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China offered to sign bilateral FTA in 2016 and offered to bear the cost of feasibility study. Bangladesh casually accepted proposal and a delegation visited China for primary discussion but there is no visible progress. India is also willing to sign bilateral FTA but concerned of FTA of Bangladesh with other countries although they have sign more dozen of FTA.TRANSCRIPT
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How important is FTA for Bangladesh? Published Time: August 20, 2019, 12:01 am Updated Time: August 19, 2019 at 9:11 pm
M S Siddiqui writes for DOT Bangladesh is likely to face a severe blow to its foreign trade, as its competitor country Vietnam signed a free-trade agreement (FTA) with the European Union (EU). The EU signed the free-trade deal with Vietnam on June 30, 2019 paving the way for tariff reduction on 99 per cent of goods, traded between the bloc and the Southeast Asian country. The trade deal of the EU, the first of its kind with a developing country in Asia, will be effective after approval of the European Parliament. Local trade analysts said Bangladesh will face a serious blow, as its strong trade opponent Vietnam signed the FTA with the EU. The challenges for Bangladesh will swell further when it will graduate as a developing nation after 2024. Bangladesh, as a least developed country (LDC), now gets “zero tariff” facility in exporting its products to Europe under the Generalised System of Preferences (GSP). Bangladesh not yet signed any bilateral free trade agreement but few regional and sub-regional trade agreements (RTAs). Bur signed the Asia-Pacific Trade Agreement (APTA), previously named the Bangkok Agreement, signed in 1975 as an initiative of ESCAP. Bangladesh, China, India, Lao PDR, Mongolia, Republic of Korea, and Sri Lanka are the parties to the APTA. ESCAP functions as the secretariat for the Agreement. APTA is a preferential tariff arrangement that aims at promoting intra-regional trade through exchange of mutually agreed concessions by member countries. The following three Framework Agreements under APTA have been signed and ratified by the Participating States: (i) Agreement on Trade facilitation, (ii) Agreement on investment and (iii) Agreement on Liberalization of Trade in Services. Successful implementation of the latter agreement can play a vital role in investment flows, not only from non-member countries but also among the member countries.
APTA was signed with the aim to promote intra-regional trade through an exchange of mutually-agreed-upon concessions. Its membership is open to developing countries that belong to ESCAP. ESCAP is the regional development arm of the United Nations for the Asia-Pacific region. It has 53 Member States and 9 Associate Members, with a geographical scope that stretches from Turkey in the west to the Pacific island nation of Kiribati in the east, and from the Russian Federation in the north to New Zealand in the south, the region is home to 4.1 billion people, or two thirds of the world’s population. With the entry of China in 2001 made APTA the only RTA linking the two fastest-growing economies of the world China and India. One of the most distinguished gains for Bangladesh is to get access to the two most populous and fastest growing countries in the region and also to opportunities to trade in major world markets, such as the Republic of Korea, and in newly developing markets in South Asia, such as well as Sri Lanka. Bangladesh enjoying some benefit of since the rules of origin criteria of APTA are:(1) In case of single country content, value addition requirement is 35% for LDCs and 45% for non-LDCs, and (2) In case of regional accumulation, local content requirement in 50% for LDCs and 60% for non-LDCs. Bangladesh is mainly importing products, including intermediate goods, basic raw materials, capital goods and machinery, and industrial parts. Bangladesh has offered duty benefit on import of 602 products from five countries. Bangladesh for the first time offered the duty benefit on import of 602 products from five countries under APTA. The SRO has been issued with a retrospective effect from July 1, 2018. China and India constitute for around 50 per cent of annual import of Bangladesh. Bangladesh import from APTA member countries is about 20 billion and export to APTA is very low. The benefit will affect the government’s revenue earning to some extent. Out of its total US$ 51.50 billion import, Bangladesh brought goods worth around $ 16 billion from China and Hong Kong and $ 9.0 billion from India in last fiscal year (FY), 2017-18. In 2018, Export to India is US$870m and export earnings from China are US$$695m. Our Major Export destinations are EU, USA, Canada, Japan etc. China and India are the source of major raw materials for our exportable items including garments. We need support from APTA to develop our export competitiveness in the APTA region. The competitiveness of export products can ensure with elimination of customs duty on imported raw materials from China and India and also customs duty on Bangladesh export to China and Indian market. Bangladesh can increase export volume with no import duty on Bangladesh products through FTA in these two markets. Bangladesh may get rid of different trade barrier in Indian market only by signing FTA. Global experience proved that bilateral FTAs have been becoming instrumental in the global trading system. There are more than 200 such deals worldwide. Bangladesh has negotiation of bilateral FTA with many countries but could not sign any such agreement. Bangladesh could sign some regional and intra-regional PTA and FTA very successfully and should try to get benefit under those PTAs and FTAs. The negotiation of APTA was under sponsorship of The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and seems successful from point of view of Bangladesh as we are not efficient in negotiation of bilateral and multilateral PTA or FTA.
China offered to sign bilateral FTA in 2016 and offered to bear the cost of feasibility study. Bangladesh casually accepted proposal and a delegation visited China for primary discussion but there is no visible progress. India is also willing to sign bilateral FTA but concerned of FTA of Bangladesh with other countries although they have sign more dozen of FTA. Bangladesh also needs a balance of trade with these two countries simultaneously due to geo-political reason. APTA is the only forum to bring these two countries together in a single forum of PTA with Bangladesh. But Bangladesh urgentlyshould promote APTA and also need FTA with both China and India. The writer is a Legal Economist, e-mail: [email protected]