The Ministry of Commerce (MoC) has decided to make a fresh move to convince the relevant government agencies, businesses and experts about the benefits of signing free trade area (FTA) deals.
The MoC has decided to hold further consultations to allay fear in the minds of many about such deals and secure the green signal towards signing the same with prospective countries. Signing such deals is seen imperative in the context of the country's graduation from a least developed country (LDC) by 2024.
The National Board of Revenue fears substantial revenue loss while a section of businesses are apprehensive of losing market to cheap imports.
Bangladesh had changed its stance in 2018 in favour of opening its market by signing of FTA deals.
In late 2018, the Ministry of Finance (MoF) forwarded a list of potential countries with which Bangladesh can try signing FTA deals.
The Prime Minister's Office also asked the ministries and divisions concerned to take steps for signing bilateral and multilateral FTA deals.
The MoF named China, India, Indonesia, Brazil, Malaysia, Thailand, South Korea, Pakistan, Japan, Argentina, United Arab Emirates, Australia, Sri Lanka, and Saudi Arabia as potential countries for signing the agreements.
"Bangladesh's large trade gap with many countries can be minimised through signing of FTA deals since it will help boost goods exports," the MoF wrote to the commerce ministry at that time.
After that, officials said, the commerce ministry conducted a feasibility study on signing of FTA deals with several countries and blocs while the same is underway for many other countries.
Even Bangladesh has initiated talks and exchanged templates with Indonesia, Malaysia, and Sri Lanka for signing FTAs or preferential trade agreement (PTA).
While talking to the FE, MoC additional secretary (FTA Wing) Shahidul Islam said the study found that Bangladesh needs to lower import duty in case of its move to sign FTA with any country or bloc.
He said Bangladesh's average import tariff is 14 per cent which needs to be reduced to around 4.0 per cent to sign FTAs with Association of Southeast Asian Nations (ASEAN).
"If we do not agree to cut import tariff, we won't be able to sign FTA with any of the ASEAN member country," he added.
Mr Islam also said the National Board of Revenue (NBR) does not agree to lower tariff as their revenue earnings will fall.
"We have to consider the long-term benefits of signing FTA deals which will help raise exports and draw more investments," he said.
Another commerce ministry official said it is true that signing of FTA deals will cause instant revenue loss but in the long term, new area of revenue generation will be created due to fresh investments.
Apart from job creation, investments will also generate value added tax from selling products, and income tax from companies and individuals, he said.
"You are getting a big revenue advantage in the long term," said the official.
He said the Bangladesh Trade and Tariff Commission has been asked to prepare a concept paper for holding further consultations on this issue soon.
Officials from the ministries and departments concerned, top level government officials, NBR, Bangladesh Bank, Bangladesh Investment Development Authority (BIDA), top chamber bodies, economists, think tank and media representatives will attend it.
"We want to sensitise government functionaries in favour of FTA deals," he added.
Distinguished Fellow of Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya earlier told the FE that exploring FTA possibility with major countries is a welcome move.
During study, some issues have to be taken into consideration so that Bangladesh can benefit from the deals.
Dr Bhattacharya said Bangladesh needs to check whether it will get preferential tariff reduction and products having export potential can be included in the FTA concession list.
"The amount of revenue loss from FTA needs to be calculated and non-tariff barriers have to be addressed," he added.