FTA with GCC states on cards

Syful Islam | Published: July 14, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

The government is mulling formation of a free trade area (FTA) with GCC (Gulf Cooperation Council) countries aiming to raise exports to the oil-rich nations, sources said.
In this regard Bangladesh Tariff Commission (BTC) has studied the possibility of formation of an FTA with the GCC countries and suggested the government to sign an FTA agreement covering three areas: trade in goods, trade in services, and investment.
The BTC report said the economy of GCC as a whole is ten times larger than that of Bangladesh. Bahrain, Kuwait, Oman, Qatar, Kingdom of Saudi Arabia and the United Arab Emirates--- are members of GCC, a regional inter-governmental political and economic union comprising all Arab states of the Persian Gulf, except Iraq.
The GCC has a market of US$11 billion for readymade garment (RMG). The report said being one of the largest RMG manufacturers; Bangladesh can take the opportunity of raising export of the item in the GCC market through obtaining duty free access by forming a free trade area.
The study found that Bangladesh has also export potential of other products like pharmaceuticals, footwear, hats, ceramic products, and spices to the GCC markets.
It said tariff reduction by forming FTA on the petroleum products and other industrial raw materials like aluminium, iron, and steel products may decrease production and trade cost which may intensify competitiveness of the Bangladeshi products both in domestic and foreign markets.
The study also revealed that formation of FTA may enhance possibility of human resources export to GCC countries since those are highly dependent on foreign workers. "To this effect the FTA should incorporate promoting expatriate workers to a minimum standard of working conditions like minimum wage, freedom to change jobs, working hour, and simple visa procedure."
The FTA may help raise investment in Bangladesh in various sectors, the report said.
"Since GCC countries are one of the major sources of foreign direct investment in Bangladesh and they have strong financial capacity, Bangladesh has opportunity to draw their investors in some potential sectors such as tourism, power generation, textile and clothing, construction, pharmaceuticals, leather, plastic and information technology," it added.
The BTC suggested that Bangladesh might take an initiative to form FTA if the country has opportunity to obtain duty free and quota free access of goods or substantial tariff preference in common external tariff (CET) in most exportable products. Â
Besides, it suggested, while forming FTA, to seek longer implementation period for liberalisation of trade in goods with comparatively shorter product coverage and flexible preferential rules of origin, get a longer implementation period for liberalisation of trade in service and investment.