Bangladesh moves to hold talks with Japan on the spadework for striking a much-envisaged free-trade agreement (FTA) or a preferential-trade agreement (PTA) with the developed Asian nation.
Officials said the initial discussion would take place later this month on a joint feasibility study on the planned trade pact with Japan, currently the world's third-largest economy after the US and China.
Officials at the Bangladesh Ministry of Commerce and the Japanese Ministry of Economy, Trade and Industry (METI) would sit for the talks virtually, to minimise a gap on this long-pending issue, they added.
The additional secretary of FTA Wing of the commerce ministry would lead the Bangladesh team comprising representatives from the Ministry of Industries, Bangladesh Investment Development Authority, and Bangladesh Economic Zones Authority.
Bangladesh in November last year requested Japan to conduct a joint feasibility study for signing FTA.
However, Japan had shown reluctance to take forward the proposal regarding conducting a joint feasibility study.
Amid the situation, Bangladesh has asked its commercial counsellor in Japan to keep constant contact with the METI officials to pursue them.
Since Japan is yet to respond positively, now the commerce ministry officials in Dhaka have opted to intervene by holding talks with METI officials.
Earlier in March this year, commercial counsellor of Bangladesh to Japan Dr Ariful Haque and counsellor (political) Sheikh Farid met Japan foreign ministry's deputy director Chisako Nishitani and assistant director Anri Uno to get the update on the proposed joint feasibility study.
Thereafter he informed Dhaka that the government of Japan would not advance the initiative unless its local businesses feel the need for an FTA with Bangladesh.
In a letter he wrote that the FTA is a policy decision in Japan and the issue would only arise based on the need of the business circles there.
"…it seems difficult to have feasibility study, as of now, because they need to consider it with the requests from business communities and economic effect of FTA," he wrote, referring to Japanese foreign ministry officials' views.
He also wrote that before taking a policy decision on FTA, it seems, there is no scope right now to conduct a feasibility study.
He suggested that the issue may be raised and discussed with the Japanese stakeholders in appropriate forums like the Japan-Bangladesh public-private joint economic dialogue initially.
Country representative of Japan External Trade Organisation (JETRO) Yuji Ando told the FE earlier that some Japanese companies felt the need for an FTA or extension of the existing generalised system of preference (GSP) facility.
"If the tariff-free access to Japan is not available, relocation (of factories) from Bangladesh might take place to other countries having trade agreements (with Tokyo) like that of Vietnam, ASEAN, and India," he wrote, replying to an e-mail.
The JETRO chief also said that as Japanese companies in Bangladesh export items and products mainly to Japan, there is a need to see the balance of trading items between the two countries carefully, which would help understand whether the FTA or GSP extension would be better to go to the next level.
The Bangladesh Trade and Tariff Commission (BTTC) had earlier studied the pros and cons of signing such a deal with Japan.
The BTTC study found that signing an FTA with Japan will be immensely beneficial to Bangladesh in the post-LDC era when the country would lose trade concessions globally for graduating from the poor-country status.
Presently, all but a few Bangladeshi products enter the Japanese market with the duty-and quota-free facility, but that would not last long after Bangladesh's graduation from the least-developed-country status by 2026.
In 2018-19, Bangladesh imported goods worth US$1.8 billion from Japan while its exports to the other side amounted to $1.3 billion, which is over 3.0 per cent of the country's total external trade.