Trade
10 months ago

Preferential trade agreement: Dhaka, Colombo to swap revised product lists next month

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Dhaka and Colombo are set to exchange revised lists of requested products by September to sign a proposed preferential trade agreement (PTA) shortly, with the aim of boosting bilateral trade between Bangladesh and Sri Lanka.

To this effect, the 4th Trade Negotiation Committee (TNC) is likely to convene in October to address the issue of the agreed-upon work plan from the last meeting between the two nations in May this year.

Both countries are expected to offer lists of products that are supposed to be finalised in the TNC meeting, according to a source.

The Bangladesh Trade and Tariff Commission (BTTC) is preparing the revised list of requested products for the Bangladesh side. After receiving the list, the commerce ministry will conduct internal consultations on it.

Under the proposed deal, both countries previously exchanged lists of requested products, each consisting of more than 100 items, seeking duty-free access to each other's markets.

Due to political turmoil in Sri Lanka and the spread of the Covid-19 virus, primary negotiations on the proposed deal were postponed.

After the prolonged pause, the Lankan High Commission in Dhaka proposed a discussion on the current status and the way forward in April.

The PTA negotiations between Bangladesh and Sri Lanka have already resumed. The commerce ministry formed the high-powered Trade Negotiation Committee to advance these efforts, said an official familiar with the developments.

The additional secretary (FTA) at the commerce ministry has been appointed as the chief negotiator of the committee.

The official said the initial negotiations on the proposed deal were delayed by months of political turmoil in Sri Lanka.

The 12-member committee has been coordinating with the Sri Lankan side to continue the negotiations.

Meanwhile, economists have advocated the signing of PTAs and FTAs (free trade agreements) with different countries to address the challenges Bangladesh will face when it graduates to the next level. They said that preferential trade deals would help boost Bangladesh's exports.

Another high-ranking official at the commerce ministry said, "We need to sign several PTAs and FTAs before Bangladesh's graduation in order to reap the benefits of the least-developed country category…"

After graduation, he added, Bangladesh would lose various tariff-related benefits that it currently enjoys as a least-developed country (LDC).

In 2017, both Dhaka and Colombo completed the necessary preparations to sign an FTA, but the effort did not come to fruition due to internal issues.

"We are currently in the process of initiating talks with two dozen countries, including the US and Canada, to sign PTAs and help boost the country's export earnings," said an official from the FTA wing of commerce ministry.

Currently, the priority is to sign PTAs, the official said, adding, "Signing an FTA deal is very challenging."

Some issues, including revenue losses, are associated with FTAs, as all products from both countries under FTAs enjoy a duty-free facility.

In March 2021, Bangladesh and Sri Lanka signed six memorandums of understanding (MoUs) to increase bilateral cooperation between the two nations.

Bangladesh signed a PTA with Bhutan on 6 December 2020, the first of its kind since the country's independence in 1971. However, the country is a member of several multilateral trade blocs.

The two multilateral FTAs that Bangladesh has signed so far are the South Asia Free Trade Area (SAFTA) agreement and the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) FTA.

On the other hand, Bangladesh is a party to three multilateral PTA deals: the Asia-Pacific Trade Agreement (APTA), TPS-OIC (Trade Preferential Scheme-OIC) and D-8 (Developing-8) PTA.

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