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Bilateral Free Trade Agreement deal with neighbouring countries: consultants to point out benefits, risks

BSS / The Bangladesh Observer

Bilateral Free Trade Agreement (FTA) deal with neighbouring countries

Consultants to point out benefits, risks

Wednesday July 20 2005

The commerce ministry is going to consultants to run a study to identify the benefits and possible risks of signing any bilateral trade agreement (FTA) with neighbouring countries, informed sources said in the city on Tuesday, reports BSS.

"Our engagement should be in proportion to our ability to gain markets and offset revenue losses," said a senior official source justifying the move to take up the study.

A source said, the authorities have taken the decision in the light of proposals coming from neighbouring countries like India, Pakistan, Sri Lanka or Nepal to sign such agreements.

He said in fact initial negotiations on bilateral FTA with these countries had kicked off in late 2003 and some progress was achieved in one to one talks with them.

The move made headway just before the SAARC summit in January 2004 which decided to launch SAFTA, the multilateral free trade agreement for South Asia from January 2006. But it slowed down at the same time the pace of negotiations of the bilateral free trade agreements with respective member states.

But now the fate of the SAFTA as to whether it can be formally launched in due time (from next January) is also facing some uncertainty although expert group meetings to sort out technical issues to pave the way of launching the free trade area are taking place regularly.

The sources said even if the SAFTA is making debut from next year, the appeal for the bilateral free trade agreements with individual member states has not lost ground. But the question is: Should Bangladesh move to sign the bilateral free trade agreements with all its neighbours.

They said the decision to engage consultants to run the study to this effect is what is the latest government answer to this question. One source said the bilateral free trade agreement which deals with even small sensities will obviously make room for duty free access of products from other ends.

Here the question remains if Bangladesh will be exporting more than imports. If its revenue losses in terms of duty free access to other products can be offset from gains in export earnings and so on.

The source said the planned study will look into country specific cases and impacts of such trade agreements from other ends.

He said Bangladesh’s exports to India is the only place facing non-tariff and para-tariff barriers, besides variable level of tariff walls. With regard to other regional countries, the problems only relate to duty structures, not much about non- tariff barriers to exports.

So some weighing of relative advantages and risks can be easily worked out for some countries, the source said making the case for the study.

He said Bangladesh is now facing the major problem of quick expansion of export capacity building. The country’s export volume is expanding at about 15 percent annually over the past couple of years meaning that the out spacing of exports is taking place at a rather quite satisfactory way.

You can’t multiply your export capacity overnight. So our opening up should be commensurate to our ability to expand exports and offset revenue losses, the source said adding that there should be calculative moves in business decisions, there is no place for haste.

So, the government will take decisions about the signing of the FTA only after the study reports come into its hands, he said.

 source: Bangladesh Observer