Bangladesh to get more trade benefits from China as an LDC
Bangladesh really wants to secure additional trade benefits from China as a good least developed region (LDC) rather than signing a free trade arrangement with the Asian monetary giant, according to commerce ministry officials.
"We don't need to sign an FTA with China for the reason that nation is the major trading partner of Bangladesh. If we signal the FTA, we will eventually lose a lot of earnings each year," stated Sharifa Khan, more secretary (FTA) of the commerce ministry.
The commerce ministry has recently accepted China's offer for the duty-free import of 97 % of most Bangladeshi products beneath the LDC category, effectively rejecting the huge benefits the country would have received beneath the Asia-Pacific Trade Agreement (APTA).
Bangladesh and China are actually both APTA member nations.
In 2015, China, Bangladesh's largest bilateral trade partner, offered many LDCs extensions on the trade benefits for 97 % of their goods. Even so, nations that used the give were no longer allowed to benefit from the benefits beneath the APTA.
Since Bangladesh was late in its response, China will now send a brand new offer for 95 per cent of the country's items.
China was supposed to issue a good letter to Bangladesh found in this regard found in January."But unfortunately, the letter is yet to be received simply by the commerce ministry as a result of coronavirus outbreak," Khan told The Daily Star over phone.
Incoming goods right from China amount to more than $14 billion and make Bangladesh Tk 23,000 crore seeing that import duty every year.
The import duty levied on the Chinese products accounts for 30 % of the total earnings collected from import duties annually.
"So, we aren't interested to signal the FTA with China even though the Chinese government does wish to," the additional secretary said.
However, Bangladesh is near signing an FTA with Indonesia and the offer could be finalised this season if normalcy can be restored soon after quelling the coronavirus outbreak.
"Once we graduate to a growing country in 2024 and emerge from the LDC bracket, we will once again enter the APTA to enjoy trade advantages from China," Khan added.
China is a essential trade partner of Bangladesh for various reasons. For example, the country's garment industry is usually heavily reliant on Chinese fabrics although local suppliers can supply almost 80 per cent of the yarn needed by the knitwear sector.
Bangladesh's woven garment makers import nearly 60 per cent of all the fabrics they might need directly from China seeing as local weavers cannot source adequate raw materials.
In total, apparel manufacturers in the united states source 46 % of their recycleables from China.
Bangladesh is also dependant on Chinese dyes, chemical substances and capital machinery.
The bilateral relations between your two nations go deeper though as China is currently a significant export destination in the Asian region for Bangladesh.
China is one of the biggest buyers of apparel products in the world. The domestic market for garments in China is worth $350 billion as the center profits bracket is expanding, according to estimates from the International Textile Manufacturers Association.
Clothing exports from Bangladesh to China are actually increasing with time as a portion of consumers in the centre income bracket cannot spend the money for high-end garment items made in China.
This is why they rely upon cheaper Bangladeshi products, industry insiders said.
The cost of apparel production in China has gone through the roof due to a shortage of skilled workforce. This is because the personnel prefer jobs in more sophisticated technological industries instead of the garment sector.
The export of various merchandise, specifically apparel products, from Bangladesh to China is continuing to grow rapidly recently following increased require while preferential trade benefits receive to local exporters.
In fiscal 2018-19, Bangladesh's total exports to China amounted to $831.20 million while it was $694.97 million just the prior year, according to the Export Promotion Bureau.
In the February-July amount of the current fiscal year, Bangladesh earned $470.20 million through exports to China. Of that total, garment exports accounted for 80 per cent.
"Bangladesh should benefit from the duty-free benefits for 97 % of its goods and reject the APTA for the greater interest of the united states," said Abdur Razzaque, study director of the Insurance policy Research Institute.
Currently, there are about 65 Bangladeshi items that will be allowed duty-free usage of the Chinese market beneath the APTA while a lot more than 5,000 goods benefit from the same benefit beneath the LDC coverage.
"That's why Bangladesh must accept the 97 per cent bundle," Razzaque told The Daily Star.
It really is believed that China would be Bangladesh's third Asian export vacation spot after Japan and India, where the country would be able to send more than $1 billion value of goods.
Currently, Vietnam and Cambodia happen to be enjoying increased exports to China since they have preferential trade agreements with the world's virtually all populous nation.
"If Bangladesh is granted the 97 per cent bundle, exports to China increase manifold," Razzaque said.
