Harnessing full potential of Indo-Bangladesh trade
Wednesday, 29 October 2008
Shihab Ahmed
The idea or proposal for forming a free trade area (FTA) between Bangladesh and India has been debated for sometime past at different levels. This was also done at the last meeting of the bilateral joint economic commission.
Bangladesh earlier consented in principle to the FTA, offered by India. Free trade negotiations are of important for the parties to derive equitable benefits.
India already has free trading arrangements with some of its other neighbours. Sri Lanka, for example, signed an FTA agreement with India. Reportedly, Sri Lanka's export to India rose in a marked way after it signed the FTA with India. Thus, Bangladesh may look forward to having a similar FTA with India to promote its economic interests. For this matter, it needs to carefully study the India-Sri Lanka FTA as a guide in this respect, of course keeping in view of the specifics of the situation relating to bilateral trade flows, formal or informal ones, between the two countries.
Stereotype notions exist about expanding Indo-Bangladesh trade. These relate to the weaker position of Bangladesh's indigenous industries and how far these would be able to cope with the pressure that freer entry of Indian goods could create for Bangladesh. But it needs to be realised that Indo-Bangladesh free trading would not necessarily mean wholesale free access of all kinds of Indian goods to the Bangladesh market. Only an agreed number of goods the number of which are to be negotiated, will gain free access on both sides. Thus, the fear of Indian goods flooding the market of Bangladesh all on a sudden to cripple the domestic enterprising is not tenable, without considering the concrete provisions therein under the details of FTA accord. Many forward-looking members of the business community in Bangladesh consider the FTA as an opportunity to expand their exports.
Currently, India enjoys a huge one-sided advantage in its formal and informal trade with Bangladesh. With an FTA in place, this picture could change considerably with Bangladeshi export products reaching Indian markets in significantly increased number and volumes. This could limit to some extent the one-sided exploitation of advantage by India in the bilateral trade.
However, India must sincerely and actually carry out its commitments to an FTA arrangement. Earlier, India declared some concessions for the entry of some Bangladeshi products into their market. But India did not honour its commitment. It continues to raise non-tariff barriers to obstruct the entry of these and other goods from Bangladesh into the Indian market. Earlier, India even unfairly applied the anti-dumping law against the export of limited quantities of lead aid batteries from Bangladesh when the bilateral trade balance heavily tilted in its favour. It is, therefore, important for India to start honouring its commitments immediately to create confidence ahead of any discussion taking place on an FTA.
The idea or proposal for forming a free trade area (FTA) between Bangladesh and India has been debated for sometime past at different levels. This was also done at the last meeting of the bilateral joint economic commission.
Bangladesh earlier consented in principle to the FTA, offered by India. Free trade negotiations are of important for the parties to derive equitable benefits.
India already has free trading arrangements with some of its other neighbours. Sri Lanka, for example, signed an FTA agreement with India. Reportedly, Sri Lanka's export to India rose in a marked way after it signed the FTA with India. Thus, Bangladesh may look forward to having a similar FTA with India to promote its economic interests. For this matter, it needs to carefully study the India-Sri Lanka FTA as a guide in this respect, of course keeping in view of the specifics of the situation relating to bilateral trade flows, formal or informal ones, between the two countries.
Stereotype notions exist about expanding Indo-Bangladesh trade. These relate to the weaker position of Bangladesh's indigenous industries and how far these would be able to cope with the pressure that freer entry of Indian goods could create for Bangladesh. But it needs to be realised that Indo-Bangladesh free trading would not necessarily mean wholesale free access of all kinds of Indian goods to the Bangladesh market. Only an agreed number of goods the number of which are to be negotiated, will gain free access on both sides. Thus, the fear of Indian goods flooding the market of Bangladesh all on a sudden to cripple the domestic enterprising is not tenable, without considering the concrete provisions therein under the details of FTA accord. Many forward-looking members of the business community in Bangladesh consider the FTA as an opportunity to expand their exports.
Currently, India enjoys a huge one-sided advantage in its formal and informal trade with Bangladesh. With an FTA in place, this picture could change considerably with Bangladeshi export products reaching Indian markets in significantly increased number and volumes. This could limit to some extent the one-sided exploitation of advantage by India in the bilateral trade.
However, India must sincerely and actually carry out its commitments to an FTA arrangement. Earlier, India declared some concessions for the entry of some Bangladeshi products into their market. But India did not honour its commitment. It continues to raise non-tariff barriers to obstruct the entry of these and other goods from Bangladesh into the Indian market. Earlier, India even unfairly applied the anti-dumping law against the export of limited quantities of lead aid batteries from Bangladesh when the bilateral trade balance heavily tilted in its favour. It is, therefore, important for India to start honouring its commitments immediately to create confidence ahead of any discussion taking place on an FTA.