Bangladesh and India are set to start a joint study on the signing of an advanced free trade area deal under the banner of comprehensive economic partnership agreement, or CEPA, said officials.
The two sides have already finalised the terms of reference for the study, which may lead to inking the FTA deal, if found feasible, they said.
Officials said the CEPA is more than an FTA deal, comprehensive like the one the European Union and Korea signed.
He said the ToR set by two countries indicates that if the parties agree to sign the CEPA based on the study results, it will be one kind of comprehensive FTA agreement covering all aspects of bilateral trade, commerce, and investment.
The ToR noted the joint study will analyse trends in the key macroeconomic indicators in India and Bangladesh and the strategic and economic benefits that India and Bangladesh can reap from establishing CEPA covering trade in goods, trade in services, investment, and other areas.
It will also analyse the existing trade patterns between India and Bangladesh and assess the trade possibilities between the two countries.
The prevailing tariffs between India and Bangladesh, along with the bound tariffs will be examined to suggest a tariff coverage and liberalisation programme, consistent with the World Trade Organisation's principles, to expedite the expansion of trade in goods.
The study will further examine the trade policy environment and regulatory framework prevailing in Bangladesh and India to identify impediments to trade-like technical barriers and sanitary and phytosanitary measures and suggest a framework within the comprehensive agreement to tackle such issues.
The pattern of trade flows in services for India and Bangladesh will also be analysed.
The study will examine the policy and regulatory regimes in both countries and the extent of autonomous liberalisation the countries have undertaken.
Areas of liberalisation in services will be identified after a detailed examination of the existing commitments and revised offers in the WTO. The recommendations for liberalisation with potential sectoral coverage will be made within the General Agreement on Trade in Services framework.
The study will also explore investment opportunities between India and Bangladesh with a view to identifying an appropriate framework and modalities for investment cooperation within the comprehensive agreement for creating a favourable climate to encourage cross-border investment flows.
It will identify the possibilities for entering into the mutual recognition agreement between the agencies concerned in both countries for different products and services having high trade potential.
The study will analyse the pros and cons of entering bilateral CEPA using the internationally-recognised econometric modelling used for bilateral trade analysis. For the purpose of economic analysis, both countries will co-operate with each other and exchange data in a mutually-agreed format.
A senior commerce ministry official told the FE in the last bilateral commerce secretary-level meeting the two sides discussed on completing the study within six months of its launching.
He said once the pandemic crisis is over, two stare research organisations will start conducting the study. They may add two more think-tanks in the study.
Contacted over telephone, research director of the Centre for Policy Dialogue Khondaker Golam Moazzem had told the FE earlier Bangladesh needed to consider it as a developing country instead of a least developed nation while fixing the future trade strategy.
In this case, Bangladesh should consider its capability, limitations and potential not targeting the one country, but for all natural partners, he said.