat thesethese twotwo regionalregional brotherly brotherly countriescountries--

BangladeshBangladesh andand PakistanPakistan shouldshould comecome upup fastfast toto tightentightentheirtheir handshands toto consolidateconsolidate furtherfurther theirtheir mutualmutual andandequitableequitable growthgrowth andand developmentdevelopment prospectsprospects underunder thethespiritspirit of of SAARCSAARC andand SAFTASAFTA..



Rationale of BangladeshRationale of Bangladesh--Pakistan increased Trade Cooperation:Pakistan increased Trade Cooperation:

CulturalCultural homogeneity homogeneity andand mutualmutual acquaintanceacquaintance SameSame historicalhistorical traditiontradition

EconomicEconomic complementaritiescomplementarities

HugeHuge marketmarket of of aboutabout 300300 millionmillion peoplepeople

Almost Almost similarsimilar socialsocial structurestructure andand family family bondagebondage

HomogenousHomogenous consumerconsumer behaviourbehaviour andand buying buying patternpattern

ExistenceExistence of of similarsimilar distributiondistribution systemsystem andand selling selling

strategy strategy Almost Almost symmetricsymmetric economiceconomic developmentdevelopment statestate

Similarity Similarity inin lifelife stylestyle andand standardstandard of of living living

ScopesScopes toto exploitexploit eacheach other·sother·s competitivecompetitive advantagesadvantages



General Benefits of augmented bilateral trade cooperation:General Benefits of augmented bilateral trade cooperation:

Greater market access of each other·s productsGreater market access of each other·s products

Attainment of more economies of scale Attainment of more economies of scale

More FDI attraction in both the countriesMore FDI attraction in both the countries

Promotion of bilateral investmentPromotion of bilateral investment

Facilitation of joint venture as well as technology Facilitation of joint venture as well as technology transfertransfer

Greater consumer satisfaction with low price indexGreater consumer satisfaction with low price index

Better exploitation of each other·s economicBetter exploitation of each other·s economiccomplementaritiescomplementarities

Infusion of dynamism and impetus to holisticInfusion of dynamism and impetus to holistic

economic development efforteconomic development effort



Conspicuous Benefits of enhanced trade cooperation:Conspicuous Benefits of enhanced trade cooperation:

BangladeshBangladesh hashas beenbeen grantedgranted duty duty andand quotaquota freefree marketmarket accessaccess

by by EU,EU, Norway,Norway, Canada,Canada, Japan, Japan, Australia Australia andand New New ZealandZealandandand alsoalso preferentialpreferential accessaccess by by many many otherother developeddeveloped andandhigherhigher developing developing countriescountries.. PakistaniPakistani entrepreneursentrepreneurs cancan easily easily exploitexploit thisthis opportunity opportunity throughthrough increasedincreased economiceconomiccooperationcooperation with with BangladeshBangladesh..

BangladeshBangladesh enjoysenjoys aa strategically strategically advantageousadvantageous geographicgeographiclocationlocation linking linking SAARCSAARC andand ASEAN ASEAN atat thethe middlemiddle.. PakistaniPakistanientrepreneursentrepreneurs cancan availavail of of thisthis opportunity opportunity if if economiceconomiccooperationcooperation with with BangladeshBangladesh isis consolidatedconsolidated furtherfurther..

BangladeshBangladesh cancan useuse PakistanPakistan asas aa SpringboardSpringboard forfor thethe marketsmarketsof of Afghanistan, Afghanistan, CentralCentral Asia, Asia, IranIran andand Gulf Gulf countriescountries..

BothBoth thethe countriescountries cancan exploitexploit theirtheir economiceconomiccomplementaritiescomplementarities.. ForFor exampleexample BangladeshBangladesh hashas hugehuge domesticdomesticandand overseasoverseas apparelapparel marketsmarkets andand PakistanPakistan hashas raw raw materialmaterial andandcompetencecompetence inin textiletextile sector,sector, which which cancan bebe goodgood combinationcombinationforfor collectivecollective growthgrowth of of bothboth thethe economieseconomies.. There There areare alsoalsootherother fieldsfields forfor suchsuch mutually mutually beneficialbeneficial cooperationcooperation..



Bilateral trade and economic relationsBilateral trade and economic relations

between Bangladesh and Pakistan:between Bangladesh and Pakistan:(Figures i n Milli on US$)

Year Export to

Pakistan

Import from

Pakistan

Trade Balance

2000-2001 32.08 95.22 (-) 63.14

2001-2002 28.60 67.32 (-) 38.72

2002-2003 31.50 68.68 (-) 37.18

2003-2004 45.11 112.70 (-) 67.59

2004-2005 63.12 138.92 (-) 75.80

2005-2006 57.74 150.11 (-) 92.37

2006-2007 61.06 181.40 (-)120.34

* Galloping trade balance is always skewed to Pakistan.



Other Economic Relations:Other Economic Relations:

FDIFDI fromfrom PakistanPakistan toto BangladeshBangladesh registeredregistered with with BOIBOI

goesgoes toto thethe tunetune of of aboutabout 100100 millionmillion USUS dollardollar 66 PakistaniPakistani companiescompanies areare currently currently operating operating inin

Bangladesh·sBangladesh·s EPZsEPZs

Altogether Altogether moremore thanthan 5050 PakistaniPakistani companiescompanies areareoperating operating inin BangladeshBangladesh

PakistanPakistan hashas offeredoffered BangladeshBangladesh duty duty freefree accessaccess of of raw raw

jutejute andand uptoupto 1500015000 metricmetric tonton of of Tea Tea perper annumannum..

BangladeshBangladesh hashas alsoalso submittedsubmitted aa listlist of of 7373 itemsitems underunderninenine categoriescategories toto PakistanPakistan forfor duty duty freefree accessaccess..

ExistenceExistence of of agreementagreement forfor avoidanceavoidance of of doubledouble

taxationtaxation



Major Export Import Items:Major Export Import Items:

Sl#Sl# Major Items Exported toMajor Items Exported toPakistan fromPakistan from

BangladeshBangladesh

Major items Imported intoMajor items Imported intoBangladesh from PakistanBangladesh from Pakistan

11 Raw Raw Jute Jute Textile Textile && textiletextile articlesarticles

22 Tea Tea inin bulk bulk Vegetable Vegetable productsproducts

33 Jute Jute manufacturesmanufactures PreparedPrepared foodstuffsfoodstuffs

44 CutCut flowerflower Machinery Machinery..

55 PharmaceuticalsPharmaceuticals ChemicalChemical andand alliedallied productsproducts

66OthersOthers:: Shrimps,Shrimps, terry terry towel,towel,plasticplastic hanger,hanger, zipper,zipper, PP..V V..CC..bags,bags, dry dry food,food, BambooBamboo Poles,Poles,OtherOther MfdMfd.. Goods,Goods, soapsoaptoilet,toilet, leather,leather, ironiron chain,chain, ballball

penpen etcetc..

OthersOthers:: animalanimal products,products, basebase metalsmetalsandand articlesarticles of of basebase metal,metal, wood wood andandarticlesarticles of of wood, wood, Raw Raw hides,hides, PlasticPlastic

And And articlesarticles thereof,thereof, footwear,footwear,articlesarticles of of stone,stone, glassglass andand glassware,glassware,

pearlspearls etcetc..



Most prospective sectors for Joint Venture:Most prospective sectors for Joint Venture:

ITIT

Textile Textile

Leather GoodsLeather Goods Agrobased Industry Agrobased Industry

Light Engineering Light Engineering



Deterrents to accelerated bilateralDeterrents to accelerated bilateral

trade and economic cooperation:trade and economic cooperation: PerceivedPerceived politicalpolitical uncertaintiesuncertainties of of bothboth thethe countriescountries

Absence Absence of of directdirect shipping shipping linkslinks betweenbetween thethe twotwocountriescountries

Lack Lack of of frequentfrequent interactioninteraction andand exchangeexchange of of requiredrequiredinformationinformation betweenbetween ourour businessmenbusinessmen

Absence Absence of of cargocargo flightsflights andand enoughenough passengerpassenger flightsflights

Lack Lack of of exchangeexchange of of frequentfrequent privateprivate sectorsector delegationsdelegations FailureFailure toto participateparticipate inin eacheach other·sother·s tradetrade fairsfairs

Absence Absence of of requiredrequired cooperationcooperation atat GovernmentGovernment levellevel

MyopicMyopic views views of of thethe businessbusiness community community onon eacheachother·sother·s prospectsprospects andand competitivecompetitive edgesedges



Areas to be given more importance Areas to be given more importance

to tap economic opportunities:to tap economic opportunities: Strengthening Strengthening andand expanding expanding technicaltechnical cooperationcooperation

Enhancing Enhancing cooperationcooperation inin fisheriesfisheries andand livestock livestock

Creating Creating aa Joint Joint FundFund toto undertakeundertake investmentinvestment--promotionpromotion activitiesactivities andand linkageslinkages among among exportexport

processing processing agenciesagencies of of thethe twotwo countriescountries..

CooperationCooperation inin Agriculture Agriculture CooperationCooperation inin Tourism Tourism

CooperationCooperation inin exportexport PromotionPromotion andand

Signing Signing of of bilateralbilateral FTAFTA Agreement Agreement atat thethe earliestearliest



Salient Features of the proposed FTA:Salient Features of the proposed FTA:

If If bilateralbilateral tradetrade betweenbetween BangladeshBangladesh andand PakistanPakistan isis

toto increaseincrease toto 11 billionbillion dollardollar mark,mark, anan FTAFTAagreementagreement shouldshould bebe signedsigned.. The The FTAFTA shouldshould havehavefollowing following featuresfeatures::

EarlyEarly HarvestHarvest Approach Approach:: The The twotwo countriescountries cancan

implementimplement anan Early Early HarvestHarvest ProgrammeProgramme toto deliverdeliverbenefitsbenefits toto theirtheir privateprivate sectorsector aheadahead of of FTAFTA asas well wellasas toto provideprovide impetusimpetus forfor anan early early conclusionconclusion of of FTAFTA negotiationnegotiation..

UnderUnder thisthis programmeprogramme PakistanPakistan shouldshould grantgrantimmediateimmediate duty duty freefree accessaccess toto 7373 BangladeshiBangladeshiproductsproducts underunder 99 categoriescategories asas requestedrequested forfor..

PakistanPakistan cancan alsoalso provideprovide aa listlist of of productsproducts underunder

thisthis programmeprogramme.. Cont·d Cont·d....P/P/2 2



RecognitionRecognition of of SpecialSpecial andand DeferentialDeferential Treatment Treatment forforBangladeshBangladesh:: PakistanPakistan shouldshould recognizerecognize thethe LDCLDC statusstatus of of BangladeshBangladesh andand provideprovide thethe SpecialSpecial andand DeferentialDeferential (S&D)(S&D)

Treatment Treatment toto itit.. As As anan LDC,LDC, BangladeshBangladesh isis thethe legitimatelegitimateclaimerclaimer of of thethe facility facility.. Tariff Tariff reductionreduction scheduleschedule:: UnderUnder SAFTASAFTA Agreement, Agreement, PakistanPakistan

isis toto reducereduce theirtheir tariff tariff toto 00--55%% forfor BangladeshiBangladeshi productsproducts within within 33 yearsyears beginning beginning fromfrom thethe datedate of of coming coming intointo thethe

forceforce of of thethe Agreement Agreement.. UnderUnder thethe bilateralbilateral FTA,FTA, PakistanPakistanshouldshould reducereduce itsits tariff tariff toto 00--55%% forfor BangladeshBangladesh with with effecteffectfromfrom coming coming intointo forceforce of of thisthis bilateralbilateral FTAFTA Agreement Agreement.. OnOnthethe otherother hand,hand, asas anan LDC,LDC, BangladeshBangladesh shouldshould bebe allowedallowed totocomply comply with with itsits obligationsobligations asas itit isis underunder SAFTASAFTA..

SensitiveSensitive ListList:: FTAFTA shouldshould bebe moremore liberalliberal thanthan SAFTASAFTA.. As As ananLDC,LDC, any any itemitem having having exportexport interestinterest of of Bangladesh,Bangladesh, shouldshouldbebe excludedexcluded fromfrom thethe sensitivesensitive listlist.. At At thethe samesame time,time, itit shouldshouldbebe allowedallowed toto maintainmaintain aa wider wider negativenegative listlist.. Any Any productsproductsalready already underunder preferentialpreferential treatmenttreatment shouldshould notnot bebe includedincluded inin

thethe sensitivesensitive oror negativenegative listlist.. Cont·d Cont·d....P/P/33



RulesRules of of OriginOrigin:: RulesRules of of OriginOrigin underunder thethe proposedproposed FTA,FTA,shouldshould bebe moremore flexibleflexible thanthan thatthat of of SAFTASAFTA.. ItIt shouldshould bebebasedbased onon simplesimple value value additionaddition criteriacriteria andand notnot onon Heading Heading ororSubSub--Heading Heading changechange criteriacriteria oror combinationcombination of of bothboth of of themthem..ForFor getting getting preferentialpreferential accessaccess toto PakistanPakistan market,market, value valueadditionaddition forfor BangladeshiBangladeshi productsproducts shouldshould bebe lessless thanthan oror equalequaltoto 2525%% asas thethe percentagepercentage isis 3030%% inin SAFTASAFTA.. A A derogationderogation inin value value additionaddition criteriacriteria forfor R MGR MG andand otherother labourlabour incentiveincentivegoodsgoods of of BangladeshBangladesh shouldshould bebe allowedallowed andand itit would would notnot bebemoremore thanthan 2020%%..

RecognitionRecognition of of Testing Testing InstitutesInstitutes andand LaboratoriesLaboratories forforConformityConformity Assessment Assessment:: Conformity Conformity assessmentassessment certificatescertificates

onon technicaltechnical regulationsregulations andand productproduct standards,standards, toto bebe issuedissuedby by thethe respectiverespective designateddesignated nationalnational agencies,agencies, shouldshould bebeacceptedaccepted untiluntil mutualmutual recognitionrecognition Agreement Agreement isis reachedreachedbetweenbetween thethe twotwo countriescountries.. NonNon--acceptability acceptability of of conformity conformity assessmentassessment certificatescertificates of of any any product,product, if if andand when when arise,arise,

shouldshould bebe resolvedresolved by by mutualmutual cooperationcooperation andand discussiondiscussion without without restrictinrestrictin thethe flow flow of of tradetrade.. Cont·d Cont·d....P/P/44



ImpositionImposition of of RestrictiveRestrictive MeasuresMeasures:: ExportsExports fromfromBangladeshBangladesh shouldshould bebe exemptedexempted fromfrom antidumping,antidumping,countervailing countervailing andand safeguardsafeguard measuresmeasures onon nonnon--reciprocalreciprocal

basisbasis untiluntil Bangladesh·sBangladesh·s exportexport shareshare reachesreaches moremore thanthan1010%% andand thethe combinedcombined LDCLDC shareshare reachesreaches moremore thanthan 2525%%of of totaltotal marketmarket shareshare of of PakistanPakistan forfor thatthat particularparticular productproduct..

SettlementSettlement of of DisputesDisputes:: All All disputesdisputes relating relating toto any any

transactiontransaction shouldshould bebe referredreferred forfor settlementsettlement toto ananarbitrationarbitration body body toto bebe mutually mutually agreedagreed uponupon by by bothboth thethecountries,countries, unlessunless bothboth partiesparties agreeagree toto settlesettle thethe disputedispute ininany any otherother peacefulpeaceful mannermanner..

NegotiationsNegotiations onon tradetrade inin servicesservices andand investmentinvestment:: Trade Tradeinin ServicesServices andand investmentsinvestments shouldshould bebe expeditedexpedited by by negotiationsnegotiations betweenbetween thethe twotwo countriescountries onon thethe basisbasis of of respectiverespective offersoffers andand requestsrequests onon preferentialpreferential basisbasis taking taking intointo cognizancecognizance of of thethe varying varying developmentdevelopment statestate of of bothboth

thethe countriescountries..



Formation of a joint trade facilitating Committee:Formation of a joint trade facilitating Committee:

A A jointjoint tradetrade facilitating facilitating committeecommittee shouldshould bebe setset upupconsisting consisting of of thethe officialsofficials of of thethe concernedconcerned agenciesagencies

andand representativesrepresentatives fromfrom thethe privateprivate sectorsector toto identify identify

andand removeremove tradetrade barriersbarriers andand facilitatefacilitate mutualmutual tradetradeandand investmentinvestment..

The The recommendationsrecommendations of of thethe jointjoint tradetrade facilitating facilitating

committeecommittee mademade fromfrom timetime toto timetime shouldshould bebe thethe basisbasisforfor regulatory regulatory framework framework andand tradetrade policy policy formulationformulation

betweenbetween thethe twotwo countriescountries..



Areas for joint efforts to reap benefits of Areas for joint efforts to reap benefits of

bilateral Trade Opportunities Cooperation:bilateral Trade Opportunities Cooperation:

HarmonizationHarmonization of of HH..SS.. CodesCodes of of bothboth thethe countriescountries.. SimplificationSimplification andand harmonizationharmonization of of customscustoms procedureprocedure.. MutualMutual recognitionrecognition of of certifying certifying andand testing testing institutesinstitutes.. EstablishmentEstablishment of of directdirect shipping shipping andand airair linkslinks

EstablishmentEstablishment of of anan activeactive network network of of GovernmentGovernment andandprivateprivate sectorsector agenciesagencies relatedrelated toto tradetrade andand economy economy..

Fostering Fostering frequentfrequent interactioninteraction andand building building rapportrapportbetweenbetween thethe businessmenbusinessmen of of bothboth thethe countriescountries..

Making Making thethe GovernmentGovernment functionariesfunctionaries responsiveresponsive toto thetheneedsneeds andand problemsproblems of of thethe privateprivate sectorsector of of bothboth thethecountriescountries..

RegularRegular exchangeexchange of of informationinformation onon bilateralbilateral trade,trade,

commercecommerce andand investmentinvestment



THANK THANK YOU YOU

seminar on bd-pak trade opportunities under safta

Documents