UNB/The News Today | October 18, 2006
Study suggests Bangladesh to ink FTAs with India, Pakistan
Experts, present at the conference, criticised the perception-based study
Bangladesh to sign Free Trade Agreements (FTAs) with India and Pakistan for mutual benefits, but it failed to identify what the FTAs would have in addition to South Asia Free Trade Area (SAFTA), reports UNB.
The European Commission funded the study, titled “Feasibility Study on Bilateral FTA within SAARC Region”, to contribute to efforts of the Ministry of Commerce to adopt a position on bilateral FTAs with India and Pakistan. It was released at a conference at Hotel Sheraton.
Experts, present at the conference, criticised the perception-based study, as it has not identified the issues of concerns need to be addressed while considering FTAs in addition to SAFTA.
“It (study) has also failed to address the impacts of FTAs on revenue and domestic industries,” Dr Mostafa Abid Khan of Bangladesh Tariff Commission told the conference.
He also wanted to see whether Bangladesh would be able to provide its SMEs sector with huge fund support like that of India to make its SMEs competitive as the study found.
Prof Ayubur Rahman Bhuiyan of Dhaka University and Sunirmal Ray from India presented their study findings at the conference held with Bangladesh Enterprise Institute executive chairman Farooq Sobhan in the chair.
Economists, academics, trade experts, trade body leaders and diplomats took part in the discussion.
India and Pakistan have proposed Bangladesh to have the FTAs for mutual benefits of the countries. But, Bangladesh has so far given no responsive to the separate proposals.
The Ministry of Commerce coordinated the study by private consulting firms from both home and abroad, aiming to have a decision in this regard.
The trade experts were apparently in favour of the FTAs, but expressed doubt on the prospect of the FTAs, particularly with India with special reference to the much-talked-about non-tariff barriers by India and the experience of SAPTA and the SAFTA, which yielded almost nothing.
On NTBs, Prof Abu Ahmed of Dhaka University pointed out that no Bangladeshi business house has an office in India, but Indian business houses have many offices in Bangladesh.
He stressed the need for taking initiatives by the Indian side to remove the bottlenecks if they really want to have FTA with Bangladesh. “I think we’re ready to accept it (FTA),” he said, emphasising that Bangladesh should go for FTAs, or else, the country would be lagging behind.
Former commerce secretary Sohel Ahmed made another reference on NTBs that Bangladesh has developed its Banglabandha land customs station to facilitate trade, but India has done nothing in Fulbari on the other side of Banglabandha.
He added that the Banglabandha LCS has now become virtually dysfunctional. “Please take note of it while considering FTAs,” he added.
Economic Minister at the high Commission of India in Bangladesh TN Srivastava, however, said there are many institutional arrangements already set up to deal with the issues and things were progressing now.
Commercial Counselor in the Pakistan High Commission in Bangladesh Rubina Shah invited Bangladesh to inform them about any NTBs, other than drug licensing, so that they could solve the problems.
CPD research director Dr Mustafizur Rahman suggested identifying products to be able to compete in the markets of India and Pakistan before considering the free trade agreements.
“The market is already indicating that we’ve comparative advantage,” he said. He, however, stressed the need for addressing the NTBs by dividing them into categories as well as strengthening supply side capacities.
About the prospect of FTAs, he questioned the prospect of SAFTA as it has got a very long negative list of products.
The trade expert also suggested not to see the Indian market as a single one but to consider state-wise for selecting products of Bangladesh’s export interest.
They study report said despite high tariffs, Indian exporters were successfully competing in Bangladesh market. In a free trade situation, they would enjoy a substantial price advantage.
On the positive side, it said, duty-free import from India would create economic welfare benefits in the form of lower prices or better quality and services for Bangladesh.
“These welfare benefits will considerably exceed the economic welfare losses of Bangladesh producers,” it added. The report also favoured FTA with Pakistan as Bangladesh has little to lose but much to gain from the FTA.