FTA studies on way

The commerce ministry has been conducting a major study on the implications of signing free trade agreements (FTAs) with some major trading partners, a senior official said.

The ministry has already assigned the Bangladesh Tariff Commission for conducting the study on what would be the impacts on the economy, trade and business if the FTAs are signed with countries like India, Sri Lanka, Malaysia, Turkey and China.

The studies are being conducted to safeguard the interests of the domestic industries, said Manoj Kumar Roy, additional secretary to the commerce ministry.

Roy also said the ministry will seek opinions from different stakeholders before signing any FTA because any wrong decision can damage the domestic industries, as tariffs will be lowered to zero level if the agreement is signed with the partnering countries.

Bangladesh has already held some bilateral meetings with the intending countries over the last few years to sound out its interest in signing FTAs with them.

The country already enjoys duty benefits with the proposed countries as a least-developed country.

For example, India has allowed zero-duty benefit to all Bangladeshi products except 25 alcoholic and drug items and China has allowed duty benefits to more than 4,721 products including the country's main export, apparel.

In case of Turkey, Bangladesh needs to pay 17.50 percent duty on export of garment items since June 2012, which was duty-free earlier. In 2012, Turkey unilaterally imposed 17.50 percent duty on import of Bangladeshi garment items to save their own apparel industry.

Malaysia has allowed duty-free benefit for 497 Bangladeshi products including garments. “It is not that we will sign the FTA with any country only depending on the outcomes of the studies, as the duty is related with the agreement,” Roy said.

Bangladesh has been looking for prominent global trading partners either through the signing of FTA or preferential trade agreement (PTA) as the country is slowly graduating from the list of LDCs with the increase in its per capita income.

The government forecasted that Bangladesh will become a middle-income country by the end of 2021.

If the country comes out the list of LDCs, Bangladesh will not enjoy preferential trade benefit with many countries, although the EU has been saying it will continue the zero-duty benefit for Bangladesh even if the country becomes a middle-income one upon fulfillment of some conditions.

As a result, the government has been trying to sign FTA or PTA with prominent countries.

Currently, as an LDC Bangladesh enjoys generalised system of preferences (GSP) in 38 countries, including 28 EU nations.

Under the GSP, Bangladesh either enjoys zero-duty benefit or removal of duty on export of major products to 10 countries, according to Export Promotion Bureau.

Bangladesh exports 729 products but only six items, including garments, jute and leather, account for 94 percent of the total export, according to EPB.