REPORTS in a national daily said signing of free trade agreement (FTA) with individual countries or external trade blocs particularly with ASEAN countries figured prominently in discussion in foreign office on Sunday. The issue is quite sensitive and also timely as Bangladesh will cease to get duty free market access (GSP) to European countries from 2027 after its graduation from LDC status in 2024. European buyers will have to pay customs duty from that time on import of Bangladeshi products including apparels to make it expensive. The country enjoyed duty free status on everything but arms so long. But the situation is poised to change soon.
Economists and experts have therefore suggested signing FTA or Preferential trade agreement (PTA) with major trading nations or blocs to secure duty free or preferential market access to continue the country’s stride as a growing exporting nation. But what seems to be a major issue here is that if Bangladesh would look for duty free market access in other countries it should reciprocally open up its market to duty free imports. So whether or not the country would gain would mainly depends on its market competitiveness and adoption of high tech industrial manufacturing to enhance its capacity to produce goods at low cost and diversity exports to capture markets of its trading partners.
But an immediate issue that makes many to ponder is that any duty free import would drastically reduce government revenue and expose weaker segments of industries and services to face marginalization. Many may just collapse on arrival of low cost goods. Nonetheless, the government is reportedly considering signing FTA or PTA with at least a dozen countries while the National Board of Revenue (NBR) is calling for cautious move taking into consideration the negative impacts of such decisions on the economy. It is true Bangladesh will suffer serious setback at the beginning but a duty free market access to 10-member ASEAN bloc along with other counties of the region like South Korea China, Japan, Australia and New Zealand may give it bigger export markets at the end.
We would say there is no point to keep the country under the tariff walls. In our view, Bangladesh must slowly open up and needs to quickly upgrade its manufacturing system to the level which will be able to sustain the immediate negative impacts.
Economists and experts have therefore suggested signing FTA or Preferential trade agreement (PTA) with major trading nations or blocs to secure duty free or preferential market access to continue the country’s stride as a growing exporting nation. But what seems to be a major issue here is that if Bangladesh would look for duty free market access in other countries it should reciprocally open up its market to duty free imports. So whether or not the country would gain would mainly depends on its market competitiveness and adoption of high tech industrial manufacturing to enhance its capacity to produce goods at low cost and diversity exports to capture markets of its trading partners.
But an immediate issue that makes many to ponder is that any duty free import would drastically reduce government revenue and expose weaker segments of industries and services to face marginalization. Many may just collapse on arrival of low cost goods. Nonetheless, the government is reportedly considering signing FTA or PTA with at least a dozen countries while the National Board of Revenue (NBR) is calling for cautious move taking into consideration the negative impacts of such decisions on the economy. It is true Bangladesh will suffer serious setback at the beginning but a duty free market access to 10-member ASEAN bloc along with other counties of the region like South Korea China, Japan, Australia and New Zealand may give it bigger export markets at the end.
We would say there is no point to keep the country under the tariff walls. In our view, Bangladesh must slowly open up and needs to quickly upgrade its manufacturing system to the level which will be able to sustain the immediate negative impacts.
