The country is now aiming to cobble-up a series of trade pacts, as many as 11 as per some accounts but the National Board of Revenue is for exercising restraint and considering the issues of revenue and local industry protection before singing any free trade agreement (FTA), preferential trade agreement (PTA) with any country.
Preferential trade agreements may backfire if those are signed without considering the overall economic impact and protection of revenue collection and local industry, concerned officials underlined and went on to add conducting feasibility studies engaging more than one Government and private agencies and taking opinions of stakeholders would help protection of domestic industry and revenue sector.
The much-awaited Preferential Trade Agreement (PTA) between Bangladesh and Bhutan was signed on 6 December, 2020. Bangladesh Commerce Minister Tipu Munshi and Bhutanese Economic Affairs Minister Lyonpo Loknath Sharma signed the PTA in the virtual presence of Prime Minister of Bhutan Dr Lotay Tshering and Bangladesh Prime Minister Sheikh Hasina.
As per reports, under the agreement, 100 products from Bangladesh will enjoy the duty-free benefit in the Bhutanese market while 34 Bhutanese items would enjoy similar privilege in Bangladesh market. Among the good that would enjoy the duty-free benefit in the Bhutanese market are readymade garments, footwears, jute or coconut fibre carpets, fruit juices, particle boards, potatoes, cement, biscuits, corrugated iron sheets, iron rods, cosmetics, sugar, dried fish and cables while among the Bhutanese goods that will be eligible for the benefit are dried chillies, boulder stone, milk, natural honey, cement clinkers, gypsum, calcium carbonate, soap, mineral water, ferrosilicon, wheat bran, dolomite, apples, pears, cabbage, cauliflowers, orange, seed potatoes and cardamom.
The bilateral trade between Bangladesh and Bhutan will grow by 15 per cent every year thanks to the agreement, underlined Commerce Minister Tipu Munshi while adding that there is a provision in the PTA that the two countries can increase the number of trading items in the future.
Meanwhile, the Bangladesh Prime Minister and the country’s economists and experts have hailed signing of the PTA between the two countries. “The PTA which both sides signed today will contribute to further consolidating the relations between our two countries,” said Sheikh Hasina while joining the signing ceremony virtually from her official Ganabhaban residence.
She added that the PTA signing was held on 6 December to make the day memorable as on this day in 1971, Bhutan became the first country in the world to recognise Bangladesh’s independence and it marks the 50th anniversary of bilateral and diplomatic relations between the two countries.
“It is time to make our extraordinary relations even more meaningful for mutual benefits and for the overall development and well-being of our citizens. It is in this spirit that we have signed today the Bangladesh-Bhutan PTA,” said the PM while noting that it is a historic moment and Bangladesh was signing its first-ever PTA with any country in the world and this country is also the first country that recognised Bangladesh as a sovereign and independent state after the War of Liberation in 1971.
Under this agreement, Sheikh Hasina said, a wide range of products from Bangladesh and Bhutan can find duty-free entry into each other’s markets, adding that the PTA also has a provision for including an additional list of products through mutual consensus. “Once the agreement comes into force, I believe more people in Bangladesh can have access to fresh Bhutanese apples and oranges, while the fashion-conscious people of Bhutan can choose from more varieties of quality apparels from Bangladesh,” Hasina expressed hope.
Meanwhile, speaking to the media, eminent economist and former Bangladesh Bank Governor Dr Salehuddin Ahmed said the signing of the first-ever PTA was a good sign for the country’s economy and suggested the Government to ink more PTAs and Free Trade Agreements (FTAs) with economically large countries for accelerating Bangladesh’s economy.
“Bhutan is a small country. We will have to sign more PTAs with economically large countries, including Malaysia and Indonesia,” he added while urging the Government to go to the regional blocks, like ASEAN, for increasing its negotiation capacity in this regard.
Said Dhaka Chamber of Commerce & Industry (DCCI) President Shams Mahmud, “Based on this PTA, we’ll have to make analysis and thus strike more PTAs and FTAs with countries like Nepal, Malaysia and Indonesia,” and added those should be formulated and done in a scientific way.
Citing an example, he said if Bangladesh could penetrate the Australian and Latin American markets with products like readymade garments (RMG) by striking such trade deals, then those particular products would have a round the year market.
Mentioning that Vietnam has already signed FTA with the EU, the DCCI President opined that signing of PTAs and FTAs is very much important for a country like Bangladesh for successful LDC graduation, adding, “From now on, we’ll have to sign more PTAs and FTAs.”
President of International Business Forum of Bangladesh (IBFB), Humayun Rashid has also welcomed the signing of PTA with Bhutan, terming it as a ‘milestone’ of the present Government.
“Bangladesh has signed its first-ever PTA with Bhutan. The PTA which both sides signed today will accelerate the economic activities between the two countries,” Humayun Rashid said and asked the Government to take initiatives to sign such agreements with more countries, including the USA, the European Union and Association of Southeast Asian Nations (ASEAN) countries.
The agreements with those countries will increase bilateral trade and will also play a big role to sustain the country’s economy after the graduation from the Least Developed Countries (LDCs) in 2024, Humayun claimed.
It may be mentioned here that Bangladesh Government has taken initiative to ink free trade agreement (FTA) with some 11 countries aiming at a smooth and competitive trade market in near future.
Sirajul Islam, Executive Chairman of Bangladesh Investment Development Authority (BIDA), said the Commerce Ministry is beginning trade negotiations with different countries and expressed hopes the country would successfully sign FTAs soon with some countries.
In this context, Commerce Secretary Md Jafar Uddin stated, “We are seriously working this issue as the country is currently in negotiations with 11 countries to sign the preferential trade agreements (PTAs) or FTAs.” On the other hand, a process is under way to sign Comprehensive Economic Partnership Agreements (CEPA) with India as well, he added.
However, even as Bangladesh continues its efforts to hammer out more and more trade deals so as to minimise the impact of the LDC graduation, the country’s National Board of Revenue has requested the Government to consider the issues of revenue and local industry protection before singing any free trade agreement (FTA), preferential trade agreement (PTA) with any country.
The Government should pay special attention to keeping the revenue mobilisation and domestic industry unhurt in the process of signing FTA, PTA or comprehensive economic partnership agreement (CEPA) with any country, NBR said in a letter to the Commerce Ministry.
Still customs duty contributes more than 30 per cent to the country’s overall revenue generation, it said.
The revenue board also prepares the country’s fiscal policy considering the protection of domestic industries. So, the Government should consider the issues while starting any negotiation for such agreement, the letter sent to Commerce Secretary Md Jafar Uddin underlined while adding that the overall economic impact of such treaties should also be considered in negotiations.
International trade and agreement wing of the customs department of the revenue board sent the letter in which the Customs department also requested the Ministry to follow a set of procedures, including conducting feasibility study on possible FTA or PTA by more than one public and private agency, before signing such agreements.
The Ministry should take opinions of the revenue board, other relevant Government agencies and stakeholders from the private sector on the feasibility study before moving ahead with the study, it said.
The revenue board also observed that the Government should avoid signing free trade or preferential trade agreements with countries such as India, China, Thailand, Malaysia and Indonesia as Bangladesh has huge trade gap with the countries and there are possibilities of widening the gap further if FTAs or PTAs are signed.
The Government should give priority to the Bangladesh’s export destination countries and regions in signing such agreements, the letter suggested while underlining that negotiations should be strengthened to enter in the preferential trade regime with those countries and regions where Bangladesh may lose existing trade benefits due to its graduation from least developed country to a developing one.
The officials of the revenue board said that they gave the opinions following letters sent by the Commerce Secretary and the Bangladesh High Commissioner in Sri Lanka on various aspects of upcoming FTAs and PTAs the Government is considering to sign with several countries.
The Bangladesh Trade and Tariff Commission usually conducts feasibility study and the Ministry takes opinions of stakeholders on the study before starting any negotiation, they said, adding, the Ministry was negotiating with a number of countries, including Indonesia, Nepal and Sri Lanka, over signing trade agreements.
Considering the views and opinions as shared by the concerned officials, the Government would perhaps do well to go for complete feasibility studies and from multiple and competent authorities before signing any trade deals.
