CEPA talks with India may not begin this year
The Daily Star | 19 November 2023
CEPA talks with India may not begin this year
by Refayet Ullah Mirdha
There is little possibility this year of the initiation of official negotiations between Bangladesh and India for the signing of a Comprehensive Economic Partnership Agreement (Cepa).
Bangladesh is prepared but India wants more time to go over preliminary findings of a feasibility study jointly conducted by the two countries, said Senior Commerce Secretary Tapan Kanti Ghosh.
Though there is one and a half months to go for this year, the possibility of the negotiations to begin is low, he told The Daily Star over the phone.
Prime Minister Sheikh Hasina of Bangladesh and her Indian counterpart Narendra Modi in a joint statement on September 7, 2022 had agreed to start the negotiations on welcoming the study, which stated that a Cepa would be beneficial for both countries.
They directed trade officials to start the negotiations within 2022 and complete it at the earliest, so that Bangladesh can better face the challenges of making the United Nations country status graduation to a developing nation in 2026.
Bangladesh afterwards provided some bilateral trade data on India’s request for further scrutiny, said Ghosh, adding that the commerce ministry has already formed two panels to conduct the negotiations.
A Foreign Office Consultation meeting is also scheduled to be held in Dhaka on November 28 where issues of bilateral trade, investment and the Cepa might be widely discussed, he said.
Currently, India is the second largest source of imports for Bangladesh after China.
Annually, Bangladesh imports nearly $15 billion worth of goods, including textiles and fabrics, industrial raw materials and intermediate goods, food items, cotton and chemicals for industrial use.
As a least developed country (LDC), Bangladesh has been enjoying duty-free benefits on export to India under South Asian Free Trade Area (Safta), a free trade arrangement of the South Asian Association for Regional Cooperation (Saarc).
Bangladesh’s exports to India amount to nearly $2 billion annually.
Bangladesh might not make a large gain from a Cepa as it would lose duty-free market access provided under its LDC status, said the joint study.
Comparatively, India will make a larger gain primarily through the removal of existing high tariff rates, it said.
Bangladesh Foreign Trade Institute and the Centre for Regional Trade (CRT) of India conducted the study based on trade data between 2015 and 2020.
If signed, the Cepa will be the first free trade agreement of its kind as Bangladesh has till date signed only a preferential trade agreement with Bhutan in December 2020.
Moreover, Bangladesh has the potential to benefit from the trade of services in tourism, transport and educational cooperation and also creation of jobs locally from Indian investment.
The proposed deal, which calls for a withdrawal of duties, is expected to boost Bangladesh’s exports by 190.15 per cent and more if transaction costs are also reduced through improved connectivity, according to the study.
India’s exports to Bangladesh are expected to increase by 188 per cent. The Cepa will increase Bangladesh’s GDP by 1.72 per cent and India’s by 0.03 per cent, the study found.
