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The Financial Express

Need for bilateral FTAs for mutual benefits  

| Updated: December 13, 2018 22:32:36


Need for bilateral FTAs for mutual benefits   

Signing of free trade agreement is very much essential for Bangladesh. Yet the authorities are not that much serious about it. There were lots of discussions with many countries in the past. Yet, the country is yet to sign even a single deal.

The first such agreement was supposed to be signed with Sri Lanka by this year. Unfortunately, it did not happen. The government announced earlier that the agreement with Sri Lanka would be signed during the tenure of the incumbent government as both the countries had already completed a joint feasibility study and examined pros and cons of the matter.

Although the government did not disclose anything about the FTA launching as yet, it is unlikely that the proposed deal would be signed by this year as the national election in Bangladesh is going to be held this month.

Sri Lanka is in an advantageous position in value added apparel industry, shipping lines and deep-sea port, financial services, ICT and skilled technical people in different sectors. On the other hand, Bangladesh enjoys advantages in the apparel sector, skilled workforce in the garment sector, agricultural products, processed foods and migrant workers.

Bangladesh would be immensely benefited if the FTA is signed with Sri Lanka, as a portion of its exports and imports of goods are done through the Colombo port.

Now the question is what FTA means. It is an agreement between two or more countries to reduce or remove trade barriers and bring closer economic integration. FTA offers lower or zero tariff on exports and imports of goods and components assigned under FTA. This would make products more competitive, as compared to exports and imports from non-FTA partner countries.

Another South East Asian country, Malaysia, is reported to have shown interest in signing FTA with Bangladesh to boost bilateral trade and investment. The country's envoy, in a meeting with a leading chamber, said Bangladesh has a promising future in terms of trade, commerce and economic development.

The country's commerce minister has recently stressed the need for signing a FTA with Beijing aiming to narrow the yawning trade gap between Bangladesh and China. Bangladesh and China have a huge trade gap. The country has increased export growth to China in recent years and if the growth continues, it will be able to boost its export to US$2.0 billion within two or three years.

Presently, as a least developed country, Bangladesh gets duty-free market access to European Union, Canada, Australia, Japan and some other countries. The country also gets duty-free access to Indian and Sri Lankan markets under the South Asian Free Trade Agreement (SAFTA).

There is no denying that the country's future trade benefits would largely depend on bilateral free trade agreements as it may lose duty-free facilities once it graduates to a middle-income nation in the next few years. Without FTAs, the country will invariably lose competitive advantages to other countries.

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