Deal on trade in goods may bring BD significant gains

Bangladesh may reap significant revenue gains even after signing agreement on trade in goods under the BIMSTEC Free Trade Area (FTA) regime, a government study predicts.
"Though the above simulation presents the possible scenario of revenue loss, there is an immense possibility of gaining for making trade liberalisation which should not be overlooked," says Bangladesh Tariff Commission (BTC) on the basis of a recent study.
The commission came to the conclusion through comparative calculations of revenue loss and gain from the proposed tariff cuts under the FTA terms.
Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal are members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).
The 19th Trade Negotiation Committee (TNC) meeting of the BIMSTEC in February 2011 decided that all of its members will revise their tariff schedules of commitments for free trade in the sub-regional bloc.
According to the currently agreed timeframe, tariff reduction under the agreement has to be competed by fiscal year 2022-23.
The BTC in its report said as a result of tariff reduction, usually trade flow increases rather than decreases. Therefore, trade in the BIMSTEC region may increase after the agreement on trade in goods is signed.
It said revenue loss will be incurred with three lists: fast-track list, normal-track list, and normal-track-elimination list.
On the other side of the scales, products on negative list will not cause revenue loss.
Reckoning the probable revenue loss based on the trade data of fiscal year 2009-10, it said the country's loss from 3,890 Harmonised System (HS) lines of products for importing from all BIMSTEC countries would come to Tk 3.89 billion. But, after excluding the revenue loss for importing from SAFTA (South Asian Free Trade Area) countries the amount would stand at Tk 760 million.
While opening Bangladesh's market to other BIMSTEC member-countries and vice versa, there may be three types of positive impacts on trade in Bangladesh, it said.
Elaborating on the way of revenue gain it said the import volume from BIMSTEC would rise due to the tariff reduction, resulting in revenue increase. Export under reduced tariffs will lead to significant export growth, and employment opportunities would be created in the export-oriented domestic industries. It would lead to increased earning of foreign exchange.
"These benefits might beget significant compensation in the revenue loss, even may beget net gains," the BTC report noted.

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