DHAKA: Bangladesh is unlikely to strike Free Trade Agreement (FTA) with any country until 2025 before losing the facilities it has been enjoying as a least developed country (LDC), a meeting decided on Sunday. “We are still studying the pros and cons of signing FTA. Let’s see what we can find,” Ministry of Commerce (MoC) Senior Secretary Hedayetullah Al Mamoon told the FE. Mr Mamoon chaired a meeting on possibility of Bangladesh’s signing FTA with China and Malaysia at MoC conference room.
Asked whether the meeting has decided not to sign any FTA before 2025 he said, “That is not our official position. The facilities we enjoy as an LDC were discussed in the meeting. But we will continue studying the FTA benefits and losses.” Sources said an official of Bangladesh Tariff Commission made a power point presentation in the meeting that concluded with a message that signing FTA with China and Malaysia would not be beneficial for the country now.
The meeting was told that as an LDC Bangladesh has been enjoying various tariff preferences in the markets of the developing and the developed countries. The process of Bangladesh’s graduation to a lower middle-income country would not be completed before or around 2025. Until then Bangladesh will continue to enjoy the benefits as an LDC.
The meeting also discussed that some 4,721 Bangladeshi products have been enjoying duty-free access in Chinese market under Asia Pacific Trade Agreement (APTA) since 2010. In 2013 Bangladesh again sought duty-free access for 17 more items. The country will have to grant duty-free access to Chinese products in its market, if FTA is signed.
Bangladesh’s import from China has reached nearly US$9.0 billion, while export to the country is only around $800 million. Bangladesh will lose $2.70 billion or more as revenue, if it grants duty-free market access to Chinese products through signing FTA deal, the meeting was further told.
Bangladesh’s local industry will be hit hard, if FTA is signed with a country like China having huge production capacity with very competitive prices, an official said. While discussing the issue of signing FTA with Malaysia the meeting was told that the local industries of the Southeast Asian nation, including its light engineering and agro-processing industries, are much more advanced than the Bangladeshi ones. With a thin export basket Bangladesh has very little possibility to be gainer after getting duty-free access to Malaysia by signing FTA. Besides, Bangladesh will lose $375 million or so as import revenue once the duty-free market access is granted to Malaysia.
When contacted, MoC additional secretary Manoj Kumar Roy told the FE that interests of exporters, importers, domestic industry, and consumers have to keep in balance before signing any preferential deal with any country. “Since Bangladesh enjoys tariff preference from China under APTA, there is no logic to open our market through signing an FTA,” he said.
Talking to the FE, chairman of standing committee on Import, Export and FTA of Dhaka Chamber of Commerce and Industry (DCCI) M S Siddiqui however, was in favour of signing an FTA with any country on test basis and after raising internal capacity. “When the issue of signing FTA comes, we only see immediate revenue loss as a big factor. But we don’t take into consideration the future export potentials,” he said after attending the meeting.
“Bangladesh mainly imports raw materials for its industries. If we get raw materials at low cost, our production cost will also go down. Thus we will be able to compete with products of any country. Thus FTA won’t affect our domestic industry,” he further noted.