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Bangladesh is going to resume negotiations on a free trade agreement (FTA) with China to boost trade with the world's second-largest economy, officials said.
As part of the process, a high-powered delegation of the government would visit Beijing in June and discuss with their Chinese counterparts on a joint-feasibility study to assess the economic potentials of such bilateral agreement, officials said.
Though the visit was supposed to happen early this year, it did not take place for unknown reasons.
In March, Bangladesh became eligible to graduate from an LDC (least-developed country), for which it could lose a string of trade benefits like preferential market access to the developed and developing economies after 2024.
Sensing the potential dangers, the government took the initiative to have such an agreement with its major trading partners.
Seeking anonymity, a commerce ministry official said last year, Bangladesh approached China to jumpstart the FTA talks.
After the proposal, both countries decided to initiate a joint-study to assess the potential areas as Bangladesh is among the few economies in the world, which does not have a single FTA.
He said the first meeting of the joint-study group, slated for January last, was postponed due to reasons not known. The official, however, did not elaborate on the reasons.
"The ministry has decided to restart the process. A team will fly for Beijing within two months if everything goes accordingly," he said.
The team will finish the country's first-ever FTA with Sri Lanka by the end this year.
China is Bangladesh's largest trading partner and the volume of bilateral trade reached $ 16 billion in the financial year of 2016-2017. But the trade heavily favoured China ($ 15 billion) leaving a ballooning deficit, which is a concern for Bangladesh.
Speaking on the issue, Li Guangjun, economic and commercial counsellor of the Chinese embassy in Dhaka, said the FTA negotiations were initiated last year and both countries had agreed to conduct a joint feasibility study.
He said that the next meeting of the FTA working group is set to be held in June in Beijing this year.
"It (the study) could take at least one year. If Bangladesh shows interest in such an agreement after the study findings, China would consider it," he said.
About the growing trade imbalance, Mr. Li suggested concentrating more on quality and diversification of products.
Trade experts said Bangladesh negotiations with China on FTA should be broad-based, not too focused on trade.
Khondaker Golam Moazzem, research director of local think-tank the Center for Policy Dialogue (CPD), said that Bangladesh has to enter into the FTA regime in the coming years after the country's transition from the LDC status.
As an LDC, the country does not get effective benefits from China because of high rules of origin, he said, adding the country needs to go ahead carefully.
Noting that Bangladesh's tariff structure for the import of raw materials and finished products is different, he said if the country provided duty-free entry to the Chinese finished goods, it would affect the internal revenue.
On the other hand, local industries could lose their competitiveness on the domestic market because of the finished goods.
But he saw some positive signs in case of Chinese outbound investment because the East Asian country plans to spread its low-end industries to labour-intensive destinations like Bangladesh.
"So, the FTA negotiations should not focus on trade alone. It should be focused on a broad-based economic partnership structure that involves trade, investment, energy and IT cooperation," he said.
"I think the joint working team should pay serious attention on that," he added.