Facing the dilemma of accepting the zero-tariff treatment or swapping it for the Asia-Pacific Trade Agreement (APTA) benefits on the Chinese market, the government moves to conduct a comprehensive study before deciding.
Officials said the ministry of commerce (MoC) last week asked the Bangladesh Tariff Commission and the Bangladesh Foreign Trade Institute (BFTI) to carry out the study within a month, detailing the pros and cons of accepting either of the benefits.
If Bangladesh wants to avail duty-free and quota-free (DFQF) access the Chinese market, it will have to forgo the benefit being reaped from the APTA.
"The Chinese government will no longer offer 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 the least-developed countries (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 preferences in China.
Officials said Bangladesh is a founder-member of APTA and needs 35 per cent value addition to enjoy tariff preferences on the Chinese market. On the other hand, to enjoy DFQF facility under World Trade Organisation (WTO) arrangement, 40 per cent value addition is mandatory.
They said Bangladesh is expected to graduate to next stage from the lower-income bracket by 2022 and it will then lose the LDC status, as also the benefits it enjoys as a member of the world's poor-country club.
"If Bangladesh now opts for DFQF facility in the Chinese market as LDC, replacing the benefit under APTA, the loss will be greater since, after few years, it will lose both the LDC status and subsequently the zero-tariff facility, too," said a senior MoC official.
Commerce secretary-in-charge Shubhashish Bose told the FE Wednesday 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 the facilities there," he told the FE.
"We are discussing with Chinese government how to resolve it. Besides, we are studying the pros and cons of the both types of facilities," Mr Bose said.
Another senior MoC official said Bangladesh has long been requesting China to grant duty-free market access of goods only under 17 more HS Codes. With APTA facility in hand the duty-free market access of products under these 17 HS Codes will be good enough for Bangladeshi exports to enjoy a great lead on the Chinese market, he noted.
"We may seek DFQF in Chinese market keeping APTA facility intact. Because, while offering any facility under WTO arrangement a developing country can't tag any condition," said the official.
"Otherwise, we may put forward the issue to the WTO headquarters saying China is breaching WTO guidelines," he noted.
Latest statistics show Bangladesh's export to China increased by 17.48 per cent in fiscal year 2016-17 to US$949.41 million from $808.14 million last year. China is a major import source for Bangladesh with annual imports from there costing nearly $9.0 billion.
Bangladesh mainly exports woven garments, knitwear, home textiles, agri-products, footwear, raw jute, jute goods, bicycle, frozen foods, leather and leather products.
On the other hand, its major imports from China include: cotton, cotton yarn/thread and cotton fabrics, nuclear reactors, boilers, machinery and mechanical appliances, manmade staple fibres, iron and steel, plastics and articles thereof, vehicles other than railway or tramway, paper and paper board, arms and ammunition, electrical machinery and equipment, sound recorders and reproducers.
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