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CEPA negotiations with India start next year

The Daily Star - 15 December 2021

CEPA negotiations with India start next year
By Refayet Ullah Mirdha

Negotiations for signing a Comprehensive Economic Partnership Agreement (CEPA) with India will begin next year as the related feasibility study has entered its final stage, according to a senior official of the commerce ministry.

"The Bangladesh Foreign Trade Institute (BFTI) is expected to submit the feasibility study to us by the end of this month," said Mahbubul Haque, additional secretary (Foreign Trade Agreement Wing) of the commerce ministry.

Upon receiving a positive report from the BFTI, the commerce ministry will form a negotiation committee to hold discussions with India.

"The proposed CEPA between Bangladesh and India has three dimensions, namely trade in goods, trade in services, and investment," Haque added.

The CEPA would cover a range of issues as the concept of such a bilateral trade agreement is wider than that of normal free trade agreements and preferential trade agreements.

As such, the CEPA aims to address difficulties regarding trade, tariff, government procurement, investment, connectivity, and investment protection guarantees, among a host of other issues.

It is also a big initiative to offset the challenges to Bangladesh’s graduation to a developing country.

If the CEPA goes through, importers and exporters of both countries can choose their preferred agreement for conducting

business as the South Asian Free Trade Agreement (SAFTA) is in effect among members of the South Asian Association for Regional Cooperation.

For example, both Bangladesh and India are members of the Asia Pacific Trade Agreement but traders prefer to take advantage of SAFTA as it is more beneficial, experts said.

As a least developed country, Bangladesh has been enjoying duty free access to India under SAFTA for all products other than 25 alcoholic and non-alcoholic beverage items.

Md Jafar Uddin, chief executive officer of the BFTI, informed that the feasibility study has already been prepared and will likely be sent to the advisory committee headed by the commerce secretary by the end of December.

Both Bangladesh and India had agreed to sign the CEPA in 2018.

"The report was prepared in consultation with different important government bodies and trade bodies," said Uddin, who is also a former senior commerce secretary.

India has become an important trading partner for Bangladesh thanks to its strategic and economic power.

In FY2020-21, India’s overall imports and exports stood at $394.43 billion and $291.80 billion respectively, according to India Briefing.

But exports from Bangladesh to India are still very low mainly due to some non-tariff barriers and lack of product diversification.

In its 50 years of independence, Bangladesh only just crossed the $1 billion-mark in export earnings from India in the 2018-19 fiscal year.

In fiscal 2020-21, Bangladesh shipped goods worth $1.28 billion to the neighbouring nation, according to data from the state-owned Export Promotion Bureau.

On the other hand, Bangladesh imports nearly $10 billion worth of goods from India each year.

"So, the main target of the proposed CEPA is to reduce the huge trade gap between Bangladesh and India," the BFTI chief said.

However, the feasibility study found that it may not be possible to minimise the trade imbalance as Bangladesh lacks the product diversity required to satisfy the needs of a vast economy such as India.

Still though, some companies like Pran and Hatil have been performing well in Indian markets and so, it stands to reason that more local firms could invest and repatriate money to Bangladesh if the CEPA is signed.

Similarly, Indian companies are showing interest to invest in Bangladesh and the government has already allocated a special economic zone in the country for Indian entrepreneurs.

"We should also create opportunities so that Indian entrepreneurs come here for big investment. This is an opportunity for creating employment in Bangladesh," Uddin added.

 source: The Daily Star