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Govt begins consultations with industries on SAFTA, BIMSTEC benefits

Financial Express, Dhaka

Govt begins consultations with industries on SAFTA, BIMSTEC benefits

M Shafiqul Alam

2 November 2004

The government has started a series of consultations with industries to have a clear-cut idea about the sectors that can enjoy the benefits of the SAFTA and BIMSTEC deals.

The industries and their respective chambers have been asked to inform the government whether they meet the rules of origin criteria while the ministries and divisions were told to prepare a Sensitive List that would comprise some 10 per cent of the tariff lines.

The aim is to find out the sectors that would be capable of enjoying the benefits of the two regional free trade agreements (FTAs) that Bangladesh signed this year.

The two agreements will come into force within less than two years — the SAFTA from January 1, 2006 and the BIMSTEC from July 1, 2006.

These are the first regional FTAs that Dhaka signed and these would allow duty-free access of Bangladeshi goods to the markets of other signatories. The products of other nations would get the same benefit in Bangladesh market.

Tariff Commission, which is holding the consultations, has divided the industries into five broad groups and representatives of the groups have been told to give actual capacity of the industries in relation to rules of origin.

The groups are agricultural and agro-based sector, leather, chemicals, jute, textile and ready-made garments and engineering and electronics.

Criteria to determine the originating status of goods to be eligible for preferential treatment are core elements of any rules of origin (RoO).

And RoO is the most crucial aspect of a free trade agreement and to a large extent it determines the fate of an industry in a country and how much investment would be made in a particular sector under a free trade regime.

Sources said already the Commission held a meeting with the agricultural and agro-based sectors but the response from different associations of the sectors was tepid. There would be four more meetings within the next week.

Though the industry has still much to know about the rules of origin criteria and how an industry fulfils them, Commerce Ministry sources said they expect more serious approach from the respective sectors.

Sources said the industries have been asked to inform the Commission about which RoO criteria they prefer most. In case of value addition, the industries have been asked to state what should be the minimum domestic content or maximum import content.

They have been asked whether they prefer the value addition or Change in Tariff Heading (CTH) criteria or the combination of the both. Besides, they have also been asked whether the respective sector can comply with the wholly obtained or produced goods.

About the sensitive list, the second most vital component of an FTA, the government has taken a move to prepare a shorter list since a consensus has already been built in the SAFTA negotiations for a smaller sensitive list, sources said.

The government had earlier prepared a sensitive list comprising 1398 items or 26.75 per cent of the total tariff lines. But experts claimed the list as too big for an FTA.

The ministries and the Free Trade Group, a conclave of the country’s 21 leading chambers, have been told to consult the stakeholders for downsizing the list to 10 per cent of tariff lines by the end of this year.

The items under the sensitive list do not get duty-free access to a country. Usually the products in which a country enjoys competitive advantages against the other FTA signatories are put in a sensitive or negative list.