Signing of FTAs with trading partners essential

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Signing of the much-needed free trade agreements (FTAs) with the important trading partners is still a long way away for Bangladesh as much countries aren't showing interest to go for such deals. The federal government is now looking for ways to sign preferential trade agreements with the trading partners. The preferential agreements are essential for Bangladesh to remain competitive in the international market.

FTA is an international agreement between several countries to lessen or remove trade barriers and bring closer monetary integration. FTA offers lower or zero tariff (tariff concession) on exports and imports of goods and parts assigned under FTA. This makes products more competitive, when compared with exports and imports from non-FTA partner countries.

 FTA is expected to help Bangladesh to keep obtaining the duty benefits following its full graduation from the league of least developed countries (LDCs).

Bilateral FTAs have already been becoming instrumental in the global trading system as the prospects of multilateral trading systems under the World Trade Organisation are decaying gradually. There are a lot more than 200 such deals worldwide.

The country shouldn't only try to sign FTAs, but also lobby with major countries and trade blocs for signing the Comprehensive Economic Partnership Agreement such as trade, tourism and investment.

Currently, Bangladesh enjoys zero-duty benefit on export to 38 countries, including 28 EU nations.

Bangladesh hasn't signed a single FTA up to now. Signing of such agreement is very much indeed essential for the united states. There were plenty of discussions with many countries during the past about the problem, but FTA has remained elusive.

The first such agreement was said to be signed with Sri Lanka late last year. The federal government announced that the agreement with Sri Lanka will be signed soon as both the countries have already completed a joint feasibility study and examined its benefits and drawbacks.

Unfortunately, it hasn't yet materialised. Once the deal is signed, a joint working committee will be formed with Sri Lanka engaging garment exporters of both countries to produce value-added apparel items for exports to European markets. The forming of the committee continues to be at the initial stage.

Sri Lanka is in an advantageous position in value added apparel industry, shipping lines and deep-sea port, financial services, Information and Communications Technology (ICT) and skilled technical persons in different sectors.

On the other hand, Bangladesh enjoys advantages in the apparel sector, skilled workforce in the garment sector, agricultural products, processed food items and migrant workers. Bangladesh will be immensely benefited if the FTA is signed with Sri Lanka, as some of its exports and imports of goods are done through the Colombo port.

Denying the government's inertia to sign FTAs, a commerce ministry official said they are now researching to sign preferential trade agreements with the trading partners. The preferential agreements are vital for Bangladesh to remain competitive in the international market.

Signing of FTAs with some countries is being delayed because every country looks after its own interests. For instance, Malaysia is interested to sign an FTA with Bangladesh, however the latter isn't that much interested. If Malaysia gets duty-free market access through the process of FTA, it'll go in its favour since the trade is already tilted towards that country.

Bangladesh exports $300 million-worth goods to Malaysia as the import figure has hit $2.0 billion. That's the reason for Bangladesh to go slow. After holding meetings for a long time, Bangladesh backtracked from signing FTA with Malaysia at the final moment.

FTAs have finally become instrumental in the global trading system as the prospects of multilateral trading systems beneath the WTO are decreasing gradually. There are a lot more than 200 such deals worldwide. Why should Bangladesh lag behind? Very recently, the united states expressed keen interest to sign FTA with South American trade bloc MERCOSUR to tap the under-exploited South American market.

Bangladesh has recently submitted 'Letter of Intent' compared to that effect to secure greater access for Bangladeshi products to an enormous market of 300 million consumers across Argentina, Brazil, Paraguay and Uruguay.

The state minister for commerce expressed the country's interest when new non-resident Argentine ambassador (located in New Delhi) called on him recently. Argentine ambassador, whose country may be the current President of this trade bloc, promised full cooperation in this respect.

Trade economists suggested the federal government to sign FTA with europe instead of seeking GSP Plus for continuation of trade privilege following graduation to the developing country bracket in 2027.

In the last fiscal year, about $21 billion out from the country's total export receipts of $36.66 billion originated from the EU, where Bangladeshi goods enjoy duty-free privilege beneath the GSP scheme as a least-developed country.

For continuation of the GSP scheme after graduation, Bangladesh must follow some stringent conditions like ratifying 27 UN Conventions and make improvements in four important areas: good governance, labour rights, human rights, and environment protection.

But, the EU can cancel the trade privilege anytime. As such, it is best to sign the FTA with the EU. Analysts also suggested inking an FTA with the united kingdom too once its Brexit negotiations are complete.

Bangladesh should be ready and continue lobbying with the major trading partners for FTAs as the erosion of preference will affect trade significantly after LDC graduation.
Source: https://thefinancialexpress.com.bd

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