BANGLADESH is unlikely to gain much by signing a preferential trade agreement (PTA) with Nepal, as Kathmandu’s trade treaty with Delhi stands as a barrier in this regard, officials have said, as per local daily reports.
According to the treaty of trade between India and Nepal, the two sides agreed to “accord unconditionally to each other treatment no less favourable than that accorded to any third country with respect to (a) customs duties and charges of any kind imposed on or in connection with importation and exportation, and (b) import regulations including quantitative restrictions”.
Officials said if Nepal now agrees to accord any tariff concession under the proposed PTA to Bangladesh, and if that is lower than what was granted to India, the new low tariff rate will also be applicable in case of its trade with the giant neighbour. They said Nepal’s total global import amounts to US$ 10 billion, and the major part of it comes from India. So, if tariff is lowered in the case of Bangladesh, the reduced tariff automatically applies to imports from India as well. In that case Nepal’s revenue earning from import duty will fall drastically.
Thus, Nepal will be unable to lower tariff significantly for Bangladeshi products under the PTA. So the only possible reason for signing a treaty in this case with countries like Nepal with whom we have low bilateral trade relations would be to enhance capacity of the negotiators concerned, before opting to sign pacts with giants.
With the experience that we gain we can start negotiations with countries like Vietnam and Sri Lanka, with whom Bangladesh has no big trade gap. Much later on, when we have significantly increased our expertise we can start talks with India or China — both economies with whom we have large trade gaps.
Our ultimate objectives should be to reduce our trade gaps in an atmosphere of talks conducive to the decrease of our trade gap reduction. But more importantly we have to also stimulate our own internal efficiency to reduce the gaps. Without decreasing corruption we can never hope to achieve international competitiveness. This includes but is not limited to increasing both infrastructural competitiveness and financial competitiveness.
Talks’ aimed to reduce tariffs is a bit like begging nations to reduce their external trade barriers. If we can make competitive products we will create demand in other nations so they will be forced to buy our products. Stopping corruption in our administrative and financial sectors is the only way to go ahead.
