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The Financial Express

Offsetting post-LDC preferential trade losses

Bangladesh for securing SAFTA benefits in CEPA pact with India

Negotiations with Delhi soon


| Updated: August 12, 2022 11:16:40


Flags of Bangladesh and India are seen cross-pinned in this photo symbolising friendship between the two nations — Collected Flags of Bangladesh and India are seen cross-pinned in this photo symbolising friendship between the two nations — Collected

Bangladesh will push for securing the benefits it enjoys under the SAFTA deal when negotiations on Comprehensive Economic Partnership Agreement (CEPA) start with India soon, officials say.

As a least developed country (LDC) all but 25 tobacco and alcohol products of Bangladesh are entitled to duty-and quota-free market access to India under the South Asian Free Trade Area (SAFTA) agreement.

Bangladesh will lose the duty-free and quota-free market-access facility to India after 2026 when it graduates to a developing country.

A recent meeting at the Ministry of Commerce (MoC) decided to open CEPA negotiations with India soon with a view to retaining in the new pact the facilities it enjoys under the SAFTA deal.

The meeting was told that India is a major trade partner of Bangladesh from where essential commodities, industrial raw materials and equipment are imported.

Export to the neighbouring giant is also increasing gradually, according to the meeting's opinion.

The two next-door neighbours first discussed the possibility of striking CEPA in 2018 at a commerce secretary-level meeting for a boost in bilateral trade and overall cooperation.

The same year, the trade ministers of the two countries agreed to conduct a joint feasibility study on the prospects of CEPA.

The Centre for Regional Trade of India and Bangladesh Foreign Trade Institute (BFTI) later jointly conducted the feasibility study and submitted its report to the commerce ministry.

Sources say the recently held meeting, chaired by commerce secretary Tapan Kanti Ghosh, asked the BFTI and the Bangladesh Trade and Tariff Commission to prepare a joint report identifying the possible benefits and risks of getting into CEPA pact with India.

Also, conducting a separate study on trade in goods, trade in services, and investment was underscored to decide appropriate strategy for negotiating CEPA.

The meeting suggested the formation of an expert team to carry out the negotiations, taking in-house preparation for dispute settlement for investment negotiations, steps for ensuring mutual recognition of standards for deciding product quality, and providing priority to the SAARC agreement on trade in services (SATIS) in case of negotiating trade in services.

Also, the meeting suggested steps for continuation of trade facilities Bangladesh attained in north-eastern regions of India, keeping watch so that Indian investment policy cannot be barrier in case of investment here, and intensifying trade-facilitation activities.

Steps about non-tariff barriers in CEPA, addressing the issues like easy and low-cost import of essential commodities, industrial raw materials, and machinery were recommended.

Contacted, a senior commerce ministry official told the FE the negotiating team has to be formed with qualified officials who have enough knowledge on bilateral and multilateral deals and laws.

"The purview of CEPA is very wide, much larger than a free- trade-area deal, thus has to be handled with adequate skill, since Bangladesh is for the first time negotiating such agreement," he says.

Dr Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), suggests that the decision to undertake separate studies on trade in goods and services, and investment to identify the possible strategies based on the impacts and implications of CEPA should get immediate priority.

"Since India earlier negotiated a number of trade and investment deals and a number of those are currently in the process of negotiation, it is important to review the documents related to those negotiations to understand its priorities, offensive and defensive interests, institutions working with negotiations, and institutional measures undertaken to implement such agreements," he says.

Mr Moazzem suggests forming a highly competent technical team within the ministry of commerce where experts from different sectors need to be involved on a long-term basis.

"Operation of the technical team should be supported from the government budget without the support from development partners and international organisations."

He feels that it is important to involve stakeholders in different phases of the discussion since the private sector will be the direct and most important users/parties of such agreement. "Such an important political and economic negotiation should not happen outside the close observation of the political process," he says.

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