About the proposed Bangladesh-Malaysia FTA
Tuesday, 18 May 2010
Manzur AhmedIt is perplexing to know that the "Commerce ministry officials poured cold water" on the Malaysian proposal to give duty-free access to top Bangladeshi products under an 'early harvest programme' of the proposed Dhaka-Kuala Lumpur FTA. I wonder, why on earth?
A report in the May 16 issue of the Financial Express says: "In its proposal Malaysia, which also hosts nearly one million Bangladeshi workers, said it would give duty-free access to most of the 19 goods Dhaka had sought from Kuala Lumpur for the last few years. Major items in the Dhaka's request list include woven and knit garments, halal meat, ceramics, jute goods, pharmaceuticals, leather goods and fresh vegetables."
The report quoted an official as saying: "But I don't think we'll sign an FTA with Malaysia in the coming years. We are not prepared for such a deal and it could be asymmetric. It can harm -- rather than benefit -- our exports." The official spoke on condition of anonymity. The official added, "Bangladesh prefers signing multilateral trade deals" and confessed that "Officials fear that Bangladesh lacks the negotiation skills."
One thing we surely agree with the 'anonymous' officials that they lack negotiating skills.
Malaysia is one of the most advanced developing countries having a thriving economy. Free trade agreement with Malaysia in goods, services (including manpower, mode 4 and mode 3 as well) and investment will be of immense benefit for Bangladesh. By accepting the Malaysian proposal of BFTA Bangladesh will not only gain immediate market access for most of the 19 goods Dhaka had sought DFQFMA from Kuala Lumpur but can also promote its case to be included in the list of sourcing countries for Malaysia's huge requirement of manpower.
By refusing Malaysian FTA proposal, as reported, Bangladesh is surely going to harm its prospect of renewing its mode 4 interests in Malaysia. FTAs are a lot more effective and relevant than multilateral trade deals, which are only generalised frame works of terms of trade, are cumbersome and less effective like SAFTA, for example. Bilateral free trade agreement provides a structured framework under which various issues such as rules of origin, harmonisation of HS Codes and technical standards, custom procedures and negative lists can be addressed with much higher degree of flexibility for the mutual benefit of the contracting countries.
There is little prospect of multilateral duty- and quota-free market access for Bangladesh under WTO. With the deadlocked DDA, WTO members are more interested in bilateral trade agreements with strategic trading partners and "The world faces the prospect of 400 preferential trade agreements by 2010," according to Pascal Lamy.
"In my view, there are several reasons for the attractiveness of bilateral agreements as compared to multilateral negotiations" Director-General Pascal Lamy told the Confederation of Indian Industries in Bangalore on 17 January 2007:
l First, they seem quicker to conclude. Fewer parties mean that preferential trade agreements can be wrapped-up within a shorter period of time. This is usually very attractive to both politicians and business communities who are looking for quick results.
l Secondly, they can enter into new territories. Because of common interests and often more common values, bilateral trade agreements can go into new areas such as investment, competition, technical standards, labour standards or environment provisions, where there is no consensus among WTO Members.
l Thirdly, bilateral trade agreements are also useful for negotiators to learn how to negotiate thus contributing to reinforcing a country's trade institutions. Many regional trade agreements have been the bedrock for peace and greater political stability.
l Finally, they are often used as instruments for domestic reform in areas where the multilateral system offers a weaker leverage.
Bangladesh, the only country with no bilateral free trade partner anywhere, has therefore no other option but to enter into BFTA with its principal trading partners, including India, US Malaysia and Japan, to protect, safeguard and enhance its vital trade interests.
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The writer is Chairman, Fair Trade Advocacy Centre, FBCCI Standing Committee on WTO and RTAs. He can be reached at e-mail: mahmed019@hotmail.com;, a.manzur@yahoo.com)
A report in the May 16 issue of the Financial Express says: "In its proposal Malaysia, which also hosts nearly one million Bangladeshi workers, said it would give duty-free access to most of the 19 goods Dhaka had sought from Kuala Lumpur for the last few years. Major items in the Dhaka's request list include woven and knit garments, halal meat, ceramics, jute goods, pharmaceuticals, leather goods and fresh vegetables."
The report quoted an official as saying: "But I don't think we'll sign an FTA with Malaysia in the coming years. We are not prepared for such a deal and it could be asymmetric. It can harm -- rather than benefit -- our exports." The official spoke on condition of anonymity. The official added, "Bangladesh prefers signing multilateral trade deals" and confessed that "Officials fear that Bangladesh lacks the negotiation skills."
One thing we surely agree with the 'anonymous' officials that they lack negotiating skills.
Malaysia is one of the most advanced developing countries having a thriving economy. Free trade agreement with Malaysia in goods, services (including manpower, mode 4 and mode 3 as well) and investment will be of immense benefit for Bangladesh. By accepting the Malaysian proposal of BFTA Bangladesh will not only gain immediate market access for most of the 19 goods Dhaka had sought DFQFMA from Kuala Lumpur but can also promote its case to be included in the list of sourcing countries for Malaysia's huge requirement of manpower.
By refusing Malaysian FTA proposal, as reported, Bangladesh is surely going to harm its prospect of renewing its mode 4 interests in Malaysia. FTAs are a lot more effective and relevant than multilateral trade deals, which are only generalised frame works of terms of trade, are cumbersome and less effective like SAFTA, for example. Bilateral free trade agreement provides a structured framework under which various issues such as rules of origin, harmonisation of HS Codes and technical standards, custom procedures and negative lists can be addressed with much higher degree of flexibility for the mutual benefit of the contracting countries.
There is little prospect of multilateral duty- and quota-free market access for Bangladesh under WTO. With the deadlocked DDA, WTO members are more interested in bilateral trade agreements with strategic trading partners and "The world faces the prospect of 400 preferential trade agreements by 2010," according to Pascal Lamy.
"In my view, there are several reasons for the attractiveness of bilateral agreements as compared to multilateral negotiations" Director-General Pascal Lamy told the Confederation of Indian Industries in Bangalore on 17 January 2007:
l First, they seem quicker to conclude. Fewer parties mean that preferential trade agreements can be wrapped-up within a shorter period of time. This is usually very attractive to both politicians and business communities who are looking for quick results.
l Secondly, they can enter into new territories. Because of common interests and often more common values, bilateral trade agreements can go into new areas such as investment, competition, technical standards, labour standards or environment provisions, where there is no consensus among WTO Members.
l Thirdly, bilateral trade agreements are also useful for negotiators to learn how to negotiate thus contributing to reinforcing a country's trade institutions. Many regional trade agreements have been the bedrock for peace and greater political stability.
l Finally, they are often used as instruments for domestic reform in areas where the multilateral system offers a weaker leverage.
Bangladesh, the only country with no bilateral free trade partner anywhere, has therefore no other option but to enter into BFTA with its principal trading partners, including India, US Malaysia and Japan, to protect, safeguard and enhance its vital trade interests.
..................................................
The writer is Chairman, Fair Trade Advocacy Centre, FBCCI Standing Committee on WTO and RTAs. He can be reached at e-mail: mahmed019@hotmail.com;, a.manzur@yahoo.com)