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Bangladesh: Core Group suggests signing of FTAs with three SA nations

Financal Express | 8 December 2009

Core Group suggests signing of FTAs with three SA nations

Nazmul Ahsan

An official body has recommended signing of bilateral Free Trade Agreements (FTAs) with India, Pakistan and Sri Lanka on goods in the first phase and similar deals on services and investment in the second phase.

Under the proposed FTAs, a Core Group (CG), formed by the government, strongly suggested the government to seek zero duty facility for all Bangladesh exports to the markets of three countries and demand the national treatment at local level to avoid any additional duties and charges.

The CG, headed by Dr. Mohammad Ali Taslim, Chief Executive Officer, Bangladesh Foreign Trade Institute, has 12 members from public, private and research organizations.

The Group has recently submitted its report to the commerce ministry.

Presently, Bangladesh, India and Pakistan are the members of South Asian Free Trade Area, BIMSTEC and APTA.

’To begin with, bilateral FTAs should only cover trade in goods leaving the services and investments to be dealt with in the future or under separate bilateral agreements. In this regard Bangladesh should claim credit for signing unilateral agreements on investments in goods and services,’ reads the report of the Group.

The report recommended taking into cognisance the negative and positive lists during the signing of the agreements in goods and services.

On negotiation on trade in goods, the report has put forward six-point recommendations.

The recommendations include seeking of zero duty for all products in the markets of India, Pakistan and Sri Lanka and national treatment at the national and local levels of three countries to avoid extra or para tariff, finalizing a priority list to be identified from the sensitive lists of countries concerned for negotiating purpose, establishing a committee comprising representatives from MoC and business community to finalise a list of items to be given tariff preference to India, Pakistan and Sri Lanka under the proposed deals.

A CG member said Dhaka could not reap benefit out of duty free market access facility offered by India to its market under both SAFTA and bilateral approaches as extra levies like education tax, central value added tax, special central value added tax and additional counter veiling duty are levied on products originating from Bangladesh.

"National treatment at local level means no additional duties and charges will be levied on Bangladesh products which are not levied likewise on Indian, Pakistani or Sri Lankan products in their respective markets,’ the CG member clarified.

"Our negotiators must have intensive home work for negotiations with trade officials of other countries on FTA as the issue is new for us,’ he added.

Presently, exports from Bangladesh to India, Pakistan and Sri Lanka constitute less than three per cent of its total annual export earning while it imports to these countries represent about 13 per cent of its total import earnings.

India, Sri Lanka and Pakistan have long been showing their interest to strike bilateral FTAs with Bangladesh. However, Dhaka has avoided the signing of the same.

"Now, for the first time we at least got a report on FTAs, which will be examined soon," a trade official told the FE.

 source: Financial Express