Beijing for expediting Sino-Bangladesh FTA
The Financial Express - 04 March 2022
Beijing for expediting Sino-Bangladesh FTA
By Mir Mostafizur Rahaman
China moves for expediting the signing of a proposed free-trade agreement (FTA) with Bangladesh as the two countries enjoy growing economic cooperation, with the balance of trade heavily tilted towards Beijing.
A suggestion on this score was made in a high-level meeting on the trade and investment cooperation between the two countries, sources say.
The Chinese side said that after graduating from the LDC status, Bangladesh would face a lot of challenges like withdrawal of many trade-related facilities, and in that scenario FTA with China could be a major cushion to offset the shocks, the meeting sources said.
Bangladesh assured that it would expedite the process for a joint feasibility study on the FTA with China-world’s second-largest economy with vast supply chain wherefrom huge imports come into Bangladesh that far outstrips exports from here in the two-way trade.
According to the latest data placed in the meeting, the bilateral trade volume was $22 billion during the January-to-November period of 2021, marking an increase by 59 per cent compared to the same period of the previous year.
Bangladesh’s export to China grew by 32 per cent with $950 million in the first 11 months of the last year.
Encouraged by the rise in the trade, the meeting made some recommendations to further promote the two-way trade, competent sources told the FE.
The Chinese side suggested focusing on quality livestock production to enlarge Bangladesh’s export basket as these products are in demand in China, meeting sources said, adding that they asked for signing customs-inspection protocol with China in this regard.
Quality livestock export from Bangladesh presupposes protocol of customs inspection and quarantine.
"China agreed to offer details of the procedure of signing the protocol if Bangladesh is interested," says one official.
The meeting also discussed ways of exploiting by Bangladesh the opportunity of 98-per cent duty-free access of products to the Chinese market, as a measure of bridging the yawning trade gap.
"The Chinese side mentioned that they had sent a Letter of Exchange for Duty- Free Access to China for 98 per cent of Bangladeshi products," the official told the FE.
On the other hand, the meeting was told that investment from China also marked a significant rise. In 2021, it was $621 million, marking a rise of 150 per cent compared to the previous year.
The Chinese side said their entrepreneurs were interested to invest in power, infrastructure, transportation, and textiles sectors.
Bangladesh briefed the Chinese counterpart about a spectacular economic growth achieved by the former and the latest reforms initiated by the government to improve the investment climate.
China is the largest trade partner of Bangladesh but the trade balance is highly in favour of China.
The trade deficit between the two countries was 19 per cent in 2015-16 fiscal. It decreased to 16 per cent in FY18-19.
However, experts opine that Bangladesh has the potential to raise its exports to $25 billion annually to China.
"If Bangladesh can grab one-per cent share in the Chinese imports, it will make a big difference," says Dr Razzaque, head of Research and Policy Integration for Development (RAPID).
China imported goods worth $2.4 trillion in the 2019-20 fiscal year and Bangladesh’s share was only 0.05 per cent.
According to his research, China is expected to import products worth $22 trillion in next 10 years’ time.
The latest data show that in November 2021 China exported $2.33b and imported $105 million from Bangladesh.
Between November 2020 and November 2021, the exports of China had increased by $714 million - from $1.62 billion to $2.33 billion, while imports increased by $32.1 million - from $73.2 to $105 million.
In November 2021, the increase in China’s year-on-year exports to Bangladesh was explained primarily by an increase in product exports in blood, antisera, vaccines, toxins and cultures worth $174 million.
In November 2021, the increase in China’s year-on-year imports from Bangladesh was explained primarily by an increase in product imports in jute yarn, tanned equine and bovine hides. Bangladesh exported jute yarn worth $8.82 million in that month.
