The government is examining whether the Chinese authority is violating relevant rules of World Trade Organisation (WTO) by tagging zero tariff treatment to the existing benefits granted to Bangladesh under Asia-Pacific Trade Agreement (APTA), officials said.
The ministry of commerce (MoC) recently asked Bangladesh mission in Geneva to check if the Chinese proposal was made to replace one benefit by another as per WTO rules, they added.
Sources said the officials at Bangladesh permanent mission in Geneva may take the issue with Chinese officials at the WTO to find a solution for it.
The Chinese authority in its proposal said Bangladesh has to drop the facility it avails under the APTA to get duty-free and quota-free (DFQF) facility in the Chinese market what it offered for least developed countries (LDCs) as per WTO rules.
"The Chinese government will no longer implement the preferential tariff rates under the APTA for your country after the DFQF enters into force," the Chinese embassy in Dhaka informed the MoC recently.
As a member of LDC group, Bangladeshi goods will get duty-free market access in 97 per cent tariff lines to the Chinese market once Bangladesh signs a letter of exchange with China. On the other hand, under APTA arrangement, 2,372 Bangladeshi tariff lines will enjoy 5.0 per cent to 100 per cent tariff preference in the Chinese market.
Officials said Bangladesh is a founder member of APTA and needs 35 per cent value addition to enjoy tariff preferences in the Chinese market. But 40 per cent value addition is mandatory for enjoying DFQF facility in the Chinese market under the WTO arrangement.
They said Bangladesh is supposed to graduate to next stage from the lower income bracket by 2022 and will lose the LDC status thereafter. Side by side, it won't derive the benefits it enjoys as LDC then.
"If Bangladesh now opts for DFQF facility in the Chinese market as LDC replacing the benefit under APTA, the loss will be greater after few years it will lose both the LDC status and subsequently the zero tariff facility," said a senior MoC official.
APTA is a regional platform while the Chinese DFQF facility comes under a global platform. One cannot be replaced by another, he argued.
Commerce secretary in-charge Shubhashish Bose told the FE earlier that value addition requirement for Chinese DFQF facility is higher than that of tariff preference under APTA.
"After graduating to next stage from LDC, we may lose the benefit under zero duty preference in the Chinese market. Then we will lose both facilities there," he said.
Meanwhile, the Bangladesh Tariff Commission and the Bangladesh Foreign Trade Institute (BFTI) are conducting a comprehensive study detailing the pros and cons of accepting any of the two tariff concession deals.
Latest statistics show that Bangladesh's export to China increased by 17.48 per cent to US$ 949.41 million in the fiscal year 2016-17 from $ 808.14 million in the previous fiscal. China is a major importing source for Bangladesh with annual import of goods worth nearly $ 9.0 billion.
syful-islam@outlook.com
