Negotiations for FTA with Asean underway
Bangladesh offers formally initiated negotiations with the Association of South-East Asian Nations (Asean) to sign a free trade agreement to take pleasure from greater market access in the bloc after graduating from minimal developed country grouping.
"I signed the negotiation letter today [Sunday] and sent it to the foreign ministry to open up formal negotiations with the Asean headquarters, so that we are able to sign an FTA with this main trade bloc," Commerce Secretary Md Jafar Uddin told The Daily Star.
Bangladesh has launched the negotiations mainly for three reasons.
First is for the reason that Asean is a huge market where Bangladesh can do well while the second is to guard the duty privilege after graduation.
Third, if Bangladesh may sign an FTA with the Asean, it does not need to sign any specific bilateral agreement with the 10 member countries of the bloc.
"Otherwise, we must sign the Preferential Trade Agreement (PTA) or perhaps FTA with the Asean member countries just like Indonesia or Malaysia to ensure that we may exploit the business opportunities of this important trading bloc," Uddin explained.
Currently, Bangladesh is at the final stage of its negotiations with Indonesia for a PTA for duty privileges in select goods traded between your two countries.
Even so, the negotiation is currently facing a stalemate since Indonesia disagrees with lots of terms, particularly when it comes to most major export items such as garments, beneath the proposed PTA.
"Still, we will be continuing negotiations with Indonesia to sign the offer as soon as possible," he said.
Bangladesh is a person in the Asean Regional Forum since 2006, which would be a great advantage for the united states during negotiations, Uddin added.
The Asean has become a vital market for Bangladesh due to its immense size. The southeast Asian nations are as well an important source of recycleables for the country's garment sector and other industries.
The Asean includes a enormous consumer base of 642 million persons and a burgeoning middle-class with newfound spending capabilities.
By 2030, the Asean region would be the fourth-largest economy on the planet. Its GDP improved from $2,373 billion in 2007 to $4,034 billion in 2016, relating to a study titled 'Bangladesh A story of a Phoenix.'
Booming places in the Asean member countries account for more than 65 per cent of the region's collective GDP, while an additional 90 million people will be put into the marketplace by 2030 when you will have 163 million households of 'consuming' class.
The region's total expenditure on clothing and footwear totalled $51.2 billion in 2017. Its digital economy made $150 billion in earnings every year and can add an estimated $1 trillion to the regional GDP within the next 10 years.
The Asean currently has 200 million digital consumers and 230 million online customers, but that is expected to expand by the average gross annual growth of 7.3 per cent to attain $721.7 billion in 2022, the analysis said.
To secure trade privileges beyond 2024, the commerce ministry has been negotiating with 11 various other countries and trade blocs like Australia, Japan, China and Canada for PTAs, the secretary said.
Uddin as well said that negotiations to sign a good PTA with Nepal reaches the final stage seeing that Kathmandu has decided to sign in January.
"Nepal has decided to sign the PTA with Bangladesh."
"We will take the PTA draft paper to the cabinet committee for last approval as Bangladesh has already agreed in principle to sign the PTA with Nepal," he added.
Uddin has recently demanded zero-duty advantage on the export of 140 products to Nepal at a high-level virtual meeting between the two countries held in October this year.
Regarding the tariff beneath the South Asian Free of charge Trade Contract (Safta), the secretary said trading beneath the Safta isn't fully duty-free, but duty waivers are provided to an excellent extent.
Even so, trading under a PTA presents full duty waivers for a certain quantity of goods.
Bangladesh signed a good PTA with Bhutan about December 6. Under the deal, Bangladesh will enjoy duty-free benefits on the exports of 100 local products, including garments, prepared agricultural goods and electronics.
Meanwhile, Bhutan will love duty benefits on 34 products.
Currently, Bangladesh doesn't have any FTAs despite the fact that the government has much time since been trying to sign such a deal.
As per the country's previous economic development records, the UN Committee for Production Policy (UN CDP) is scheduled to complete the ultimate circular of assessment for Bangladesh's LDC graduation in 2021.
If the UN CDP finds its assessment of Bangladesh to maintain positivity, the united states will graduate to a developing country in 2024.
Once the nation graduates, all tariff benefits will be lifted.
Only the EU allows its tariff benefits for Bangladesh for a grace amount of another 3 years. This means that Bangladesh will have duty-free access to the EU until 2027.
As an LDC, Bangladesh presently enjoys zero-duty benefits, preferential trade benefits and regional trade benefits on exports to 38 countries, including 28 in the EU.
The united states also gets duty-free usage of the US for 97 % of its products. But regrettably, Bangladesh's main export items, including garments, are not included in the package.
Consequently, Bangladeshi exporters face 15.62 % duty on apparel exports to US markets, which is the single largest export vacation spot for the country.
