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Dhaka-New Delhi negotiation on CEPA to begin this year

The Financial Express - 02 March 2024

Dhaka-New Delhi negotiation on CEPA to begin this year

Bangladesh and India are expected to start negotiations on the proposed Comprehensive Economic Partnership Agreement (CEPA) within this year, more likely by June next, officials have said.

They said Dhaka is set to commence negotiations with its second-largest trade partner to increase bilateral trade and investment although New Delhi is taking time for preparation in this connection.

Meanwhile, the commerce ministry of Bangladesh has already shared trade statistics of the country to facilitate negotiations as discussed in the 15th meeting of the Joint Working Group on Trade held on September 26-27, 2023 in Dhaka.

India is also supposed to share such data as soon as possible, according to an official who deals with the issue.

Earlier, it formed two committees - an advisory committee (AC) and 11-member Trade Negotiation Committee (TNC).

According to the provision of paragraph 4.4.2 of Regional Trade Agreement (RTA) Policy-2022, the TNC of Bangladesh would carry forward the negotiations in cooperation with the Indian TNC and periodically report to the competent authorities.

On the other hand, the AC closely monitors the overall activities of the TNCs and provides necessary suggestions in case any situation arises during the negotiations.

In a bilateral talk between Prime Minister Sheikh Hasina and her Indian counterpart, Narendra Modi, on September 08, 2023 held in New Delhi, both leaders looked forward to the starting of negotiations on the proposed CEPA.

At the foreign-office consultation between the two countries held in New Delhi late last year, Bangladesh and India agreed to wrap up negotiations on a much-vaunted comprehensive partnership forum by 2026.

When contacted, a senior official of the ministry said: "We hope to start negotiations within the next couple of months." The Indian side is, however, taking preparation in this regard, he added.

The prime ministers of the two countries in their joint statement issued in New Delhi in September, 2022 had instructed the officials concerned to start negotiations within 2022 and complete it at the earliest, in time for Bangladesh’s final graduation from LDC status.

Following the instruction by the premiers, the MoC in September last had requested its Indian counterpart to commence the negotiations as early as possible, sources said here.

"We’ve almost completed internal procedures to start the negotiations. Currently, necessary consultations are going on regarding the issue," a high official at the commerce ministry told the FE.

"We earlier sat for a number of meetings including an inter-ministerial one with different ministries, including labour, commerce and home affairs, along with senior officials of different state agencies and the trade bodies," he added.

Another senior official said the MoC has already constituted a negotiation committee, alongside the high-powered AC, comprising senior officials and representatives from the trade bodies.

The proposed CEPA pact would be a very big agreement. Bangladesh had no practical knowledge to handle such a deal in the past, said the official.

The CEPA is considered an advanced level of the free-trade agreement (FTA) that India signed with a number of trading partners like South Korea and UAE while discussing the same with a number of other countries.

Bangladesh has only signed its maiden preferential trade agreement (PTA) with Bhutan. It has not signed any bilateral free-trade agreement (FTA) so far though it is a member of a number of multilateral FTA deals.

The two countries first discussed the possibility of signing a CEPA deal in 2018 at the commerce secretary-level meeting for increasing bilateral trade and strengthening overall cooperation.

In the same year, the trade ministers had agreed to conduct a joint feasibility study on signing the CEPA.

The Centre for Regional Trade of India and Bangladesh Foreign Trade Institute (BFTI) later jointly conducted the feasibility study and submitted it to the MoC.

After reviewing the joint study report, the MoC opined that the CEPA deal can be signed with India to retain the facilities that Bangladesh enjoys under the South Asian Free Trade Area (SAFTA) deal in the post-graduation era too.

As a least developed country (LDC), all but 25 tobacco and alcohol products of Bangladesh are entitled to duty-and quota-free (DFQF) market access to India.

Bangladesh will lose the DFQF facilities in India after 2026 when it graduates to developing country status.

The negotiation on signing the CEPA with India is a part of the government’s initiatives to sign deals with major trading partners to retain the DFQF facility after Bangladesh’s graduation from the LDC status to a developing nation, experts said.

Signing the CEPA could offset the impacts of potential challenges to emerge after the graduation, they added.

Earlier, the parliament adopted a law on signing free trade agreements, preferential trade agreements and CEPA with the potential and developed countries so that Bangladesh would not face any setback to retain the DFQF market access facility after its graduation.

In the last fiscal year, Bangladesh imported goods worth $9.7 billion from India and exported over $1.4 billion.

 source: The Financial Express