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Dhaka’s negotiations with Kathmandu over PTA likely to face hurdles

Financial Express Bangladesh | 26 April 2021

Dhaka’s negotiations with Kathmandu over PTA likely to face hurdles


The country’s negotiations with Nepal over the signing of Preferential Trade Agreement (PTA) may face complexities centring the difference of opinion on fiscal benefits.

Nepal has sought exemptions from Other Duties and Charges (ODC) including Supplementary Duty and Regulatory Duty on exports of different products while the revenue board is ready to allow only exemption from payment of Customs Duty (CD), customs officials said.

Talking to the FE, a senior customs official said the process of finalizing the draft of PTA between the two countries is moving at a snail’ space for this reason.

Nepalese ambassador Banshidhar Misrain a meeting with the commerce secretary earlier raised the issue of elimination of ODC for concluding the PTA with Nepal.

The customs official said the National Board of Revenue (NBR) is not in favour of offering exemptions from SD or RD as those taxes are imposed for safeguarding the country’s local products.

However, the commerce secretary in the meeting with the Nepalese envoy said the issue of ODC is under positive consideration of the Bangladesh side within the purview of World Trade Organisation (WTO) regulations.

Talking to the FE, Commerce Secretary Dr MdJafar Uddin said as per WTO rules, Nepal cannot charge ODC as they are WTO member by accession.

"Nepal wants Bangladesh to offer similar exemptions from ODC. The issue will be settled through discussion but we will first consider national interests at the time of trade negotiations."

He, however, said there must be a win-win situation for signing such a bilateral trade agreement.

The commerce secretary also said Bangladesh has already sent a short request list of its 42 exportable products for tariff concessions under the proposed bilateral PTA with Nepal.

Responding to the FE’s query on whether the tariff concession issue is a barrier to PTA, he said trade negotiations have yet to reach at that level.

Officials said the Trade Negotiation Committee (TNC) was supposed to sit in January 2021 but the pandemic has delayed the process.

"The TNC will have to sit in another meeting to finalise the issue. Representatives of the NBR will also attend the meeting," the commerce secretary said.

The Ministry of Commerce (MoC) is ready for the next TNC in order to conclude the bilateral PTA meeting between the countries, he added.

Officials said the landlocked neighbouring country has raised some other issues which are not directly related to the PTA but those appear as burgeoning issues.

The issues include lifting ban on yarn import from Nepal through Banglabandha port, import of vegetables and fruits, and visa simplifications.

MoC officials said Bangladesh assured Nepal of addressing the issue of vegetable and fruit imports under PTA.

Seamless export of yarn and broom through Banglabandha border has been forwarded to the NBR which may be resolved shortly, they added.

In the last meeting with Nepal, the MoC has pointed to the ’modality of signing the inclusion of Rohanpur as a Port of Call to transit agreement between Bangladesh and Nepal’.

The issue was discussed during the sixth commerce secretary-level meeting. Nepal was expected to send a letter of intent in this regard.

During the visit of Nepal’s president Bidya Devi Bhandarion March 22, Dr Jafar said, both the countries decided to expedite the process of PTA.

Bangladesh has planned to sign the country’s first PTA with Nepal but the process has been delayed as the country is moving slowly on this issue, he added.

On December 6 in 2020, Bangladesh signed its first bilateral PTA with Bhutan.

The secretary said the process to sign PTA with Sri Lanka is also going on and the MoC held a virtual meeting with the counterparts of that country.

In the draft PTA, Bangladesh sought duty-free benefit on exports of garment items, including men’s t-shirt, knitwear and children’s clothes, fruit juice, cement and agro-processed food items like noodles and pastas.

On the other hand, Nepal demanded duty-free benefit on shipment of agricultural products, handicrafts and brooms.

Customs officials said Nepal is proceeding cautiously on PTA to ensure a win-win situation for it.

Bangladesh has a trade surplus with only Nepal in South Asia.

In the fiscal year 2019-20, Bangladesh exported goods worth $46 million to Nepal. At the same time, it imported goods worth $15 million from Nepal.

 source: Financial Express Bangladesh