FBCCI prepares motion plan for the federal government to successfully cope with post-LDC commencement commerce challenges
The Federation of Bangladesh Chambers of Commerce and Trade (FBCCI) has really helpful that the federal government begin talks on a free commerce settlement (FTA) with the USA – a key export vacation spot for the nation – instantly as a substitute of losing time negotiating for a restoration of generalised system of preferences (GSP) privileges there.
The nation’s apex commerce physique thinks that Bangladesh additionally must provoke discussions on bilateral FTAs with the UK and Canada quickly.
And since the remainder of the export vacation spot international locations are members of 1 or one other regional commerce bloc, FTAs with them could be mentioned with the respective commerce blocs slightly than going for bilateral talks, it provides.
This may create scope for Bangladesh to achieve FTAs with nearly all of its main export locations, observes the federation.
Bangladesh has no different possibility however to enter into complete free commerce agreements in items, providers and in addition funding with main regional commerce and financial blocs together with bilateral and reciprocal FTAs with the US, Canada and the UK, overlaying over 95% of the worldwide market with a purpose to successfully cope with the predictable post-LDC commencement challenges, the FBCCI says.
The apex commerce physique, placing ahead a set of suggestions on retaining market entry past 2026, made plenty of proposals for the federal government and the personal sector to beat the looming challenges in its report despatched to the Ministry of International Affairs and the Ministry of Commerce on 3 July.
Bangladesh must face the difficult job of exporting on probably the most favoured nation (MFN) tariff charges after graduating from LDC (least developed international locations) standing in 2026 as unilateral GSP schemes at present offered by 85% of the nation’s export locations shall be terminated, noticed the federation.
The nation will stay eligible for duty-free entry solely to the European Union market beneath the EBA (every thing however arms) initiative that shall be prolonged for 3 extra years beneath the current phrases, it added.
The FBCCI thinks that to retain its market entry, Bangladesh ought to think about some important components for the its strategic coverage, corresponding to strategic goal mapping, extension of phrases of unilateral duty-free quota-free (DFQF) market entry, GSPs, and free commerce agreements – Safta and Apta – in the course of the 2026-2029 interval.
FBCCI adviser Manzur Ahmed instructed The Enterprise Customary that the FBCCI has developed the motion plan for the federal government after analysing the deserves and demerits of FTAs with totally different international locations and commerce blocs, he mentioned, including, “This can be a physician’s prescription for the facilitation of Bangladesh’s overseas commerce, the federal government could settle for it.”
Economists, nonetheless, have mentioned that whereas the FBCCI’s views on bilateral FTAs with three international locations, together with the US, and FTAs with different international locations beneath regional commerce blocs is affordable, executing its really helpful motion plan won’t be that simple.
Mohammad Abdur Razzaque, worldwide commerce specialist and chairman of Analysis and Coverage Integration for Growth (RAPID), instructed TBS that it could be troublesome to achieve an FTA with the US as a result of Bangladesh should adjust to sure circumstances, relating to varied points corresponding to labour rights and copyrights, areas the place Bangladesh continues to be lagging behind.
He, nonetheless, pressured the necessity for formulating methods and initiating discussions rapidly on this regard.
He mentioned that precedence must be given to FTAs with the US, Canada, EU, China, Japan, and India slightly than making an attempt to signal FTAs with many international locations collectively.
“As soon as Bangladesh graduates from LDC standing in 2026, it’ll have duty-free export amenities to the EU marketplace for the following three years, however to not Canada, Japan, China and India. Then Bangladeshi merchandise must enter the Canadian market by paying 18% responsibility.”
However FBCCI Adviser Manzur Ahmed, who can also be engaged within the preparation of the report, thinks that since plenty of international locations, together with Kenya, Vietnam and India, have made exceptional progress in negotiating FTAs with the US, with Kenya and the US making a joint template already, Bangladesh can comply with these fashions and transfer forward with talks with the US.
He mentioned comparable talks must be held with Canada.
The US is the most important export marketplace for Bangladesh. In fiscal 2020-21, Bangladesh’s commerce quantity with the nation was $9.24 billion, of which imports accounted for $2.27 billion and exports $6. 6.97 billion.
Information on bilateral commerce between the 2 international locations for the just-concluded fiscal 2021-22 haven’t but been obtained. The Export Promotion Bureau (EPB), nonetheless, says that Bangladesh’s exports to the US in the course of the interval have been about $10.5 billion, which is 50% increased when in comparison with the earlier yr.
Bangladesh at present enjoys duty-free entry to exports beneath GSP or some other mechanism in nearly all main export markets, together with the EU, the UK and Canada. Nevertheless, the US market has not provided any duty-free entry to Bangladeshi merchandise since 2013. Previous to 2013, among the nation’s principal export merchandise, besides ready-made clothes, loved duty-free entry to the US, which accounted for lower than 1% of complete exports. However that facility too was suspended over labour rights points after the Rana Plaza collapse in 2013.
Regardless of this, the export of Bangladeshi clothes to the US market is on the rise.
About an FTA with the US, the FBCCI in its report “Market entry 2022-2026 and past” says non-reciprocal commerce offers corresponding to GSP and multilateral, regional preparations have been excluded from the US commerce agenda and accordingly the US solely prefers to make bilateral reciprocal commerce offers.
Bangladesh ought to subsequently, with out losing time on GSP or WTO, instantly take up a proactive initiative in establishing a bilateral FTA with the USA of America following the instance of Kenya, Vietnam, India and different international locations.
The report additional says the phrases of the FTA in items, providers and funding with the US must be with out prejudice to the rights and obligations beneath the WTO settlement and respective worldwide rights and obligations as agreed within the Bangladesh-US Commerce and Funding Cooperation Discussion board Settlement (Ticfa).
Think about the rewards of unfettered entry to 2.5 billion folks, 15 international locations and a $12.7 trillion market. That’s what the China-led Regional Complete Financial Partnership (RCEP), the most important financial bloc on the earth, has on supply.
If it sounds too good to be true, it in all probability is, no less than at this cut-off date.
Whereas in a survey the Bangladesh Commerce and Tariff Fee (BTTC) really helpful Bangladesh be part of the bloc, its wording relating to the accession had some warnings embedded.
The BTTC mentioned, “The federal government could categorical its optimistic stand relating to the accession of Bangladesh to RCEP contemplating all the problems, issues and preserving in view the issue-wise stakeholder session and recognising that home guidelines and rules could require to be modified in some circumstances, if the state of affairs arises.”
The issues and adjustments in home guidelines are certainly points that require additional scrutiny.
What’s additionally essential is the lion’s share of any export progress could be for the attire sector with others dropping out.
The Gulf Cooperation Council (GCC) is a political and financial union of Arab states, together with the United Arab Emirates (UAE), Saudi Arabia, Qatar, Oman, Kuwait and Bahrain.
In keeping with the Worldwide Commerce Centre information, in 2020, the UAE sourced about $4.40 billion value of attire objects from international markets, Saudi Arabia $3.01 billion, Kuwait $1.13 billion, Qatar $660 million, Oman $608 million and Bahrain $274 million.
Bangladesh now exports solely $367.49 million value of products to this area, as per EPB information.
Bangladesh has expressed curiosity in signing an FTA with the Eurasian Financial Union (EAEU), a Russian-led Jap European financial union comprising Belarus, Kazakhstan, Armenia and Kyrgyzstan, to discover the export potential of varied merchandise, together with knitwear.
The commerce ministry has requested the overseas ministry to make a proper proposal to the Eurasian Financial Fee (EEC) relating to the signing of the FTA.
International locations belonging to the European Union, one of many largest financial blocs on the earth, had a overseas commerce quantity of $7,311 billion in 2020. The gross home product of the international locations is $1,634 trillion.
Bangladesh doesn’t get responsibility free amenities in Eurasian markets, which have large potential for Bangladesh’s export merchandise. Bangladesh’s exports to those international locations have elevated considerably over the previous decade and the quantity stands round $500 million.
In keeping with the Export Promotion Bureau, Bangladesh’s exports to the EU throughout July-December of the present monetary yr amounted to $382 million which was $677 within the earlier fiscal yr. And in 2019-20, Bangladesh exported items value $498 million to EAEU.
Bangladesh has proven curiosity in signing an FTA with Mercosur, an financial and political bloc of the massive economies of South America consisting of Argentina, Brazil, Paraguay and Uruguay.
Highlighting Bangladesh’s power because the second largest RMG producer and world-class pharmaceutical producer, Bangladesh Ambassador to Brazil Sadia Faizunnesa has sought Brazil President Jair Bolsonaro’s help in negotiating an FTA with Mercosur.
The South Asian Free Commerce Space (Safta) is a 2004 settlement that created a free commerce space of 1.6 billion folks in Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka with the imaginative and prescient of enhancing financial cooperation and integration amongst them.