Bangladesh Tariff Commission (BTC) has recommended the government to sign free trade agreement (FTA) with the Mercosur member states as it found trade potentials in the market.
Bangladesh has enormous untapped trade potentials in the South American trading bloc of Argentina, Brazil, Paraguay, Uruguay and Venezuela with having very low possibility of losing revenue, according to the findings of a feasibility study by the BTC.
It could be a potential export market for Bangladeshi products, especially readymade garment (RMG), textiles, pharmaceuticals, leathers and leather goods, tobacco and tableware if the FTA is signed, said the study report, a copy of which was obtained by the FE.
The Mercosur is a very big trade zone with significant possibility of increasing Bangladeshi export to the area if the tariff is reduced to zero, it said.
There are 300 million people in the Mercosur member states. The size of export and import market of the bloc is US$ 324.64 billion and US$ 248.05 billion respectively, according to commerce ministry data.
"We can take the trade preference through signing the FTA with Brazil. The export volume of RMG to the South American country would increase significantly," said a commerce ministry official.
He, however, said the tariff rate for exporting to the market is still very high - the bloc imposes 35 per cent tariff on export of Bangladeshi goods.
"We have submitted a letter of intent to the Brazil embassy in Dhaka for signing the FTA with the Mercosur. If they reduce the duty, it will be a good market for the country's RMG sector," he added.
There is a good trade relation between Bangladesh and Brazil for a long period of time. Brazil is interested to increase trade with Bangladesh, the official said.
He also said the businesses should set up a joint trade body to increase direct trade between the two countries. At present, there is no Bangladesh-Brazil Chamber of Commerce and Industry.
Currently, there are 29 joint chambers with foreign countries in Bangladesh. Bangladesh will be benefited if a chamber is formed between Bangladesh and Brazil, said a business leader.
During fiscal year (FY) 2017-18, Bangladesh earned US$ 208 million through exporting goods to the Mercosur states while imported goods worth US$ 2,318 million.
Brazil alone imported goods worth US$ 177 million from Bangladesh during the period while exported goods worth US$ 1,520.61 million.
Major export items from Bangladesh to Brazil are knitwear, woven garments, textile fibres, vegetable etc.
Major import items from Brazil are sugar and sugar confectionery, cotton, ships and animal or vegetable oils etc.
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