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Finance ministry favours signing free trade deals

Agreements can cut trade gap while raising exports

Syful Islam | December 04, 2018 00:00:00

The Ministry of Finance has given the go-ahead to the Ministry of Commerce to move forward towards signing bilateral and multilateral free trade area (FTA) agreements with developed and developing countries, officials said.

The finance ministry's green light came as it gave its opinion on Bangladesh's signing FTAs.

A recent meeting at the Prime Minister's Office (PMO) had asked the relevant ministries and divisions to take steps for signing the FTAs after conducting feasibility studies.

"Bangladesh's large trade gap with many countries can be minimised through signing FTAs since it will help raise goods exports," the finance ministry wrote in a recent note to the commerce ministry.

The finance ministry also suggested expanding the export basket through adding more items to the list.

Besides, it emphasised finding new markets for Bangladeshi goods and taking appropriate steps for removing obstacles.

The ministry also said many of Bangladesh's competitors are signing FTAs and preferential trade agreements with different countries for expanding markets.

It suggested that Bangladesh go for signing bilateral and multilateral FTAs for market the expansion to boost exports while attracting foreign investments.

The finance ministry, in this case, cited China, India, Indonesia, Brazil, Malaysia, Thailand, South Korea, Pakistan, Japan, Argentina, the United Arab Emirates, Australia, Sri Lanka, and Saudi Arabia as potential countries for signing FTAs.

A senior official at the commerce ministry told the FE that Bangladesh is set to graduate to the developing country status by 2024.

Once the status is changed, the country will no longer be eligible for various benefits it enjoys as a least-developed country (LDC), which will put its external trade under severe competition, he said.

"So, we are now seriously thinking about changing our previous mindset regarding signing the FTAs," he said.

In the past some trade officials had reservation about signing the FTA deal with any country before Bangladesh graduates to the developing country status.

The official said the commerce ministry recently convened a workshop to get opinions from major stakeholders and experts, where the majority of the participants spoke in favour of signing FTAs with potential export markets.

So far, Bangladesh has made progress in signing FTA deals with Sri Lanka and China. A study by Bangladesh Tariff Commission found on signing the free trade area deal with Sri Lanka to be beneficial for Dhaka.

However, according to trade officials, Sri Lanka is less interested to open FTA negotiations with Bangladesh before it clinches the ongoing FTA negotiations with China and Korea.

In June last, Bangladesh started conducting a joint feasibility study on the possibility of inking an FTA deal with China. The trade officials of two countries have finalised the terms of references (ToR) and structure of report of the study.

Distinguished Fellow of Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya had earlier told the FE there is no problem in exploring FTA possibility with major countries.

But during the study, some issues have to be kept in consideration so that Bangladesh can benefit from the deals.

Dr Bhattacharya said Bangladesh needs to check whether it will get preferential tariff reduction and products having export potential can be included in the FTA concession list.

"The amount of revenue loss from FTAs needs to be calculated and removing non-tariff barriers has to be addressed," he added.

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