The Financial Express | 17 January 2023

CEPA negotiations likely to start in two months

by REZAUL KARIM

Bangladesh and India are expected to start negotiations on the proposed Comprehensive Economic Partnership Agreement (CEPA) within the next two months, officials said.

They said Dhaka is set to commence negotiations on inking the deal with its second-largest trade partner to increase trade and investment although New Delhi is taking time for preparation in this connection.

To this effect, the ministry of commerce (MoC) has already formed two committees - an advisory committee (AC), headed by minister Tipu Munshi, and an 11-member Trade Negotiation Committee (TNC).

According to the provision of paragraph 4.4.2 of Regional Trade Agreement (RTA) Policy-2022, the TNC of Bangladesh would carry forward the negotiations in cooperation with the Indian TNC and periodically report to the competent authorities.

On the other hand, the AC will closely monitor the overall activities of the TNCs and provide necessary suggestions in case any situation arises during the negotiations.

When contacted, Mr Munshi said: "We hope to start negotiations within the next two months." The Indian side is, however, taking some time in this regard, he added.

The prime ministers of the two countries in their joint statement issued in New Delhi in September last year had instructed the officials concerned to start negotiations within 2022 and complete it at the earliest, in time for Bangladesh’s final graduation from LDC status.

Following the instruction by the premiers, the MoC in September last requested its Indian counterpart to commence the negotiations as early as possible, sources said here.

"We’ve almost completed internal procedures to start the negotiations. Currently, necessary consultations are going on regarding the issue," a senior commerce ministry official told the FE on Sunday.

"We sat for a number of meetings including an inter-ministerial one with different ministries, including labour, commerce and home affairs, along with senior officials of different state agencies and the trade bodies," he added.

Another senior commerce ministry official said the MoC has already constituted a negotiation committee, alongside the high-powered AC, comprising senior officials and representatives from the trade bodies.

The proposed CEPA pact would be a very big agreement. Bangladesh had no practical knowledge to handle such a deal in the past, said the official.

The CEPA is considered an advanced level of the free-trade agreement (FTA) that India signed with a number of trading partners like South Korea and UAE while discussing the same with a number of other countries.

Bangladesh has only signed its maiden preferential trade agreement (PTA) with Bhutan. It has not signed any bilateral free-trade agreement (FTA) so far though it is a member of a number of multilateral FTA deals.

The two countries first discussed the possibility of signing a CEPA deal in 2018 at the commerce secretary-level meeting for increasing bilateral trade and strengthening overall cooperation.

In the same year, the trade ministers had agreed to conduct a joint feasibility study on signing the CEPA.

The Centre for Regional Trade of India and Bangladesh Foreign Trade Institute (BFTI) later jointly conducted the feasibility study and submitted it to the MoC.

After reviewing the joint study report, the MoC opined that the CEPA deal can be signed with India to retain the facilities that Bangladesh enjoys under the South Asian Free Trade Area (SAFTA) deal in the post-graduation era too.

As a least developed country (LDC), all but 25 tobacco and alcohol products of Bangladesh are entitled to duty-and quota-free (DFQF) market access to India.

Bangladesh will lose the DFQF facilities in India after 2026 when it graduates to developing country status.

The negotiation on signing the CEPA with India is a part of the government’s initiatives to sign deals with major trading partners to retain the DFQF facility after Bangladesh’s graduation from the LDC status to a developing nation, experts said.

Signing the CEPA could offset the impacts of potential challenges to emerge after the graduation, they added.

Earlier, the parliament adopted a law on signing free trade agreements, preferential trade agreements and CEPA with the potential and developed countries so that Bangladesh would not face any setback to retain the DFQF market access facility after its graduation.

In the last fiscal year, Bangladesh imported goods worth $9.7 billion from India and exported over $1.4 billion.