DHAKA: A joint feasibility study on a bilateral free-trade area (FTA) between Bangladesh and China has yet to begin even after the lapse of three and a half months of signing an accord.
Reportedly, the two countries signed the Memorandum of Understanding (MoU) in this regard in mid-October during Chinese President Xi Jinping’s Dhaka visit.
Earlier in September last year, China in a letter had formally proposed conducting the study to examine the suitability of formation of a free-trade area. Beijing then forwarded a draft of the MoU which was inked in October.
A senior trade official told the FE the signed document couldn’t yet reach the Ministry of Commerce (MoC) from the Ministry of Foreign Affairs (MoFA). Thus, the MoC could not go forward with the feasibility study. He said China will provide necessary funds for the study.
“Since the signing of the MoU, the Chinese side has not communicated with us for advancing with the task. Once they contact, we will decide next course of actions through mutual discussion,” said the official.
Contacted over phone, a top MoC official said though the MoU was signed, Bangladesh has reservation on FTA with any country at this stage considering the possible impact on revenue earnings and interests of local industry.
China in the draft MoU document said the feasibility study should be comprehensive and cover sectors of common interests. The future work plans are subject to the outcome of the joint feasibility study.
According to MoC officials, signing FTA accord with China will result in a significant revenue loss for Bangladesh.
They pointed out that Bangladesh’s import from China reached nearly US$9.0 billion while export to the country is worth only around $800 million. Bangladesh may lose $2.70 billion or more as revenue if grants duty-free market access to Chinese products though signing FTA deal.
China has granted duty-free market access to 4886 products of least developed countries (LDCs) on its market. Bangladeshi goods also enjoy the facility since the country is also an LDC. Almost similar numbers of Bangladeshi products also enjoy duty-free access to the Chinese market under Asia-Pacific Trade Agreement (APTA) since 2010, they said.
The trade officials fear that Bangladesh’s local industry would be hit hard if FTA is signed with a country like China having huge production capacity at a very competitive price. They said interests of exporters, importers, domestic industry, and consumers ought to be kept in balance before signing any preferential deal with any country.
Country’s trade leaders have also been opposing FTA signing with countries like China and Malaysia as such trade deal may disrupt domestic industrial growth.
