Tariff Commission prefers DFQF to APTA

A state agency finds duty-free and quota-free (DFQF) access to China 'more preferable tariff treatment for Bangladesh' in a swap for duty treatment under the Asia-Pacific Trade Agreement (APTA).
Officials said the Bangladesh Tariff Commission (BTC) did the arithmetic of the trade-off between the two arrangements as the Ministry of Commerce (MoC) had entrusted it with the task of submitting a report thereon.
The commission was asked to show which way is better to tread by analysing whether China's DFQF scheme or preferential tariff treatment under APTA is more beneficial to Bangladesh as a trading partner of the present world's second-largest economy.
Recently, the BTC sent the report to the MoC for taking a decision whether to accept DFQF facility or Chinese preferential treatment under APTA.
Earlier, the Chinese government had informed Bangladesh that it would not provide two tariff preferences-under APTA and DFQF-simultaneously. Bangladesh, being a least- developed country (LDC), will have to drop one to avail another trade facility.
"The Chinese government will no longer implement the preferential tariff rates under the APTA for your country after the DFQF enters into force," the Chinese embassy in Dhaka informed the MoC.
To avail the DFQF facility Bangladesh has to sign a letter of agreement that many other LDCs already have signed and are enjoying the tariff preferences.
However, MoC officials argue that the Chinese DFQF arrangement is under World Trade Organisation (WTO) arrangement while the APTA benefit is under a different forum. They said one cannot be tagged with another 'and that is in one sense violation of WTO rules'.
The BTC observed that Bangladesh is likely to be recommended by the United Nations committee for graduation from the LDC bloc in 2018 and could say goodbye to the poor-country club in 2024 on fulfilment of conditions. "So, Bangladesh has opportunity for next about 6 years to enjoy DFQF concession."
It said under APTA concession China provided 100 per cent margin of preferences on 107 products only for LDCs whereas DFQF covers 97 per cent tariff lines where margin of preference is 100 per cent.
"Bangladesh may face difficulties in satisfying the value-addition criteria of 40 per cent (which is 5 per cent more than APTA) in some export products in DFQF. But Bangladesh may take the alternative CTH (Change of Tariff Heading) criteria for determining Rules of Origin," the commission noted.
Contacted over telephone Sunday, commerce secretary Shubhashish Bose acknowledged having received a report from the BTC on this issue.
He said a team of MoC officials will soon visit China to discuss the issue as Beijing is not interested to offer both the tariff preferences simultaneously.
"We have to resolve the differences through discussion," Mr Bose told the FE.
Officials argue that Bangladesh is a founder-member of APTA and needs 35 per cent value addition to enjoy tariff preferences on the Chinese market. On the other hand, to enjoy DFQF facility there under WTO arrangement, 40 per cent value addition is mandatory.
They said Bangladesh is supposed to graduate to next stage of development from the lower-income bracket by 2024 and will lose the LDC status thereafter. And it would lose the benefits it enjoys as LDC then.
"If Bangladesh now opts for DFQF facility on the Chinese market as LDC, replacing the benefit under APTA, the loss will be greater since, after few years, it will lose both the LDC status and subsequently the zero-tariff facility," said a senior MoC official.
Meanwhile, Bangladesh's imports from China reached US$10.19 billion in the fiscal year 2016-17 while exports to that country stood at $949.41 million, according to central bank and export-promotion data.

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