A standing proposal gets the go-ahead from the interim government to begin formal negotiations towards signing on the Regional Comprehensive Economic Partnership (RCEP), an emerging economic bloc encompassing the Asia-Pacific region, sources said.
Commerce ministry Monday received the approved summary note sent to Chief Adviser Prof Muhammad Yunus for the nod, they informed.
Recently, the ministry sent the note to the interim government's premier for permission to starting off talks on striking the proposed agreement on the RCEP that accounts for a third of world GDP.
Contacted, commerce secretary Md. Selim Uddin said, "We have received the summary. We have got approval from the CA for starting process regarding signing the deal."
He expects that Bangladesh will be able to net significant trade facilities from a good number of countries if the agreement gets through.
"We in principle have taken a decision to prepare a detailed workout plan which will be formed within next one week," Mr. Uddin mentions.
The immediate-past government kept in abeyance the move to join the world's largest trade regime due to last general election. But, the commerce ministry had sent a summary of the RCEP deal and dos to the then prime minister for necessary approval.
In August 2023, an inter-ministerial meeting under the then government had recommended joining the trade bloc, as an assessment suggested that joining would increase Bangladesh's exports to the global market by more than 17.37 per cent.
The commerce ministry expects to kick-start formal proceedings at the forum headquarters for the country's membership in RCEP after completion of the workout plan, the commerce secretary mentioned.
He said, "We expect to send formal proposal to the RCEP for joining the bloc through the Foreign Affairs Ministry."
Bangladesh has started the process of joining mega trade bloc on hope of a boost to export to the member-countries, but it had been postponed since October 2023, they added.
It expects to send a formal proposal to the depository and temporary secretariat of the world's largest trade bloc at the ASEAN headquarters for the country's membership.
Bangladesh decided in principle to join the emerging vast trade bloc at a workshop held at commerce ministry on August 01, 2023.
The ministry already completed necessary scrutiny and review in this regard, based on commitments fulfilled by Vietnam, a member of the China-mooted bloc.
A high official also says the commerce ministry will have to take cabinet approval to move ahead. Vetting from the law ministry may also be required.
Bangladesh's inclusion in the RCEP will be positive although the existing regional deals with the South Asian Association for Regional Cooperation (SAARC) and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) have hardly made any visible outcomes, says Research Director of CPD Dr Khondaker Golam Moazzem.
He hopes that huge cross-border trade opportunities will be created for Bangladesh after getting membership in RCEP. Besides, Bangladesh can be able to enter important manufacturing hubs, including China. It will also be a part of value chain.
An earlier study conducted by Bangladesh Trade and Tariff Commission (BTTC) showed Bangladesh's trade with RCEP-member countries mostly concentrated on trade in goods.
Bangladesh's export may grow more than 17 per cent and gross domestic product (GDP) 0.26 per cent if free-trade agreement is signed with the bloc members, it mentioned.
The RCEP deal came into force in January 2022 and any country/customs territory is eligible for applying for membership.
As of now, 15 Asia-Pacific nations are party to the world's biggest free-trade domain.
The ASEAN members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, while its FTA partners are Australia, China, Japan, New Zealand and Korea.
An outstanding feature of the RCEP is that it represents world's largest FTA, comprising about 30 per cent of global GDP and about a third of the world population.
The economic-cooperation forum, spanning Asia-Pacific realm that covers 2.3 billion people, accounts for US$ 25.8 trillion or about 30 per cent of global GDP.
Also, it accounts for $12.7 trillion or over a quarter of global trade in goods and services, and 31 per cent of global foreign direct investment (FDI) inflows.
In the fiscal year (FY) 2020-21, Bangladesh exported goods worth $3.9 billion to and imported goods worth $24.5 billion from these countries.
On the other hand, at the same time, the services export was worth US$1.8 billion and import worth $2.6 billion.
Bangladesh enjoys preferential market access to many of the RCEP countries, either through preferential trade agreement (PTA) or through GSP facilities.
After graduating from the least-developed country (LDC) status in 2026, the duty-free access will no longer be available except for reciprocal general preference under the Asia-Pacific Trade Agreement (APTA).
In such a situation, sustaining the consistent progress achieved by Bangladesh in bilateral export trade with some of the RCEP countries as well as availing the opportunity to some potential destinations in RCEP will be a real challenge.
The study says RCEP includes some of the major export destinations as well as major import sources of Bangladesh. "Considering the bilateral-trade scenario, RCEP remains more as an important partner from the Bangladesh perspective."
Imports from RCEP contribute around 43.92 per cent of the total global imports by Bangladesh, 55.33 per cent of the total tax-revenue and 58.56 per cent of total revenue from customs duty collected under home consumption, as of FY 2020-21.
Thus, the probable accession of Bangladesh to RCEP may, however, have a negative impact on revenue generation from customs duty.
Since some major import sources of Bangladesh like China, Japan, Thailand, South Korea, Indonesia, Malaysia and Australia are involved with RCEP, there is a threat of losing a certain amount of revenue from these countries.
More than 68 per cent of total merchandise exports to RCEP are under apparel-product category. Top twenty export items to RCEP mostly consist of apparel products and these twenty products constitute 64 per cent of total exportable.
The study found that the average most-favoured nation (MFN) tariffs for Bangladesh had been comparatively higher than that of the RCEP members.
It says the probable increase in import along with a comparatively protective regime of Bangladesh estimated a probable high revenue loss for Bangladesh compared to that of the RCEP.
"However, as estimated trade creation would likely be higher than the trade-diversion effect for Bangladesh, it may generate additional revenue from other duties and charges, if not reduced due to a possible accession in RCEP," the study mentions as regards a tradeoff.
The Trade and Tariff Commission recommends that the government may express its positive stand regarding the accession of Bangladesh to RCEP through weighing all the pros and cons. In that case, domestic rules and regulations may need to be changed in some cases, if a situation arises.
The RCEP negotiations were formally launched during the 2012 ASEAN Summit in Cambodia. India withdrew from the agreement in November 2019 despite participation from the beginning of negotiations.
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