Neighbouring nations, blocs with trade potential to get priority

Next-door neighbours and blocs having trade potential, good connectivity, bilateral cooperation and strategic partnership will get priority in Bangladesh's journey towards free-trade agreements (FTAs), the government decides.

A draft of the Regional Trade Agreement (RTA) policy also puts on priority list the countries which can be gateway for market access to other nations and countries to which Bangladesh may lose preferential trading facility shortly.

The RTAs should be beyond conventional trade pacts, covering all the trade aspects like trade in goods and services and investment, intellectual property and labour issues, the draft reads.

The ministry of commerce has drafted the policy, which is now nearly at the final stage with recently held inter-ministerial and stakeholder consultations.

Trade officials say after graduation from the least-developed country (LDC) group in 2026, Bangladesh will lose preferential access to some of the global markets.

Thus, they say, Bangladesh needs to brace itself for navigating all obstacles on its way to access to global and regional markets for a smooth and sustainable LDC graduation into next trajectory of growth.

Opinions are rife that, alongside trying to retain existing preferential market access after graduation, conclusion of RTAs with prospective trading partners can be an instrument to augment the trade and investment momentum of the country.

In the global context, RTAs are a growing reality in the face of the slow progress on comprehensive global resolution in terms of trade and investment at the World Trade Organization, the draft policy mentions.

"To keep pace with the evolving reality Bangladesh urgently needs to be actively engaged in bilateral, regional, and sub-regional initiatives to overcome the protectionism and barriers to trade through successfully concluding and implementing RTAs," it adds.

The draft policy also underscores the need for aligning the country's regulatory framework and legal measures with global best practices by protecting its offensive and defensive interests apace with the current RTA trends.

As such, it says, some actions may be required to address challenges like capacity constraints, support to domestic industries, prevalent provisions of different laws and regulations, and impact on revenue.

The draft RTA policy guidelines concentrate on expanding the export market by diversifying export basket as well as widening domestic manufacturing base and reducing the excessive dependence on limited products.

In the case of potential RTA partners, the policy also prioritises economic strengths, growth prospects, and potential demand and supply, countries having significant trade volume, product diversification, prospect of cooperation in the field of technology transfer, employment, investments, remittance, trade facilitation, and development of standardising and mutual recognition.

It says depending on interests of partners the RTAs may include trade in goods which may cover tariff-reduction mechanism, removal of non-tariff barriers, rules of origin, customs cooperation, trade-remedial measures, sanitary and phytosanitary (SPS) and technical barriers to trade (TBT).

The trade in services should cover movement of natural persons and cooperation in the sector and will be in form of step-by-step approach towards liberalisation.

Other issues like cooperation and technical assistance, competition policy, mutual recognition of standards, environment, government procurement, and e-commerce can also be covered based on mutual interest of the partners.

A senior commerce ministry official said before initiating an RTA a feasibility study, independently or jointly, would be conducted to identify prospects and challenges, including offensive and defensive interests.

However, he said, "RTAs can be initiated even without conducting feasibility study provided such proposals come from a prospective partner country or a group of countries together".

Dr Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), feels that Bangladesh needs to identify a set of priority countries based on a pre-feasibility assessment to sign FTAs.

"The set of criteria in terms of prioritisation would potentiality be a natural partner, volume of trade, possible adverse effect on domestic industries and scope for enhancement of cooperation in the future," he told the FE.

Mr Moazzem said one possible consideration for Bangladesh would be how the partnership helps Bangladesh to be involved in broader regional or global value chain through the partner country.

Hence, the policy researcher notes, Bangladesh may consider partnership building with Vietnam, Thailand, small EU countries, African countries who are member of SAU, South American countries who are member of Mercosur.

He mentions that major advanced developing countries are increasingly prioritising social and environmental issues in bilateral trade agreements. Therefore, compliance with labour rights, environmental issues, governance and procurement-related issues are also part of prospective trade and investment deal-making.

"Bangladesh should get prepared on those issues as well," Mr Moazzem says about the aspects of homework to be done before negotiating such free-trade pacts.

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