Bangladesh to start bilateral FTA talks with India, SL, Pakistan
FE Report | Monday, 4 August 2008
Bangladesh on Sunday decided to start bilateral free trade negotiations with three South Asian countries, shelving the country's long-standing trade policy that favoured multilateral trade deals over bilateralism, officials said.
In a radical new shift in the country's trade negotiations, officials said the caretaker government has now planned to pursue three bilateral free trade deals with India, Pakistan and Sri Lanka.
The move comes as the world trade talks under the crucial Doha round collapsed last week failing to ensure more trade benefits for developing countries while the SAFTA and the BIMSTEC deals struggled to take off despite being ratified two years back.
The decision was made at a high-powered inter-ministerial meeting led by commerce advisor Hussain Zillur Rahman, a spokesman of the ministry said.
"The government has decided to initiate dialogue with New Delhi, Islamabad and Colombo in a bid to strike bilateral free trade agreement (FTA) with each of them," he said.
The country's embassies in India, Pakistan and Sri Lanka would start the negotiation process while a core committee at the commerce ministry will prepare the terms of reference for each of the three countries before the final talks start, he added.
The core group will be led by economist M Ali Taslim, a former chairman of Bangladesh Tariff Commission and now the head of the Bangladesh Foreign Trade Institute (BFTI).
Trade experts from government and private sectors will be included in the core group to be formed within the next one week, said the official.
Meeting insiders said the government took the decision to pursue bilateral FTAs after the last week's collapse of world trade talks that would have guaranteed duty free access of more than 97 percent of Bangladeshi goods.
Experts have termed the Doha round of WTO Talks as all but dead, as the developing countries led by China and India have failed to narrow the gap with the developed countries led by the United States and the European Union.
The country also gained little from its membership of the two regional trade treaties-- South Asian Free Trade Agreement (SAFTA) and the Bay of Bengal Initiative for Multilateral and Sectoral Economic Cooperation (BIMSTEC).
Dhaka signed the treaties back in 2006, but both are hit by slow and cumbersome trade negotiations, resulting in little or no concessions from the member countries.
The country's neighbours including India have in the recent past shelved their policy to pursue multilateral trade deals and instead opted one-to-one negotiations with countries with whom they have bigger trade stakes.
India signed a bilateral trade deal with Sri Lanka in 2001, leading to five fold increase in trade between the two countries. New Delhi has also started bilateral trade negotiations with the south-east Asia and some Gulf countries. Pakistan has also started similar negotiations.
Officials said the three countries proposed to strike bilateral trade deals with Bangladesh back in 2003, but the then BNP-led four party government ignored the proposals, saying it would prefer signing multilateral deals only.
Experts and trade body representatives attending the inter-ministerial meeting supported the government's move towards bilateral trade deals.
"We have very modest gains from the SAFTA and BIMSTEC. Both the deals have suffered from slow negotiations, big negative list and non-tariff barriers," leading trade expert professor Mustafizur Rahman of Centre for Policy Dialogue said.
"So I think it's time the government should explore bilateral trade deals as they could ensure fast-track benefits for the country. But we have to examine the deals very carefully," he added.
In a radical new shift in the country's trade negotiations, officials said the caretaker government has now planned to pursue three bilateral free trade deals with India, Pakistan and Sri Lanka.
The move comes as the world trade talks under the crucial Doha round collapsed last week failing to ensure more trade benefits for developing countries while the SAFTA and the BIMSTEC deals struggled to take off despite being ratified two years back.
The decision was made at a high-powered inter-ministerial meeting led by commerce advisor Hussain Zillur Rahman, a spokesman of the ministry said.
"The government has decided to initiate dialogue with New Delhi, Islamabad and Colombo in a bid to strike bilateral free trade agreement (FTA) with each of them," he said.
The country's embassies in India, Pakistan and Sri Lanka would start the negotiation process while a core committee at the commerce ministry will prepare the terms of reference for each of the three countries before the final talks start, he added.
The core group will be led by economist M Ali Taslim, a former chairman of Bangladesh Tariff Commission and now the head of the Bangladesh Foreign Trade Institute (BFTI).
Trade experts from government and private sectors will be included in the core group to be formed within the next one week, said the official.
Meeting insiders said the government took the decision to pursue bilateral FTAs after the last week's collapse of world trade talks that would have guaranteed duty free access of more than 97 percent of Bangladeshi goods.
Experts have termed the Doha round of WTO Talks as all but dead, as the developing countries led by China and India have failed to narrow the gap with the developed countries led by the United States and the European Union.
The country also gained little from its membership of the two regional trade treaties-- South Asian Free Trade Agreement (SAFTA) and the Bay of Bengal Initiative for Multilateral and Sectoral Economic Cooperation (BIMSTEC).
Dhaka signed the treaties back in 2006, but both are hit by slow and cumbersome trade negotiations, resulting in little or no concessions from the member countries.
The country's neighbours including India have in the recent past shelved their policy to pursue multilateral trade deals and instead opted one-to-one negotiations with countries with whom they have bigger trade stakes.
India signed a bilateral trade deal with Sri Lanka in 2001, leading to five fold increase in trade between the two countries. New Delhi has also started bilateral trade negotiations with the south-east Asia and some Gulf countries. Pakistan has also started similar negotiations.
Officials said the three countries proposed to strike bilateral trade deals with Bangladesh back in 2003, but the then BNP-led four party government ignored the proposals, saying it would prefer signing multilateral deals only.
Experts and trade body representatives attending the inter-ministerial meeting supported the government's move towards bilateral trade deals.
"We have very modest gains from the SAFTA and BIMSTEC. Both the deals have suffered from slow negotiations, big negative list and non-tariff barriers," leading trade expert professor Mustafizur Rahman of Centre for Policy Dialogue said.
"So I think it's time the government should explore bilateral trade deals as they could ensure fast-track benefits for the country. But we have to examine the deals very carefully," he added.