Negotiations for FTA with Asean underway
Bangladesh features formally initiated negotiations with the Association of South-East Asian Countries (Asean) to signal a free of charge trade agreement to take pleasure from greater market access found in the bloc after graduating from minimal developed country grouping.
"I signed the negotiation letter today [Sunday] and sent it to the foreign ministry to start formal negotiations with the Asean headquarters, to ensure that we can sign an FTA with this main trade bloc," Commerce Secretary Md Jafar Uddin told The Daily Star.
Bangladesh has launched the negotiations mainly for 3 reasons.
First is since the Asean is a huge market where Bangladesh may do well as the second is to guard the work privilege after graduation.
Third, if Bangladesh may signal an FTA with the Asean, it generally does not need to sign any kind of bilateral agreement with the 10 member countries of the bloc.
"Otherwise, we must sign the Preferential Trade Agreement (PTA) or perhaps FTA with the Asean member countries like Indonesia or Malaysia in order that we may exploit the business enterprise opportunities of this major trading bloc," Uddin stated.
Currently, Bangladesh reaches the ultimate stage of its negotiations with Indonesia for a PTA for duty privileges on select things traded between your two countries.
On the other hand, the negotiation is currently facing a stalemate since Indonesia disagrees with plenty of terms, particularly when it comes to plenty of major export items such as garments, beneath the proposed PTA.
"Still, we are continuing negotiations with Indonesia to signal the deal as quickly as possible," he said.
Bangladesh is a person in the Asean Regional Discussion board since 2006, which will be an benefit for the country during negotiations, Uddin added.
The Asean has turned into a vital market for Bangladesh because of its immense size. The southeast Asian nations are also a crucial source of raw materials for the country's garment sector and different industries.
The Asean has a huge consumer base of 642 million persons and a burgeoning middle-class with newfound spending capabilities.
By 2030, the Asean region will be the fourth-largest economy on the globe. Its GDP improved from $2,373 billion in 2007 to $4,034 billion in 2016, regarding to a report titled 'Bangladesh A tale of a Phoenix.'
Booming towns in the Asean member countries take into account more than 65 % of the region's collective GDP, while an additional 90 million persons will be put into the marketplace by 2030 when you will have 163 million households of 'consuming' class.
The region's total expenditure on clothing and footwear totalled $51.2 billion in 2017. Its digital economy generated $150 billion in earnings every year and can add an estimated $1 trillion to the regional GDP in the next 10 years.
The Asean currently has 200 million digital consumers and 230 million online customers, but that is likely to expand by an average total annual growth of 7.3 % to attain $721.7 billion in 2022, the study said.
To secure trade privileges beyond 2024, the commerce ministry has been negotiating with 11 additional countries and trade blocs like Australia, Japan, China and Canada for PTAs, the secretary said.
Uddin also said that negotiations to signal a good PTA with Nepal is at the final stage seeing as Kathmandu has agreed to sign in January.
"Nepal has decided to sign the PTA with Bangladesh."
"We will need the PTA draft paper to the cabinet committee for last authorization as Bangladesh has already agreed in principle to sign the PTA with Nepal," he added.
Uddin has recently demanded zero-duty gain on the export of 140 products to Nepal at a good high-level virtual meeting between your two countries held found in October this year.
Regarding the tariff beneath the South Asian Free Trade Arrangement (Safta), the secretary stated trading under the Safta isn't fully duty-free, but duty waivers are provided to a great extent.
Even so, trading under a PTA presents whole duty waivers for some quantity of goods.
Bangladesh signed a good PTA with Bhutan on December 6. Beneath the deal, Bangladesh will love duty-free rewards on the exports of 100 local items, including garments, processed agricultural things and electronics.
Meanwhile, Bhutan will love duty benefits on 34 products.
Currently, Bangladesh doesn't have any FTAs even though the government has much time since been trying to sign such a deal.
According to the country's previous economic development records, the UN Committee for Advancement Plan (UN CDP) is scheduled to complete the final round of evaluation for Bangladesh's LDC graduation found in 2021.
If the UN CDP finds its assessment of Bangladesh to be positive, the united states will graduate to a developing country in 2024.
Once the region graduates, all tariff benefits will be lifted.
Only the EU allows its tariff benefits for Bangladesh for a grace period of another 3 years. This signifies that Bangladesh will have duty-free access to the EU until 2027.
As an LDC, Bangladesh currently enjoys zero-duty benefits, preferential trade benefits and regional trade benefits on exports to 38 countries, including 28 in the EU.
The united states also gets duty-free usage of the US for 97 per cent of its products. But however, Bangladesh's main export products, including garments, aren't contained in the package.
Therefore, Bangladeshi exporters face 15.62 per cent duty on apparel exports to US markets, which is the single largest export destination for the country.